January 8, 2008
Just the Facts, Ma’am
The Current State of Buyer Information:
Five years ago, home buyers were in the dark. Their resources consisted of agents, brokers, mortgage lenders and appraisers; none of whom could make money if the buyer stayed in her old home. All these people have incentive to get the buyer to buy something, anything to keep the money rolling in.
Today the buyer has options. She knows what her house is worth, she knows what the market is doing and she knows what specific properties are available and what they might cost. She can choose from many lenders- not just the one her agent recommends, and she can shop and compare mortgage rates.
But how much of this information is accurate? Redfin and all the other online services are investing heavily on an information infrastructure that will bring accurate information to every buyer, but is it working? I did a quick survey of Lemon Grove, the smallest city on my beat to see how they compare:
New Beginnings
The agent doesn’t have to push the sale any more but still has a professional role to play.
Just the Facts here for Lemon Grove California today:
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Yes, the numbers vary widely. The Multiple Listing Service (MLS) is the most complete source, but it is limited and even numbers extracted from their data varies. They also severely restrict access to data on sold homes. Non MLS search sites often show fewer listings but they may have some freedom from MLS restrictions. This Redfin data is flawed because there is no way to accurately select just the oddly shaped Lemon Grove borders, so there is some Spring Valley in there and maybe some Lemon Grove is missing from this data. [This just in: expect accurate community boundaries by March of this year at Redfin.]
More features are available at each of these sites, some including census data for a given area, information about schools, taxes, estimated values for specific homes, mortgage assistance, general info for buyers and much more. Many sites offer interactive forums where experts and newbies can exchange info. Only one nationwide company offers local blogs where unbiased reporters discuss the neighborhood and invite discussion. [That’s Redfin and my associates, folks! Thanks for the applause!]
Beyond these competing sites are others that have a different approach. RealtyTrac looks at foreclosures. Here’s what they show for exactly 1000 homes in Lemon Grove: 442 pre-foreclosure; 188 auction; 340 bank-owned; 003 FSBO; 027 resale homes; 000 new homes. Don’t know where they get their data but nobody comes close in that area. Altos Research is an aggregator of real time data who makes statistical data almost fun to study. For Lemon Grove they show: median price $409,663; avg listing 76 days; med $322/sq.ft.; 130 homes for sale. OK, the last 2 items are suspect, but their visual display of data is excellent. Still there’ll be more! Expect the major Realty companies to develop their own MLS based sites.
There are a lot of shortcomings at the moment. Craigslist is the only reasonable source of open house information although others are trying. Specialized searches for foreclosures, for sale by owner (FSBO), recent sales, etc are difficult or impossible at many sites. And, as we discovered here, accuracy is questionable.
Power to the People
Technology to the Rescue
Keep in mind that these are all early efforts. These companies and more will be improving, adding features and making life better for buyers and sellers. The role of agents and mortgage brokers will evolve from a sales to a service role. Home buyers will have the kind of information that other investors have had for decades and they will be empowered to make better decisions.
[data from generally reliable sources, please comment on any errors!]
They feel your pain… | Redfin San Diego Sweet Digs said:
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January 10, 2008 6:31 AM