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 local MLS (MLS). After choosing properties of interest, you would spend many weeks touring each property until you found the correct one. Finding market data to help you assess the price tag would take more time and much more driving, and you still might not be able to find each of the information you needed to get really comfortable with a fair market value.

Today, most property searches start the Internet. A quick keyword explore Google by location will probably get you thousands of results. If you spot a house of interest on a genuine estate web site, you can typically view photos online and perhaps even have a virtual tour. You can then check other Web sites, like the local county assessor, to obtain a concept of the property’s value, see what the existing owner paid for the property, check the true estate taxes, get census data, school information, and also have a look at what shops are within walking distance-all without leaving your house!

While the resources on the Internet are convenient and helpful, using them properly can be a challenge because of the volume of information and the difficulty in verifying its accuracy. At the time of writing, a search of “Denver real estate” returned 2,670,000 Web sites. Even a neighborhood specific search for real estate can easily return thousands of Internet sites. With so many resources online so how exactly does an investor effectively utilize them without getting bogged down or winding up with incomplete or bad information? Contrary to popular belief, understanding how the business enterprise of property works offline makes it easier to understand online real estate information and strategies.

The Business of Real Estate

Real estate is normally bought and sold either by way of a licensed real estate agent or directly by the owner. The vast majority is bought and sold through real estate brokers. (We use “agent” and “broker” to make reference to the same professional.) This is due to their property knowledge and experience and, at least historically, their exclusive usage of a database of active properties on the market. 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). Typically, only properties listed by member real estate agents can be added to an MLS. The primary purpose of an MLS would be to enable the member real estate agents to create 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 many 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 similar to an MLS but the agents adding the listings to the database aren’t required to offer any specific type of compensation to another members. Compensation is negotiated outside the CIE.

Typically, for-sale-by-owner properties can’t be directly put into an MLS and CIE, which are usually maintained by REALTOR associations. new roof of a managed centralized database could make these properties more difficult to find. Traditionally, these properties are located by driving around or searching for ads in the neighborhood newspaper’s real estate listings. A more efficient way to locate for-sale-by-owner properties would be to search for a for-sale-by-owner Web site in the geographic area.

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