One such company, according to Wikipedia, claims to house more than 100 million homes (currently for sale and past solds) in their database, and boasts millions of unique visitors each month.
While we applaud people for wanting to become more informed and knowledgeable about real estate, we believe it a shame that the sources for their information may cause them to be misled.
We happen to be a featured team on one such online real-estate site (as are many other local agents). It is interesting to us how many phone calls we receive from people wanting more information about a house they saw on these sites. When we search for the same house on our MLS (multiple-listing service, a professional database of home listings posted by cooperating brokers), in at least 90 percent of the cases, the home was already sold or in escrow pending sale. We discovered that often times the information from these online sites is anywhere from two to four weeks outdated. This simply means that any buyer who is highly motivated to purchase will repeatedly lose out on opportunities because, through their efforts to avoid working with a real-estate agent, they miss out on the real-world activity.
Here is something else we discovered: in our own research, we compared the estimated selling prices from one such online database site. For several areas where the homes appear to be similar or identical (what we call “cookie-cutters”), the estimate was within a narrow 3 percent of the actual selling price for those same homes when later sold. Kudos! But wait a minute … a fifth-grader could probably do just as well. We then compared that same company’s estimated selling prices for homes in La Jolla, especially homes with ocean views or those that offer other extraordinary benefits, and well, that company’s estimate was below the actual selling price by as much as 27 percent to 33 percent. Unfortunately some prospective buyers believe in these published estimates and are using them as a basis for making offers.
These search sites likely use some very sophisticated algorithmic models to estimate selling prices. The models seem to work effectively in “look-alike” areas, but seem to fail substantially when it comes to specialty home markets like La Jolla. To purchase a home in a “look-a-like” area is like shopping for apples — every apple in the bin costs $2.49 a pound. Homes in La Jolla are more like unique pieces in an art gallery, and each can have a very different value.
For any seller who has received a ridiculously low offer, there may be a good chance that it was from someone who was doing their research from one of these online real-estate sites, and using that company’s recommended price.
Online third-party search site databases are a bit like online dating sites — both lack substance. As much as we are all headed to more technology, for now, nothing takes the place of personalized service and knowledge from a real-estate agent. Whether you are buying, selling or both, we encourage you to hire a respected and trusted real-estate team.
Do you have a question about real estate in San Diego? Send your inquiries to Cschevker@san.rr.com. We will respond directly to you, and those questions that have a broader public appeal will be published along with our next column in La Jolla Today.