Agents influencing house price estimates
Popular property website Homes. co.nz allows real estate agents to influence listings’ estimated prices with their own appraisals, which can result in the estimates increasing hundreds of thousands of dollars in days.
Homes.co.nz chief data scientist Tom Lintern said the vast majority of listings received no influence from agents, and when they did their appraisals were fed into the site’s algorithms to create its HomesEstimate.
The potential buyer, however, was not told if a property’s price estimate had been influenced by the agent trying to sell it – a fact criticised by Consumer NZ.
‘‘I think letting people know that an estimate has been generated by an agent acting for the vendor would be good from a transparency perspective,’’ Consumer chief executive Jon Duffy said.
Stuff has looked into multiple properties listing on Homes.co.nz where the estimated price jumped substantially following appraisals and valuations provided by the estate agent or owner.
These included a four-bedroom home on the Kapiti Coast currently listed that increased in estimated price by $200,000 days before it was listed for sale in September, going from $1.05 million to $1.25m.
Lintern confirmed the increase in estimate occurred after a current market appraisal (CMA) was submitted by the real estate agent.
The property’s estate agent told Stuff the increase followed a registered valuation being done on the property.
Stuff has seen the valuation, which was still $15,000 below the CMA submitted. The agent said this additional bump-up in price expectation was based on the recent price tags of other properties in the area.
However, the steep increase does not match the more-gradual climb in prices recorded by Homes.co.nz in the surrounding suburb.
In another instance, a fivebedroom home in Petone, Lower Hutt, was sold in May last year for $860,000 and has now more than doubled in estimated price to $1.8m.
This followed a sharp jump in the fortnight between September 23 and October 7, when the HomesEstimate price increased $780,000.
The tenanted property is owned by investor Steve Goodey, who said he asked Homes.co.nz to increase the estimate after conducting extensive renovations and having a registered valuer go through.
He said he had no intention of selling the property, and the request to have the estimate changed was down to ‘‘financial vanity’’.
Goodey said the valuation price was below the $1.8m current estimate and the continued increase would probably be down to Homes.co.nz’s automated updating of estimates based on general market movements.
Lintern said only about 3 per cent of listings received a current market appraisal from the real estate agent, and these were fed into the site’s algorithm as part of a number of factors that dictated the final HomesEstimate.
He defended the practice of allowing estate agents to inform estimate prices, saying agents knew the properties and local market better than website staff.
Lintern confirmed the website did not inform the potential buyer if the HomesEstimate had been influenced by an estate agent’s appraisal.
The website stated estimates were based on ‘a proprietary formula’ and were calculated from ‘public data, registered valuers’ valuations, and real estate agent CMAs’.
He said he would raise the issue internally with Homes.co.nz whether the website should notify potential buyers in future when an estate agent’s appraisal had been used to form the HomesEstimate.
‘‘It’s important to understand that agents do not manipulate prices, but rather use their professional opinion to give a market appraisal range,’’ he said.
Lintern said CMAs were sometimes provided at below HomesEstimate price if, for example, the home was in disrepair.
In a sign of the market possible falling, Lintern said Homes.co.nz had received feedback that some HomesEstimates were higher than eventual sales price.
Duffy said under the Real Estate Agents Act agents must provide the vendor a written estimate of what they expected a property to sell for prior to any agency agreement being signed.
‘‘If agents over-estimate the expected selling price to get the listing or to manipulate the