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 neighborhood MLS (MLS). After choosing properties of interest, you’ll spend many weeks touring each property until you found the correct one. Finding market data to enable you to assess the asking price would take more time and much more driving, and you still is probably not able to find each of the information you needed to get really comfortable with a fair market value.
Today, most property searches start on the Internet. A quick keyword search on Google by location will probably get you a large number of results. If you spot a house of interest on a real estate web site, you can typically view photos online and perhaps even have 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 true estate taxes, get census data, school information, and even have a look at what shops are within walking distance-all without leaving your home!
While the resources on the net are convenient and helpful, using them properly could be a challenge because of the volume of information and the issue in verifying its accuracy. During writing, a search of “Denver property” returned 2,670,000 Web sites. Even a neighborhood specific seek out 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 makes it easier to understand online real estate information and strategies.
The Business of PROPERTY
Real estate is normally bought and sold either by way of a licensed agent or directly by the dog owner. The vast majority is bought and sold through real estate agents. (We use “agent” and “broker” to make reference to the same professional.) That is due to their property knowledge and experience and, at least historically, their exclusive access to a database of active properties for sale. Access to this database of property listings provided probably the most efficient way to search for properties.
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). Generally, only properties listed by member real estate agents can be put into an MLS. Altea estate agents of an MLS would be to enable the member real estate agents to make offers of compensation to other member agents should they find a buyer for a house.
This purposes did not include enabling the direct publishing of the MLS information to the public; times change. Today, most MLS information is directly accessible to the public over the Internet in lots of different forms.
Commercial property listings may also be displayed online but aggregated commercial property information is more elusive. Larger MLSs often operate a commercial information exchange (CIE). A CIE is comparable to an MLS however the agents adding the listings to the database are not required to offer any specific kind of compensation to another members. Compensation is negotiated outside the CIE.
Generally, for-sale-by-owner properties can’t be directly added to an MLS and CIE, which are usually maintained by REALTOR associations. Having less a managed centralized database could make these properties more difficult to locate. Traditionally, these properties are located by driving around or looking for ads in the local newspaper’s real estate listings. A more efficient way to locate for-sale-by-owner properties is to search for a for-sale-by-owner Site in the geographic area.