As with any profession, consumers and the pros look at things through different lenses. So holds true for real estate websites as seen by realtors and consumers.
One of the most common questions we receive from buyers is "Zillow says this house is available, so how can it not be?" Consumers often search for-profit sites like Zillow, Trulia and Realtor.com for available properties, not understanding that these sites are not broker-driven sites and hence, are not bound by the same rules that Commerce Department-regulated brokerage websites (like Edina Realty, Coldwell Banker and Re/Max) are. Here are some things these sites will not tell you.
1. The homes you are looking at are already sold. On these sites, more than a third of the homes displayed are already sold. These sites are not bound by the same rules of accurate representation, and so it is common to see homes appearing as available for sale, when in reality they are already sold or have come off the market.
We've received numerous calls this year from consumers inquiring about Property XYZ, when a search of the MLS shows the property sold long ago. In one particular case, the home sold in 2010 and is still showing up as for sale.
For this reason, the MLS is the most accurate tool for propery availability.
2. The price is often wrong. While much of this falls under the same reasoning as stated above, some of it is due to simple lack of updating on the site. This is particularly true of short sales, where the price the lender is willing to accept is not necessarily the price displayed.
Many consumers are unaware of how price on a short sale is determined, and believe that if the home is listed at a price, that must be the price. Case in point: One two-story in West Savage was listed far below market, as a short sale at $199,900. We received countless inquiries from people who wanted to buy that home at that price, not understanding that the home was far into the foreclosure process, and that price is a lure for a fast offer. The liklihood of the bank accepting that price was slim to none.
And it didn't. There were numerous offers on the home, none of which ever closed. The bank eventually took ownership of the property and has since relisted it as a foreclosure in the $300,000's - a true list price now that the bank is the seller.
3. The "Area Expert" often times isn't. For-profit sites sell zip codes and areas to realtors for a fee. The purchaser of these areas is is often displayed as an area expert for that given region. Any leads generated on the properties in that particular area are funneled to that agent. This means agents from outside of a market region who conduct little or no business in that market may be portrayed to the consumer as being an area expert. Sometimes these portrayals are true. Most times they're not.
Piggybacking on the agent features of the site is the agent review process. Agent reviews can be conducted by anyone who knows that person, and it is common to see reviews done by loan officers, other business associates, and friends - not necessarily clients.
A few MLS's in the country have filed lawsuits against one large for-profit site who ranks realtors, citing the data is highly inaccurate. A run of the list in our local market is curious. Without getting into details, we can safely say the list is highly inaccurate based on the reality of what goes on in the market.
4. Estimates of value are wrong. Many homeowners rely on sites like Zillow to give an idea of what their home is worth. But true market values are often radically different.
These sites determine value by using automated valuation models that calculate home prices based on several pieces of information, like previous appraisals and home features from the tax assessor's files. If an appraisal occured many years ago, and/or the home was updated and the county is unaware, this creates inaccuracies. We tend to see more accurate figures when numerous home sales occur in a neighborhood.
Neighborhoods with low turnover are the most at-risk for data inaccuracies based on these models. That said, neighborhoods with low turnover often have low turnover for a reason - because such neighborhoods are great places to live - and buyers understand that and may assign another value to such homes at the time of an offer.
While sellers tend to quote Zillow more than buyers, we have heard buyers express they use Zillow as a research tool for pricing. Our thoughts: The best determination of market value is to (first get preapproved) get out and begin looking at available properties in a certain pricepoint. One will quickly get a grasp of the value for the dollar. Facts and figures like bedrooms and bathrooms do not pick up intangibles like lot, view, privacy, layout, and quality of construction.
Buying a home is an emotional and "touchy-feely" process, and whether one is researching a home or an agent, they key to finding the best fit is often times an in-the-flesh evaluation.
