There’s nothing better than kicking back with your laptop on your couch and escaping into real estate sites like Zillow or Trulia while the rest of your family watches something on Netflix you’d never admit to watching. Am I right? Perusing dream homes in your ideal neighborhood near and far makes zombies and alternate worlds flashing on your big screen so much more palpable. But how much can you trust these sites and the information they provide? Whether your need is immediate or you are still in the “just shopping” mode it’s important to know what’s real and what’s not.
Availability of Homes
Let’s start with the availability of homes. It is important to understand that the primary purpose of online real estate information sites is to collect your information and sell it to vendors that pay for ad space. Real estate licensees select the neighborhoods they represent and pay large fees to be featured as recommended licensees within them. The purpose of these sites is not to sell homes or to provide accurate, up-to-date information. They are advertising websites. There is no incentive for them to make sure that a home that sold six months ago is changed from “active” to “sold” on their website. They just care about getting your contact information. As a result, you as the consumer are caught in the middle of a very competitive online real estate information market with no online entity in your corner.
What does this mean to you? Because there is no incentive for these sites to fact-check their data, when homes change status, that change is not always reflected immediately or even at all. So, if you use these sites, you’ll need to understand that if you find a property that you are interested in you’ll want to cross-check it’s availability before you get your hopes up.
Where can you find current and reliable information?
In Alaska, we are served by a technology cooperative known as the Alaska Multiple Listing Service (MLS), Alaska MLS, or AK MLS. Here, real estate professionals come together to share timely, accurate, and complete local real estate information and data on the market. Because most real estate professionals in Alaska subscribe to the Alaska MLS, this is the source for the most up to the minute data available on property listings.
As a buyer, you can access property listings from the following sites:
A local real estate licensee website such as samiglascott.com
A local brokerage site such as Remax.com
Realtor.com as provided by the National Association of Realtors
Alaskarealestate.com as provided by the Alaska Multiple Listing Service
These sites have direct access to the Alaska MLS and are updated every 15 minutes (compared to Zillow which could have information that is 6 months old, by example). In a fast-moving market, this could make or break your buying experience – specifically how much time you waste online. If you still continue prefer to use online real estate sites, that’s fine, just be sure to double check the information on any properties you are interested in.
Assessing Home Values
In addition to offering basic information on properties, some online real estate information sites offer property value estimates. This is very convenient. With a fair market value of your current home right at your fingertips, you will have an idea of what price range you can consider when shopping for your next home.
After submitting your contact information, of course, you simply enter your property’s address and a value will be generated within seconds. It should be noted that a real estate licensee would require a couple of hours to complete their due diligence for a comparative market analysis.
An example of property value estimates are those provided by Zillow, branded as Zestimates. Interestingly, Zillow has a helpful chart which can be accessed here. Unfortunately, Anchorage is not listed specifically, but you can see from the chart that the Zestimate for most (95%+) homes across the U.S. are off by 10% on average. That means for a $500,000 home the Zestimate could say it’s worth either $450,000 or $550,000. That’s a $100,ooo swing in price. Even the CEO of Zillow says they aren’t meant to be used as fact. Instead, the CEO claims that Zestimates are meant to serve as a starting point. Just like cross-checking the availability of homes you are interested in, its important to understand that you should also be prepared to cross-check the value of your home.
What are these automated property values based on?
In Anchorage, most of the data used by online real estate information sites comes from public data derived from the Municipality of Anchorage. Anyone who has lived in Anchorage and owned property for any length of time knows that this data is woefully inaccurate. Every year the Municipality sends property owners a green card providing their assessment of real property values. What these assessments fail to take into account is the interior condition or improvements or even recent exterior changes in the properties skewing the true value of each and every home in this market. In addition, these sites fail to include sold home prices which help true up appraisals conducted by appraisers and real estate licensees. An algorithm is then applied to what little data is available to pump out a quick estimate for the consumer. How can an accurate price be determined for a home when the data it is based on is out of date and incorrect?
How can I obtain a reliable property value?
To determine a property’s fair market value, properties that have sold within the last 3-6 months (only available to real estate licensees and appraisers), have a similar number of bedrooms and bathrooms, square footage and features, and are located within a one-mile radius of the subject property are selected for comparison. The condition of each property is factored in as well as whether the property’s neighborhood is appreciating or depreciating. This meticulous process compares properties with an “all things being equal” approach and is trued up with sold data that is only available to real estate licensees and appraisers and not to online real estate information sites. Determining a home’s value is an art and a science that requires a firm understanding and familiarity of the current market, neighborhood trends, and home construction. A professional assessment also eliminates any emotion or perceived value, which is often higher than the market value, that a homeowner might add if assessing the value themselves.
As a seller, to find the value of your property, you can ask your real estate licensee to provide you an estimate or hire an appraiser for a pre-market appraisal. Keep in mind that Anchorage is a cold weather city that slows down – sales-wise – during the winter, meaning you could have a skewed estimate of value in the winter, versus the spring and summer.
The Take Away
The takeaway is this: use online real estate information sites with discretion. Know that there are websites that are connected to your local MLS that provide more accurate information and it is wise to take the time to find one that works for you. When you are ready to transition from shopping for a new home, then it makes sense to use MLS sites exclusively. MLS sites have their own advantages. For example, as a buyer you can receive regular notices of any new listings by email that will directly link you to the MLS website. Be sure to ask your real estate licensee about these types of services. Similarly, to assess the value of your current home it is best to reach out to your real estate licensee or an appraiser to ensure the most accurate assessment. By minimizing your reliance on online real estate information sites, you will save time, receive more accurate information, and improve your overall experience as you get closer to making your next move.
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