The New York Times ran a piece over the weekend talking about how real estate is moving from local to hyper local. When buying and selling homes people are no longer looking at the market on the city level; instead, they are looking at the neighborhood, zip code, and school district level.
Buyers and sellers still want all the same information they have always wanted (crime info, school info, price info, etc), it is now just much more available and transparent. This trend obviously helps consumers and everyone at Movoto applauds the advances of open information on the web. It has sparked real competition among online sites, but the fact of the matter is that every single online site still recommends working with a local agent. Agents on the ground have many inherent advantages over website, but they need to take into account a more informed consumer.
Real estate agents should all be aware of this move to a more knowledgeable, tech savey client. With all of the available data on sites like Movoto and Zillow and Redfin, buyers and sellers have a general understanding of the market by the time they talk to an agent. They now expect their agent to have information on top of the market information they find on the internet. And the fact of the matter is that the best agents can easily value a property better than a website’s automated program.
The main problem with automated valuation models (AVMs), like the Zestimate, is that they are limited to data, and data only. They take in numbers for the area and spit out an estimate. However, the model cannot walk through a house, look at the neighbor’s lawn gnomes, or adjust for the new highway being built across the street. Because agents know these flaws, many agents tend to disregard AVMs numbers. However, most internet shoppers are not aware of these potential short falls and showing them the hyper-local MLS data can easily sway their opinion on pricing. An AVM estimate can be used as a great starting point for discussion, and sets a minimum expectations to buyers and sellers for what a real appraiser or real estate agent should be able to reproduce.
The new home value program touted in the NYTimes article takes a standard home value model and adds more transparency and better data. Because it has access to MLS data, it is more accurate than most sites, and because of the agent/client relationship, the agent can show them why the house is priced the way it is. The explanation provided by a local agent is key and the reason that everyone still uses a real estate expert.