Real Estate Buyers and Sellers Guide to the Internet
Today, the Internet plays a prominent role in the buying and selling of real estate
and is an almost limitless source of real estate information. This article provides
a road map of how most real estate is bought and sold today and provides Internet
strategies to empower your real estate investing decisions.
1. Then and Now
Ten years ago a search for real estate would have started in the office of a local
real estate agent or by just driving around town. At the agent’s office you would
spend an afternoon flipping through pages of active property listings from the local
Multiple Listing Service (MLS). After choosing properties of interest you would
spend many weeks touring each property until you found the right one. Finding market
data to enable you to assess the asking price would take more time and a lot more
driving and you still might not be able to find all of the information you needed
to get really comfortable with a fair market value.
Today, most property searches start on the Internet. A quick geographic keyword
search on www.google.com tells the story. You will likely get thousands of results.
If you spot a property of interest, you can typically view photos online and maybe
even take a virtual tour. You can then check other Web sites, such as the local
county assessor, to get an idea of the property’s value, see what the current owner
paid for the property, check the real estate taxes, get census data, school information,
and even check out what shops are within walking distance…all without leaving your
While the resources on the Internet are convenient and helpful, it can be a challenge
to use them properly because of the volume of information and the difficulty in
discerning its veracity. As we wrote this chapter a search of “Denver real estate”
returned 2,670,000 Web sites. Even a neighborhood specific search for real estate
can easily return thousands of Web sites. With so many resources online how does
an investor effectively use them without getting bogged down or winding up with
incomplete or bad information? Believe it or not, understanding how the business
of real estate works offline is the way to better understand online strategies.
2. The Business of Real Estate
Real estate is typically bought and sold either through a licensed real estate agent
or directly by the owner. The vast majority is bought and sold through real estate
agents. This is due to their real estate knowledge and experience and, at least
historically, their exclusive access to a database of active properties for sale.
Without access to this database there was no efficient way to search for properties.
A. The MLS (and CIE)
The database of residential, land, and smaller income producing properties (including
some commercial properties) is commonly referred to as a multiple listing service
(MLS). Only properties listed by member real estate agents can be added to an MLS.
Member real estate agents must offer compensation to other agent members if one
of them finds a buyer. There are no set compensation levels but each market tends
to fall within a general range.
Commercial property listings that are not in an MLS are not quite so centralized.
However, many can be found in a commercial information exchange (CIE). A CIE is
similar to an MLS except that the agents adding the listings to the database are
not required to offer any specific type of compensation to the other members.
For-sale-by-owner properties cannot be directly added to an MLS and CIE, which are
typically maintained by REALTOR® associations. The lack of a centralized
database makes these properties the most difficult to locate. Traditionally, these
properties are found by driving around or looking for ads in the local newspaper
real estate listings. A more efficient way to locate for-sale-by-owner properties
is to search for a for-sale-by-owner Web site in the geographic area.
What is a REALTOR®?
Sometimes the terms real estate agent and REALTOR® are used interchangeably;
however, they are not the same. A REALTOR® is a licensed real estate
agent who is also a member of the National Association of REALTOR®. REALTOR®
are required to comply with a strict code of ethics and conduct.
MLS and CIE property listing information was historically only available in hard
copy, and as we mentioned, only directly available to real estate agents members
of an MLS or CIE. About ten years ago this valuable property information started
to trickle out to the Internet. This trickle is now a massive river.
One reason is that most of the one million or so REALTOR® have Web sites
and most of those Web sites have part or all of the local MLS or CIE property information
displayed on them. Another reason is that there are many non-real estate agent Web
sites that also offer real estate information, for example, for-sale-by-owner sites,
foreclosure sites, regional and international listing sites, and valuation and market
information sites. The flood of real estate information to the Internet definitely
makes the information more accessible but also more confusing and subject to misunderstanding
B. Real Estate Agents
Despite the flood of real estate information on the Internet, most properties are
still sold directly through real estate agents listing properties in the local MLS
or CIE. However, those property listings do not stay local anymore. By its nature,
the Internet is a global marketplace and local MLS and CIE listings are normally
disseminated for display on many different Web sites. For example, many go to the
National Association of REALTOR® Web site, www.realtor.com, and to the
local real estate agent’s Web site. In addition, the listing may be displayed on
the Web site of a local newspaper. In essence, the Internet is just another form
of marketing offered by today’s real estate agent.
In addition to Internet marketing, listing agents also typically help the seller
establish a price, holding open houses, keep the seller informed of interested buyers
and offers, negotiate the contract and help with closing. When an agent provides
all of these services it is referred to as being a full service listing arrangement.
While full service listing arrangements are the most common type of listing arrangement,
they are not the only option anymore.
Changes in the technology behind the real estate business have caused many agents
to change the way they do business. In large part, this is due to the instant access
most consumers now have to property listings and other real estate information.
In addition, the Internet and other technologies have automated much of the marketing
and initial searching process for real estate. For example, consumers can view properties
online and make inquires via email. Agents can use automated programs to send listings
to consumers that match their property criteria. So, some agents now limit the services
they offer and change their fees accordingly. For example, the agent may offer to
enter the property in the MLS but only provide limited additional services. In the
future, some real estate agents may offer services in more of an ala carte fashion.
Maybe in part because of the volume of real estate information on the Internet,
when people hire a real estate agent today they look at the particular services
offered by the agent and the depth of their experience and knowledge in the relevant
property sector. It is no longer just about access to property listing information.
Buyers and sellers historically found agents by referrals from friends and family.
The Internet now provides ways to directly find qualified agents or to research
the biography of a referral. Several sites offer searchable databases about real
Some have argued that the Internet makes REALTOR® and the MLS less relevant.
AgentWorld.com believes it may change the role of the agent but will make knowledgeable,
qualified, and professional REALTOR® more relevant than ever. In fact,
the number of real estate agents has been on the rise in recent years. No wonder,
the Internet has made local real estate a global business. And, Internet or not,
the simple fact remains that the purchase of real property is the largest single
purchase most people make in their life (or, for the lucky investor, largest multiple
purchases over a lifetime) and they want expert help. So, what is the function of
all the online real estate information?
Online real estate information is a great research tool for buyers and sellers and
a marketing tool for sellers. When used properly buyers can save time by quickly
researching properties and, ultimately, make better investment decisions. Sellers
can efficiently research the market and make informed decisions about hiring an
agent and marketing their properties online. The next step is to know where to look
online for some of the best resources.
3. Internet Strategies
In the sections that follow, we provide strategies and tips on how to use the Internet
to locate properties for sale and research information relevant to your decision
to purchase the property. There are many real estate Web sites from which to choose
and although we do not mean to endorse any particular Web site we have found the
ones listed here to be good resources in most cases or to be so popular that they
need mention. One way to test a Web site’s accuracy is to search for information
about a property you already own.
A. Finding Real Estate for Sale
Despite the widely available access to real estate listings, the local MLS database
continues to be the most complete and accurate source of real estate information
for buyers and sellers. These databases are usually updated on a daily basis with
real estate agent listings which comprise the vast majority of property for sale.
An excellent starting point for MLS data is the national MLS Web site, www.realtor.com.
Virtually all local and regional MLSs have an agreement with www.realtor.com to
display the majority of their listing inventory.
However, direct access to a local or regional MLS will provide the most current
and complete real estate information. Some MLS systems have a publicly accessible
Web sites with limited information. Ultimately, to get complete information you
will need to find a qualified local REALTOR®. Many local real estate
agents will also provide their customers (via email) new listings that are input
into the system that match your predefined criteria. This can be very helpful to
a busy buyer.
There are also many Web sites that display both real estate agent listed and for-sale-by-owner
properties. Some of the more popular Web sites include www.zillow.com and www.trulia.com.
These sites offer other services too. For example, zillow.com is best known for
its instantaneous property valuation function and trulia.com for providing historical
information. Another source of properties for sale is the state, regional, and local
Web sites associated with brokerage companies. For example, www.remax.com or www.prudential.com.
Search engines like www.yahoo.com and classified advertising sites like www.craigslist.com
also have real estate listings.
One key difference between these sites is how much information you can access anonymously.
For example, at Trulia.com you can shop anonymously up to a point but then you will
need to click through to the agent’s Web site for more information. Many new real
estate search engines allow you to sift through listings without having to fill
out a form. The best strategy is to browse a few of the sites listed above to find
geographic areas or price ranges that are interesting. When you get serious about
a property, then it is time to find a qualified REALTOR® of your choice
to conduct a search in the local MLS.
It also never hurts to do a search the old-fashioned way and drive through the neighborhoods
that interest you. There is no substitute for physically, not virtually, walking
the block when you are making a serious investment decision. In this sense, real
estate is still a very local business and standing in front of the property can
lead to a much different decision than reviewing a bunch of Web printouts.
B. Valuing Real Estate
As we mentioned, one of the most popular real estate tools is zillow.com’s instant
property valuation. Just type in an address and in and you get a property value.
It even charts the price ups and downs, shows the last date sold (including price),
and the property taxes. There are other sites that provide similar tools such as
www.housevalues.com and www.homegain.com. Unfortunately, many people use these estimated
values alone to justify sales prices, offers and counteroffers. However, these are
only rough estimates based on a formula that incorporates the local county sales
information. These estimates can swing wildly over a short period of time and do
not appear to track actual market changes which are normally more gradual. In addition,
these estimates may not take into account property remodels or renovations or other
property specific or local changes. This is not to say these sites are not useful.
In fact, they are great starting points (as we mention above) and can provide a
good ball-park value in many cases.
When it comes to getting a more accurate value for a particular property there are
other strategies that are more trustworthy. One is to go directly to your county’s
Web site. Typically the county assessor’s area of the Web site provides sales and
tax information for all properties in the county. If you want to research a particular
property or compare sales prices of comparable properties the local assessor’s sites
are really helpful. When you visit a county’s Web site you are getting information
straight from the source. Most counties today publish property information on their
Web sites. Many times you can not only see the price a previous owner paid, but
the assessed value, property taxes, and maps. Some county assessors are now adding
a market and property valuation tools too.
Given the importance of valuation to investing, we are also going to remind you
of the two most important (non-Internet) valuation methods: real estate agents and
appraisers. Working with a local REALTOR® is an accurate and efficient
way to get value information for a property. While the primary purpose of the MLS
is to market the active property listings of its members, the system also collects
sales information for those listings. REALTOR® members can pull this
sales information and produce comparable market analyses (CMAs) that provides an
excellent snapshot of a particular property’s value for the market in a particular
Finally, the most accurate way to value a property is by having a certified appraiser
produce an appraisal. An appraiser will typically review both the sold information
in the MLS system as well as county information and then analyze the information
to produce a valuation for the property based on one or more approved methods of
valuation. These methods of valuation can include a comparison of similar properties
adjusted for differences between the properties, determining the cost to replace
the property, or, with an income producing property, determine a value based on
the income generated from the property.
C. The Neighborhood
There are many ways the Internet can help you get the scoop on a particular neighborhood.
For example, census data can be found at www.census.gov. You can also check out
the neighborhood scoop at sites like www.outside.in or review local blogs. A blog
is a Web site where people discuss topics by posting and responding to messages.
Start by looking at www.placeblogger.com and www.kcnn.org/citymediasites.com for
a directory of blogs. Trulia.com has a “Heat Map” that shows how hot or cold each
neighborhood is based on prices, sales, or popularity among the sites users.
When it comes to selling residential property or rental properties that cater to
families, the quality of the area school district makes a huge difference. There
are many Web sites devoted to school information. Check out www.greatschools.net
or www.schoolmatters.com. Most local school districts also have their own Web site.
These sites contain a variety of information about the schools and the school district,
including its district demographics, test scores, and parent reviews.
E. Finding Real Estate Agents
This is why AgentWorld.com was created. At www.AgentWorld.com you can search to
find an agent with particular expertise, geographic areas of specialization, and
services offered. Agents also sometimes provide biographical information on their
websites; however only at AgentWorld.com can you quickly check the profile of a
referral or compare agents profiles.
F. Maps and Other Tools
The Internet has made mapping and locating properties much easier. To get an aerial
view or satellite image of a property or neighborhood, go to www.maps.live.com or
www.maps.google.com or visit www.walkscore.com to see how walk-able a particular
property is. These sites can give you an idea of the neighborhood characteristics
and the types of entertainment, restaurants, and other facilities that are within
walking distance of the property. Maps.Live.com provides a view at an angle so you
can see the sides of houses and Maps.Google even gives you a 360 degree street-level
view for certain neighborhoods. If you have not tried one of these satellite map
Web sites, you really should just for amusement.
Summary on Internet Strategies
The Internet is a research and marketing tool for real estate investors but is not
a replacement for a knowledgeable experienced real estate professional. The Internet
can save you time and money by enabling quick and easy property research and marketing
options. It can also help you efficiently find a REALTOR® who fits your
buying or selling needs. Here are two final thoughts on Internet strategies for
More knowledge is better; use the Internet to build your knowledge base on a target
The big caution here is that the Internet should not replace human judgment and
perspective, expert advice or physical due diligence; key elements to successful