Succeeding as a real estate investor or real estate agent is a lot like being an FBI agent or private investigator. The "super-sleuths" use a combination of publicly available data, multiple listing service (MLS) data, social media, and powerful tools to gain access to properties before anyone else finds them. As you can imagine, this is a lot of work and often leads them to use third-party services to accomplish these tasks to paint the full picture.
The people who prosper and build confidence in lead generation are those who know how to use the right combination of data and apply filters to hone in on precisely what they're searching for. In a highly competitive real estate market, the outcome is finding the right property owner at the right time — and convincing them that now is the right time and that you are the right person to help them.
What Are Public Records? What Is the MLS?
Although they vary by county, public records are, as the name implies, publicly accessible, recorded information about a specific property. There are two main sources of public record data:
- Tax Assessor: This will provide only information on who owns the property currently along with property characteristics and tax assessment values.
- Recorder or Clerk: This provides information on recorded actions against a property such as sales, mortgages, liens, notice of defaults, and notice of sales (auctions).
The MLS comprises over 800 independent associations that are maintained by appointed real estate brokers. Participating brokers pay dues to the MLS for the ability to list properties available for sale (or coming on the market soon) to help other brokers get visibility to other agents (and brokers) who may have buyers interested in the property they posted. MLS are all governed by the National Association of Realtors but operated as independent organizations.
The data from the MLS generally only provides insights the listing agent wants or must disclose. The goal of the listing agent is to sell the property for the property owner. To learn more about the MLS, review the NAR's website.
With both systems, the data is managed by individuals, so there may be inconsistencies between public records and MLS information. If the wrong information is entered or missing, it's most likely due to human error. This brings us to how real estate investors and agents can work with each of these sources together.
Public Records vs. MLS in Making Real Estate Decisions
Investors and brokers often rely on these two familiar data sources to research properties, but public records often do not match MLS. For example:
- Public records will show when a house was built but will not highlight upgrades.
- Finished vs. unfinished square footage may not agree between these two sources.
- Public records provide 100% of sales while the MLS only reports on the sales that were listed with an agent. Not all properties sell through the MLS. One study revealed 13% of properties were not sold on the MLS.
- Because MLS data is provided by agents, its accuracy and completeness are only as good as the people and brokerages providing the data. In low-inventory/high-demand markets, many off-market deals are getting done, which means that some properties never even make their way into the MLS. Among these hot markets are California, Texas, Florida, Georgia, and New York.
Combine Data To Find Deals and Current & Potential Value
So, with these discrepancies between data sources, how does a broker, agent, or investor establish "the truth" about a property or neighborhood?
- Accept that you may need to refer to multiple data sources to draw an accurate picture of a market, especially in these volatile times.
- Adopt an easy-to-use technology that enables you to distill big data into small bite-size pieces that you can apply to your investment strategy or share with clients (as a broker or agent) to build your credibility.
- Zoom in. Neither public records nor the MLS enables you to apply finite filters so you can pinpoint exactly what you're seeking in a neighborhood. An MLS listing will never tell you the owner’s reason or situation for selling as that removes the property owner's leverage. While public records provide a lot of fragmented pieces of information, PropStream brings it all together to provide a complete view of the property, along with its current and past ownership’s financial and situational status. To find the right property and owner situation, you need the power of combining multiple datasets and custom filters to engage with the right people at the right time. For example, PropStream's 120 filters will allow you to find homeowners who are in pre-foreclosure, getting divorced, or even in pre-probate.
- Educate yourself. Especially in today's highly competitive market, you need to stay sharp and learn how to use all the data at your disposal to get a true sense of property values. PropStream recently launched a free Sales Comps Academy Course that reveals the art and science of establishing real estate comps.
If you follow these four steps, you can become a real estate super-sleuth and gain more insights into neighborhoods, properties, and even buyers and sellers at all stages of the process. You don't have to sift through the web of data on your own. Let PropStream help you get ahead in the process.