Few aspects of modern life have been transformed as much by the Internet as house hunting. Last year, 90 percent of all homebuyers—and 93 percent of first-time homebuyers—used the Internet to find a home.
However, as powerful and pervasive as it is, online real estate has its failings—some obvious and some known to only a few. Buying a home is the most expensive decision most of us make, so to avoid a mistake that could become very costly, every buyer should know how online house hunting really works.
Put simply, there are three kinds of sites carrying large numbers of real estate listings: the fancy national sites like Realtor.com and Zillow, regional sites published by multiple listing services, and sites sponsored by agents and brokers with local listings. However, they all get their information from the same source: the multiple listing service (MLS).
Not all properties are listed
There are more than 800 multiple listing services that are run by local boards of Realtors. However, not all homes are listed on a local MLS, such as the 9 percent of all existing homes sold last year (about 444,000 homes) that were sold by owners (FSBOs). That number is expected to grow as markets transition from buyers’ to sellers’ markets in the months to come. Right now, you can find FSBOs in your market on several websites where owners pay to have the FSBOs listed.
In addition, many wealthy and celebrity owners are keeping a growing number of homes, largely luxury properties, off of the listing services and Internet sites for privacy reasons. These are called “pocket listings,” and real estate agents use open houses and other techniques to target wealthy buyers while keeping details like asking price out of the news.
Finally, new homes may not be listed on an MLS or sites that rely on an MLS for their listings. However, you can find them on sites specifically offering new homes or sites sponsored by builders.
Concern over accuracy
All real estate sites convey the impression that their listings are complete, accurate, and current. However, a recent study found otherwise.
The WAV Group, a real estate consulting firm, recently studied different kinds of real estate sites and found that that local brokerage sites are the most accurate, up-to-date, and comprehensive. WAV Group CEO Victor Lund said, “We analyzed a sample of more than 6,000 listings in 33 zip codes in 11 markets, comparing the data on various websites against 14 local multiple listing services. The findings are clear: Real estate brokerage websites showed by far the most homes for sale, recognized which homes were no longer for sale, and displayed new listings much earlier.”
The study found that local real estate brokerage companies display 100 percent of the brokerage’s agent-listed homes for sale compared to about 80 percent for the national portal sites. Moreover, brokerage sites show newly listed homes for sale seven to nine days earlier than national portals, and they almost never show a home listing as active that has already sold. About 36 percent of listings that appear as active on national portals are no longer for sale.
The study also looked at the number of days between when an agent initially lists the home in the MLS and when it appears on consumer-accessible websites. Real estate brokerage sites update directly from the MLS, typically every 15 to 30 minutes. On the other hand, while some listings are updated sooner, the median delay between when a home was listed on the MLS and when it appeared on the portal sites was nine days for Trulia and seven days for Zillow.
The source of brokers’ advantage is direct access to local real estate databases. Every day thousands of properties go up for sale on an MLS. Tens of thousands more listings change price or make other changes that are material to their value and that appeal to a buyer. Unless a listing database is updated every 24 hours, vital information could be three or more days old before it appears on a buyer’s screen. Buyers and sellers using a database that is updated more frequently could have a competitive advantage over those using sites with older data.
Even though sites run by real estate brokerages carry the most accurate, current, and complete listing information, they rank only fourth among the most-popular sites visited by buyers, behind MLS sites, Realtor.com, and agents’ sites, accounting for only 39 percent of all buyers, according to the National Association of Realtors.
Tips for house hunting online
- Recognize that finding the right house for your budget and needs will probably take months. Be patient but be attentive. Check listings several times a day.
- Use several sites, but make sure at least one is a leading local brokerage in your market. You don’t usually have to use the services of that brokerage in order to access its listings.
- Sign up for email notifications of new listings and price changes so that you can keep abreast of new opportunities.
- Go to open houses and meet real estate agents in the area where you want to live. Tell agents what you are looking for and they will likely notify you of new listings—even before the listings are posted.
Steve Cook is Executive Vice President of Reecon Advisors and covers government and industry news for the Reecon Advisory Report.
Cook is a member of the National Press Club, the Public Relations Society of America and the National Association of Real Estate Editors, where he served as second vice president. Twice he has been named one of the 100 most influential people in real estate. He is a graduate of the University of Chicago, where he was editor of the student newspaper. In addition to serving as managing editor of the Report, Cook provides public relations consulting services to real estate and financial services companies, and trade associations, including some of the leading companies in online residential real estate.