Where Real Estate Listings Fail

Original Post: http://www.smartmoney.com/spend/real-estate/where-real-estate-listings-fail-1307483593158/

By ANNAMARIA ANDRIOTIS SMARTMONEY  JUNE 8, 2011, 11:27 A.M. ET

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As buyers wade back into the market, there's plenty of information to be found online. And that may be more trouble than it's worth.

Earlier this year, a client asked Troy Deierling, a realtor in Sedona, Ariz., to set up appointments for three homes he'd seen online. Those viewings never happened: In spite of their supposedly current listings, Deierling discovered the properties had already sold. One had been off the market for three months.

As home buyers cautiously re-enter the market, they're arming themselves with information found online far more than existed pre-housing crash. A record nine out of 10 house-hunters searched online last year, according to the National Association of Realtors; around 15 million people now visit 6-year-old listings site Trulia.com each month. But with this great migration online has come a new set of obstacles, including errors, out-of-date information, and properties that are listed on the web but aren't actually for sale all of which can add up to a handicap for buyers. "You're probably going to get exposed to inaccurate information," says H. Pike Oliver, executive director for industry outreach at Cornell University's Program in Real Estate. "There's no real assurance."

The most common problems are simply errors -- listings that advertise gas heating when in fact the house runs on electric heat or a price cut that hasn't been updated online. But in some cases, "mistakes" may be intentionally misleading, such as touting a partly-finished basement as fully redone, or describing a kitchen as "eat-in" but only "if you were standing [up] with your plate," says New Jersey real estate broker Paul Howard. These discrepancies often appear on the listings that are posted on the Multiple Listing Service, an online database that listing agents are expected to keep current, he says. Separately, around 21% of the data realtors individually submit for posting on real estate web sites is not updated when changes are made to the price or when the property is sold, according to a report released last month by Trulia.

Of course, online misinformation is hardly unique to real estate listings. But because many of the online services are relatively new, and people buy houses so infrequently, home buyers may be less attuned to misinformation than, say, online daters. In general, it requires much more skepticism and diligence by buyers, experts say. For example, some real estate agents keep listings on their personal web sites long after they've sold; when home buyers contact the agent inquiring about the property, they're instead pitched new properties that might not meet their criteria, says Leonard Baron, principal of real estate consulting firm LPB Services and a lecturer at San Diego State University. Such lagging information is more common with smaller firms' web sites and could be a function of real estate agents simply forgetting to update those listings, says a spokesman for the National Association of Realtors. Either way, for buyers, it's a waste of time.

Online listings also seem to level the playing field when it comes time to make an offer, by including sales history and the number of days on the market information most buyers could previously get only from an agent. But "there are a lot of games that are played with 'days on the market'," says Mark Weiss, director of business development at Trulia.com. Properties that are listed for months can get removed from listing sites only to reappear as a new property for sale a few weeks later. That could be because a new listing agent has taken it over, says Baron; in some cases, a realtor can make a listing look new by taking the house off the market for a few weeks.

Popular real estate listing web sites say they try to update information often and they're on constant lookout for errors, but many sites rely on a feed from the MLS, which means it's largely the responsibility of individual realtors to update their listings. On Realtor.com, listings are revised daily as properties' status change, says the NAR spokesman. Trulia.com, which is where Deierling says his client found outdated listings, says it receives seven to eight million listings every day and it prioritizes information that arrives directly from franchises, brokers or MLS feeds. And like Trulia, Zillow says its goal is to give buyers easy access to a lot of information about nearby home values and market trends that can better inform buyer decisions.

For their faults, these web sites still offer home buyers more information than what was available even a few years ago. And that can help them make a more informed decision and eventually, an offer on a property. The point, consumer advocates say, is not to put too much faith in the information contained in a listing. The old shoe-leather tactics like talking to neighbors, getting crime reports from the local police, and asking a real estate agent to pull recent sales prices of similar homes nearby will trump most of the data in an online listing. "It's a reasonable way to start the search but not to finish it," says Barry Zigas, director of housing policy at the Consumer Federation of America, a consumer advocacy organization.