Are Real Estate Websites Your Friend?

Real estate websites came up in yesterday’s post. The basic question was, “Can buyers rely on public real estate websites during a home search?” I think we can all agree that they’re fun to look at, and they do a very nice job at presenting and consolidating data. But do they have a buyer’s (or seller’s) best interests in mind?

Downtown Hartford from Bushnell ParkI don’t think they do. Their goal is to make money. Basically all the sites make money by selling advertising to realtors, mortgage lenders, and credit people. They want to generate as many page views and clicks as possible, since that’s what translates into revenue. Buyers are heavy users during their search, but once they get a home under contract they no longer need to keep their preferred site open in the browser tab all day at work.

It comes down to an alignment of incentives. The public websites need to be engaging enough to capture a buyer’s interest, but not so helpful that they find a home immediately and are no longer a user (potential source of revenue). They benefit from extended home searches.

There are a few different ways that sites disrupt the search process, whether it’s intentional or unintentional:

Data Lag: Listing information is updated on different schedules for different sites. In all honesty, this could be related to how the different MLS systems (realtors) around the country make their data available. All I know is that some sites are faster than others.

Not Clearly Marking Homes Under Contract: We get a lot of calls about listings people see online that are already sold. They’re not closed yet, but the seller has already accepted a bid from a buyer. Getting distracted, or even emotionally hijacked, by a property that’s not really available causes buyers to miss out on legitimate opportunities.

Suspect Valuation Estimates: One site in particular touts their ability to value any property in the Country. Our experience is that buyers who take these valuations too seriously are unable to make realistic bids and have trouble buying a home. The estimates are inevitably too low, and the buyer isn’t going to “overpay,” so they keep lowballing sellers and never get a home.

Distressed Properties: Introducing distressed properties into the mix makes buyers more uncertain. Some try to use foreclosure pricing to support bids on non-distressed properties, which is generally not effective in this area. Others decide they want to pursue a foreclosure, not realizing that the process can be very different and it may take months to get a response.

Despite these concerns about the public real estate sites, I think they’re entertaining and provide a valuable service. They each have their own angle, and generally do a nice job presenting their data. As long as home buyers recognize the motivations and potential weaknesses of each site, they should definitely feel comfortable using the one they like best.

In the comments of yesterday’s post, Michael suggested that the realtors offer the general public the opportunity to subscribe to the actual MLS. It’s an interesting idea, and could be a way to reduce the (modest) annual fees that agents pay to support the existing system. I wonder if the local board has considered that possibility? Anyone from GHAR reading today? In some ways the site is just that … the data is updated very frequently and comes directly from the MLS. However, it’s also like all the other sites in that there are ads and attempts to collect contact information.

Even this site has an agenda, though our incentives are much more aligned with our clients. We only benefit when someone successfully completes their transaction … so hopefully the GHREB can still be your friend.

Buyers: Start with the Mortgage

It’s Buyer’s Week on the Greater Hartford Real Estate Blog. Yesterday we outlined the current opportunity for buyers, and today we’re talking mortgages. Check back each day this week for another post specifically for buyers.

Unless you’re independently wealthy, the first step in buying a home is talking with a mortgage professional. They are the gatekeeper in the whole purchase process; checking credit, verifying income, and generally making sure that you are qualified to secure a gigantic loan from risk adverse lenders. From a buyer’s point of view, there are two main reasons to get this out of the way early.

Flowers in the Fall1. Mortgage people may tell you things about your credit you didn’t know. Unfortunately most of the surprises here are bad ones. Finding out about a credit problem is by no means the norm, but the sooner you know about an issue, the sooner you can address it and start building your score back up.

2. It’s depressing to look at houses you can’t buy. Some buyers can’t buy a house because a credit problem will prevent them from getting a mortgage. Others can get a mortgage, but their income qualifies them for a smaller loan than they expected. Either way, it is depressing to look at homes you cannot buy. Buyers are always trying to get as much as they can at their price point, and when they suddenly learn their price point is way down there (or zero), they lose a lot of the excitement that initially comes with the search. Looking in the appropriate price range from the beginning is the way to go.

Getting preapproved for a mortgage is a quick process, so really there’s no excuse for not doing it. And since you’ll need to have it in hand before writing an offer, you might as well get it out of the way at the beginning of the search process.

Even after the credit crisis there are still many places you can go for a mortgage. Regional or national banks, specialty mortgage brokers, and credit unions are the main options we see our buyers choosing. It’s worthwhile to call a few different places to compare rates and terms because they can vary. In addition to asking about current mortgage rates, we would also suggest you ask about points, estimated closing costs, when in the process you can lock in a rate, the length of the rate lock, and how long recent mortgages have taken to get through underwriting.

If you’re thinking about a purchase, we would be happy to take a few minutes to talk with you about the process and pass along some mortgage contacts if you need them. Just let us know how we can help.