How REAL is REALas?
I have subscribed to REALas, and so far, the majority of the predictions I have compared with actual sales prices; have been out.
In some cases, out and by as much as 9-12 percent. For an agent, this may constitute as a reprimandable offence. Our governing bodies would grill us, if our files reflected these figures.
Was the birth of these property price-predictions sites another by product of an upward property trend? Or is there a real science, behind them and will they last?
Nevertheless, how real, the REALas predictions, will continue to be in a FALLING property market, will only be determined in time. However, I’m not holding my breath.
I say, and like other DATA we have analysed with Anthony Carroll and George Rousos. We will continue to see, a separation of REAL sales figures with PREDICTED sales figures.
The data which many price-predictive platforms use, we feel is old and outdated. When I say outdated, I mean, in a rapidly changing market; three weeks is old. Some data can be up to three – six month old, and before it’s shared with the general public.
Nevertheless, the consumers (vendors), are relying more and more on these platforms. An appetite and dependence that at face value, distorts the property market.
Below is a screen shot of a prediction and an actual sale price.
REALas prediction: $1,065,000
Actual sale price: $936,000
Reliability of Data
David Crombie, CEO of the Estate Agents Co-Operative highlights and concurs with my old-data premise. “The issues with the algorithms used by these sites are twofold. On the one hand, they capture outdated figures and therefore are inaccurate in real time, and they are to slow, in keeping up with a rapidly falling market…”
As I said before, three week old figures, can be outdated and old in this arena. Not to mention, rapid changes within the property market.
When a distortion is created in the pricing of a property; no one comes out the winner.
Vendors that become overly reliant, on predictions of what their properties are worth: sit on the market with false expectations and for a very long time.
Agents, on the other hand can and often, lose the buyers that are offering fair-market-price. Buyers that may attend, early in the marketing campaigns.
Further Industry Questions
- Are these predictions, a form of over-quoting?
- Who is governing these websites?
- Should NSW Fair Trading and all other Fair Trading bodies, begin to question the data. The impact on consumers and to an extent; misrepresentation?
- How can a virtual, valuation/prediction be accurate or close to real, if a formal and internal physical inspection wasn’t conducted?
I raised the above questions with David Crombie. The unfortunate thing is; none of these sites fall under any Property, Stock and Business Agents Act. Nonetheless, both consumers and the industry appear to be led down a dangerous path, by outside powers and influence.
Industry Call and Solution
More so now, than ever. I will urge potential property-sellers, to obtain no less than three Comparative Market Appraisals, before relying too much on price-predictive sites.
A well versed real estate agent, has grass-root knowledge of the market place and LIVE – DATA to back themselves with, and provide more of an accurate selling price.
My caveat on what agents provide is: one thing is what some agents tell vendors and place on their Agency Agreements, and this may differ from what they share with the general public.
Licensed Real Estate Agent
Raine & Horne Blacktown