Nowadays, many home buyers and sellers depend on Web sites such as Trulia.com, Zillow.com and Realtor.com for real estate listings…information about prices and local market conditions…and real estate trends. But much of the information may be inaccurate and/or out of date.
Ways these sites may mislead you…
1. Their home-value estimates can be way off. Zillow and Trulia estimate the values of most homes across the country—but those estimates are less accurate than people imagine. Placing too much faith in them could lead sellers to set their asking prices too high or too low…or encourage buyers to offer too much or too little.
The sites don’t send out home appraisers. They just gather data about the property and nearby properties and run this through a formula to come up with an educated guess.
Example: If the home next door to yours is about the same size as yours and sold for $250,000 last year, these sites probably will guess that yours is worth around $250,000, too. They won’t know and so won’t factor in that your home was recently renovated while the one next door is decades out of date.
The value estimates tend to be particularly questionable in states where home sale prices are not in the public record—Alaska, Idaho, Indiana, Kansas, Louisiana, Maine, Mississippi, Missouri, Montana, New Mexico, North Dakota, Texas, Utah and Wyoming.
To fix false information about your home: If you are selling your home or expect to do so soon, check the “Zillow Zestimate” and “Trulia Estimate” for the home to make sure that the information is accurate. Review the sales price history, tax assessment history and home description, then report any missing or inaccurate details to the Web site—though various home owners have complained that these Web sites can be slow to respond to complaints, sometimes even taking months. There are varying options to try to address a discrepancy. On Zillow, click “Report problem with listing” under the “More” button or “Claim this home.” On Trulia, click “Edit home facts” or “Flag.” Or ask your broker to try to fix the problem.
Home buyers, in particular, also should check how accurate the Web site claims its estimates are for the area in question. Only if you dig deep into these Web sites will you discover that even they admit that their estimates can be fairly inaccurate in some parts of the country. Knowing what level of accuracy they claim for the area at least provides a clue as to how reliable the data might be.
On Zillow, click the “Zestimates home values” tab near the bottom of the home page, then click “States/Counties” in the “Data Coverage and Zestimate Accuracy Table.” On Trulia, select “Trulia Estimates” from the “Explore Trulia” menu near the bottom of the home page, then click “Coverage and Accuracy.”
2. Many of their listings are no longer on the market. According to a 2012 study conducted by consulting firm WAV Group, more than 35% of the homes listed for sale on Zillow and Trulia at any given time already have been sold or pulled from the market. Outdated listings linger in part because it isn’t in the Web sites’ interest to pull them—the more listings a real estate site has, the bigger and more useful it appears.
3. Their asking prices can be out-dated. Third-party real estate sites such as Trulia and Zillow sometimes fail to promptly update listings to reflect asking price reductions. That means that buyers who use the search tools on these sites to view only properties in their price range might never see the listings of properties that weren’t originally in their price range but now are because of price cuts.
What to do: Expand your search parameters to include homes 10% above the high end of your price range when you search for properties on Zillow or Trulia. Their current prices might now be in your price range. Even those that aren’t may be close enough that the sellers might accept offers in your price range. Also search the listings on Realtor.com, where asking prices tend to be more up to date.
4. Their “days on the market” figures could be way off the mark. Homes new to the market often attract interest from multiple buyers, while those that have sat for 90 days or more tend to be ignored. Buyers often are wise to be aggressive with their offers on new listings, while low-ball offers might be accepted on older listings.
But the days-on-the-market data provided by real estate Web sites can be misleading. The figure could reflect the number of days since the property was added to the Web site, which might not have occurred until weeks after it actually went on the market with third-party sites such as Zillow and Trulia. And listing agents sometimes reset the days-on-the-market clock by taking the property off the market briefly, then relisting it.
What to do: Buyers should dig deeper to see if a listing’s “days on the market” is telling the whole story before making an offer. Zillow and Trulia include a “price history” section that lists other recent times the home was on the market. Also, ask your buyer’s agent—the real estate agent representing the home buyer—for details about the property’s recent sales history. A buyer’s agent can tell you if a home was pulled from the market and then quickly returned.
5. Some of the most desirable properties don’t appear on sites until after they’ve sold. It can take a week for a new listing to appear on Realtor.com and longer still to appear on third-party Web sites such as Trulia and Zillow—and that’s if the seller’s agent submits the listing promptly to the Multiple Listing Service. Agents have been known to keep a few choice listings to themselves for a week or two when they think they can find a buyer on their own, in hopes of earning the full commission rather than splitting it with a buyer’s agent.
Buyers who wait for listings to appear on Trulia and Zillow could miss out, particularly if they’re in the market for a rare and desirable property, such as a waterfront home or a home in the area’s most prestigious neighborhood.
What to do: If your local real estate market has heated up and your goal is to buy a property that’s likely to be in great demand, choose one of the area’s busiest, best-known agents as your buyer’s agent. That increases the odds that you’ll be one of the lucky few who gets to see desirable properties before they reach the sites. Also, visit open houses to meet other area agents, and let them know what you’re looking for.
6. Listings on “for-sale-by-owner” sites often have inflated or inaccurate property descriptions. The property descriptions provided in home listings inevitably are written to put the property in the best possible light. In most cases, those descriptions are at least written by real estate agents who understand the difference between portraying a property in a good light and fabricating information. On for-sale-by-owner sites, however, the property descriptions usually are written by home owners themselves, who are more likely to distort descriptions.