6/27/2014

REALTORS® vs Real Estate Data and Your Home

Real estate data on the internet exists in multiple forms and multiple places.  I think the paradox is  that with all the available sources of data, many people are actually less knowledgeable about real estate "facts" due to the growing number of multiple choices to view real estate listings on the internet.

Issues:
  • Non-REALTOR® internet sources are not obligated by a code of ethics, and are not required to be licensed real estate professionals. Commercial sites obtain permission (in most cases) from MLS (multiple listing service used by REALTORS®) sources which contain the original listing information, and then publish it on their sites. Active listings syndicated from MLSs are not "public information" similar to what could be found in a search of property tax records for sold properties, but are the result of listing contracts signed between sellers and their licensed brokers which are then published on other commercial sites. Not all sellers want their addresses published this way, and some refuse to do so.  The National Association of Realtor code of ethics not only requires certain higher professional standards of REALTOR® members, they also may have a legal impact as well. For instance, in California an agent, governed by state law and by a code of ethics, may represent both buyer and seller in single transaction with the parties' agreement, but dual agency is a violation of the law in Colorado and Florida.
  • Skews data--i.e., days on market is undetermined when "pre-listed" as a "coming soon" listing on the internet that is not yet in the MLS . The number of days on market in the MLS is significant for seeing a trend between demand and supply--the more days on market may indicate more properties for buyers to choose from, or there may be a seasonal effect such as cold weather where showings are slow, or there may be more buyers have financial qualification problems so that properties are falling out of escrow and properties are coming back on the market. This information is just one fact not available when properties are sold off the MLS, and is not available for analysis by the many legitimate providers of real estate analysis, such as real estate appraisers, who utilize MLS information.  This is just one of factors in off-MLS listings.
  • Are off-MLS listings getting, you the seller, the best price and the most money for your property?  Off-MLS listings are may also be known as "pocket listings" or may be listed on specific non-MLS sites for individual sale.  Generally, a seller can be more assured of receiving a fair market price when his/her property is exposed to a broad market of potential buyers.  Since the MLSs exist nationwide as cooperative organizations composed of over one million REALTORS® each with their own database of clients, please see this article about determining what is in a client's best interest when choosing a private venue in which to sell property:  http://www.realtor.org/news-releases/2014/06/coming-soon-properties-can-create-consumer-confusion.
The internet, and competing housing data sites, is here to stay.  Buyers have become accustomed to searching online before even finding a REALTOR® to work with, and there may be certain advantages to that if the buyer is prepared with some prior market knowledge by the time a REALTOR is selected. 

For sellers who want to get market value, there are sites offering an "instantaneous" home evaluation price, based on property tax sales data and certain other measurements built into various proprietary software.  The software does not do what a human does, however, which is go inside the property for sale and develop human judgment about it.  Such software can be wildly inaccurate on price -- Zillow by its own admission can be as much as 30% away from actual sale price.  Companies such as CoreLogic may be a little more accurate, but no one should pinpoint the value of their property based on a software system alone. The illustration at right is from the Realtors Property Resource program and is an actual estimated 2014 value for a Long Beach property, showing an extremely large range with two stars for its level of confidence.  In an area of fewer matching comparables based on the data available to the software, it's tougher to come up with a tighter price estimate.  Don't you think the buyer would choose the lower price, and the seller wants the higher price?  A further illustration of comparisons of sold price vs. Zillow's Zestimate for actual Long Beach properties sold in 2014--due to CRMLS policies only the sold addresses can be sold--as provided by CRMLS.

Online source for housing values:

Metropolitan Sales Areas - Housing Data and Map--National Association of REALTORS®.

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