Here’s how comprehensive real estate online aggregators are compared to home listing services:
Online aggregators process huge volumes of public data in order to create their real estate tools. Overall, the aggregators typically use more data than real estate agent listing services. Despite that, the agent services are often more accurate and reliable within precise local real estate markets.
So if you want to learn all about how real estate online aggregators compare to listing services, then this article is for you. Let’s dive deeper into it!
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What Are Online Aggregators?
Ok. If we’re going to have a meaningful talk about aggregators and real estate listing services, I’m going to have to clarify a few ideas. Let’s start with aggregators.
These are things like Zillow, Trulia, and Realtor.com. They are software-based resources that collect real estate data from across the world. They then try to combine that data with an app or website (or both) that basically everyone can access and use.
If you’ve ever tried one of these apps, you have an idea. They allow you to browse houses for sale all over the place, and they offer estimated home values for pretty much every location on the site.
Notice the word “you.” That’s a big deal. The primary motivation for building aggregators is to empower individuals with access to more real estate data. It means you can track sales and prices without having to hire a realtor.
How Do Online Aggregators Work?
So, how do the aggregators actually work? Collecting and analyzing data sounds cool, but what is really involved?
Each aggregator uses its own methods, but you’ll find that there are similarities among them. So, I’m going to explain Zillow’s methodologies, mostly because Zillow clearly outlines how it works. You can safely assume that other aggregators work on similar principles.
The big thing that Zillow does is collect public records related to real estate. In the US, every home sale is on file with the county clerk. Those records are publicly available, so you can write a program that searches through the county records and tabulates everything that is found.
Zillow does this to figure out rough housing values all across the country.
On top of that, Zillow can access public sales listings and other publicly available data. Add to that the fact that you can try to manually list your property on Zillow, and you can see that it has access to more than enough information to map a ton of properties and their values.
But, if you’ve ever wondered how Zillow gets pictures of the inside of a house, those mainly come from publicly viewable listings.
What Are Real Estate Listing Services?
That covers half of the day’s question, but what are real estate listing services? Ultimately, this could mean a lot of things, so I’m going to simplify. I’m going to say that everything involved in what a real estate agent does to list a house can go in this category.
So, those services can include large private databases of houses for sale. They can include the personal network of people an agent knows. There are countless ways to connect home buyers and sellers. Whatever methods an agent can use to make that happen counts as a service for the purpose of this discussion.
How Do Real Estate Listing Services Work?
Ok. Let’s be a little more specific. What exactly can a real estate agent do?
For starters, they can access private listing services that are only available to professionally licensed realtors. There are a ton of different databases and services out there, but the big one is Multiple Listing Service (MLS). This is a major database that collects data from countless private databases around the country.
In other words, MLS is an aggregator that specifically uses information from private realtor listings. That makes it both exclusive and powerful, and it’s one of the primary tools that agents use to match buyers and sellers.
Additionally, realtors are known for their networking skills (at least the good ones are). In order to be a professional real estate agent, you are constantly talking to people who are buying and selling houses. It means that you have access to personal information related to those sales.
You probably also know other agents, and that’s a big deal.
If you want to sell your house, you’ll probably contact a realtor so they can list it. They’ll talk to you about the property and your expectations, and then they can get to work. They can immediately list your house on a database if they want to. But they also have the option to contact buyers who they know would like your house. Similarly, they can tell their fellow agents to see if there’s already a good match.
In this way, houses can sell without ever being formally listed on any database, and that’s actually something that happens a lot.
Which Is Better? (Pros and Cons)
As you can see, there are some crossover points between real estate agent listing services and online aggregators. The major realtor tool is basically its own aggregator.
But, there are also clear differences, and those differences are paramount.
So, which is better? That’s hard to say with any universal finality. They have separate pros and cons. The online aggregators have a lot more total data, but the agents usually have better and more up-to-date local data.
If you absolutely had to choose one, the agent is probably a more complete resource, but you don’t actually have to make that choice. You can use both, whether you are buying or selling property.
Online Aggregator Pros
What makes aggregators great? Actually, it’s a lot of things.
For starters, aggregators are processing considerably more data than your average real estate agent. Even with their specialized resources, the public-based aggregators like Zillow are finding and processing absolutely insane amounts of data. That makes aggregators the better tool for comparing markets.
The other major advantage of the aggregators is that they are universally accessible. You don’t need special credentials to use them. You can just hop on and look for listings or compare prices.
Online Aggregator Cons
There are drawbacks to relying solely on aggregators. One major problem is that they are not well localized. That means that they are likely to be less accurate in pricing an individual home in a neighborhood. The average home price across a state or large region is probably good on most aggregators, but the individual price of any one home is less reliable.
There’s also the problem that a lot of houses do sell without ever hitting a formal list. The aggregators miss all of them. Granted, they eventually see the county filing and include the pricing information in their calculations, but if you’re trying to buy a house, you won’t see anything for sale that doesn’t have a listing.
Lastly, aggregators are often less up-to-date. Competitive housing markets move very quickly, and aggregators like Zillow have shown that they can’t keep up with the very hottest housing markets. Instead, they tend to shine when properties aren’t moving quite so quickly.
Realtor Pros
When you’re selling or buying a house, real estate agents have a lot to offer.
First on the list is the personal touch. Your agent will talk to you. They’ll look at your house directly and take the time to understand what your goals are. They will provide customized advice and insights to help you buy or sell a home. That’s their primary goal.
There’s also this thing I keep bringing up about houses that sell without listing. Real estate agents often know about these sales. In fact, they regularly facilitate them. If you want access to that part of the real estate market, you need an agent.
Realtors also have connections. Whether a house is listed or not, realtors know a lot of buyers and sellers. They also know other agents, and those connections can help match you with a strong candidate to buy or sell a house.
Realtor Cons
Are there any drawbacks to hiring a real estate agent? Yes.
Here’s the number one reason why people shy away from hiring a realtor. They take a commission. In fact, they take a big commission. There is variability, but on average, a real estate agent will take around a 5% commission for a home sale.
Keep in mind that buyers and sellers both get their own agent. So, that adds up to two separate commissions that factor into the equation. When you consider how much money changes hands in a home sale, this is not trivial.
The other major limit with a realtor is that it’s a person. As much as they might have connections or access to information and tools, a single human being cannot match the computational prowess of an aggregator like Zillow.
That means that agents are often working with less total knowledge, and it can impact how effective they are. They might miss things or misunderstand things that can cause you to overpay or undervalue a house.
Ultimately, it’s why it’s perfectly reasonable to have a real estate agent and also check the aggregators. More information is rarely a bad thing in this business.
