We live in interesting times. Because of the internet, it is possible to
connect to information about everything. My seven-year-old knows this
instinctively. Recently, I told her about my hypothesis that the Tooth Fairy paid
children for baby teeth because "ground baby teeth" is the secret ingredient in
pixie dust. She said, “Why don't you
look it up online.” Sure enough, I
quickly discovered that my theory is not original. (See
Tooth Fairy Fun
"Facts".)
Real estate is no exception. You can go online and find infinite
information. Some of it very useful. Some
of it as tangible as pixie dust. A good real estate agent can help guide you to the most reputable sites and tell you what sources are flawed. In the East Bay, agents with access to our local Multiple Listing Service (MLS) have a product called ListingBook, which allows them to share accurate MLS data with their clients. This tool is by invitation only, so you do need an agent to hook you up.
If you are not yet aligned with a Realtor, and you want to filter out inaccurate information, it's important to
understand why online data is not always reliable.
To do this, consider how real estate data is sourced and commoditized online-- and see yourself (homeowner, potential buyer or enthusiast) as the consumer of
this commodity.
The first rule of reporting is "question the source." Some
sites gather information from their user community. This is the Wiki model and requires the
community to self-police its users. Wonderful concept; but not always reliable, and often it is difficult to trace the source. These sites can have inaccuracies due to human error or dishonesty.
In addition to requesting user participation, some sites
employ complicated algorithms to automate the population of data. The algorithms pull from a variety of sources
including MLS data and county records-- sometimes resulting in surprisingly accurate
calculations. Other times, due to small
sample sizes or the inability to account for individual variations (like the spectrum of remodeling choices evident in our Bay Area homes), the results are
misguided. The graph below is
Zillow's disclosure on the accuracy of their data. Click on the graph to enlarge it.
Chart "About Zestimates" from Zillow.com 1/20/12
Careful users should also consider how a site is monetized. Many sites rely on on advertising dollars to keep the site free to the user. To lure advertisers, they hope to show good search engine ranking on sites like Google and Yahoo. To this end, some sites post real estate data indiscriminately in order to gain good SEO (search
engine optimization). Having lots of data offers more keyword search opportunities and better
ranking. Better ranking translates to more paid ads. More is better here, so attention is not always given to fixing inaccuracies.
The foreclosure website
ReatlyTrac suffers from the "more is better" syndrome. In the quest to have the most foreclosure listings possible, they post "pre-foreclosure" information. If a homeowner is behind in payments, their home could make this list. Many of these homes never become bank-owned foreclosures: The homeowner catches up on payments or sells the home before they get a notice of default. These phantom listings can be confusing to a home buyer.
Real estate agents also use online sites to monetize their efforts, if indirectly, to gain a commission. They do this by aligning their marketing prowess with the sites that have the best ranking: “Dear Seller, I am so
good I promise to post your home on Zillow and
Trulia and
Realtor.com….” This creates inaccuracies
because, although many agents are eager to put their listing online and gain the exposure, there is far less motivation to update the information after the property has gone pending or sold. We get frequent emails asking about random listings found online, only to discover they have long since sold. BTW,
Berkeley Hills Realty prides itself on tracking our syndication efforts and we take the extra step to revisit the sites we have control over to post the most accurate data.
This article is not meant to render the mentioned websites disreputable. We use all of the above sites daily in our business and appreciate the multiple streams of information. No one wants to limit access to online data. But, in the age of information overload, good advice is priceless. Real estate agents have become the curators of good content. Contact one of our agents for guidance to the best available information.