How to avoid a damning digital footprint
The Internet is a game changer for the real estate industry. Fortunately, many developments have been positive for both home buyers and home sellers. Marketing costs have reduced while the quality of promotion per property has improved. Email has made communication with a critical mass of qualified buyers easier, quicker and cheaper than ever before. That’s the upside.
Here’s the downside: the Internet never stops connecting the dots and it never forgets.
What that means is your property has an un-erasable digital footprint. A digital footprint is a databank of information collated over time on any property that has been advertised, sold or withdrawn from the market in the past. This includes information on every property on the market right now.
There are positives and negatives here for both buyers and sellers. And you need to know them.
Every property listed in Australia is promoted on at least one of two major real estate websites realestate.com.au and domain.com.au. Both of these sites are either owned or controlled by large media companies. These same media companies also have ownership or affiliations with the two main real estate data companies in Australia — RP Data and Australian Property Monitors. Both
provide detailed information about the real estate market which is quoted and re-quoted in the media. While the accuracy of that information is quite good, the right to collect it and use it is somewhat controversial.
Very few people know these companies automatically share everything there is to know about the quarter of a million properties advertised every week in Australia. Whenever your property is put up for sale, auction or rent, the price and the name of the agent you are using and the date
the online advertisement was uploaded is automatically recorded in that property’s history. If a property sells or not, if it is passed in at auction or withdrawn from the market, is also recorded. This is your property’s digital footprint — its ‘reputation’, there for anyone to see.
The downside is how that reputation may be perceived. All this public information is forming a ‘pseudo credit rating’ for your property. The less activity recorded against your property the better
off you are because less information is gathered. However, when more activity (buying and selling or attempting to buy and sell) is recorded, the more likely people are to assume that something is wrong with your home.
Here’s one way your home could acquire a less than savoury reputation. The previous vendor overpriced the property and had a low motivation to sell. They experienced a lengthy campaign as they tried to find a buyer who would pay an above market price. The
vendor may have even had multiple pricing strategies and used several different agents to obtain a sale. Unfortunately, this entire process was recorded against this property’s advertised history. By the time the vendor lowered their selling price to match the current market price, buyers had
already tracked the property’s past advertising history. Under these circumstances, the vendor’s negotiating power was compromised. And it is all there for potential buyers of your home to see when you’re ready to sell.
Besides official real estate data records, a quick search on Google will also reveal:
• previous rental or sale ads
• development applications submitted to council
• reported events at the property such as rowdy parties, break-ins, triple murders or the discovery of methamphetamine labs
• businesses that have been run from the property
• any previous publicity of any kind which the property may have attracted.
If the major Sunday papers turn up to do a story on your auction success or failure, potentially up to a million people can read about it online the next day.
And that is just the free information. You can also pay a fee to access the entire advertised history of a property or you could scour independent property analysts’ research on property histories.
Here’s an example of how everybody’s reputation precedes them in the Internet Age.
Gary and Denise finally found a perfect property in the chic inner west Sydney suburb of Leichhardt. It appeared to meet all their buying criteria and it was affordable. After a fourmonth
property search, they had finally found the one. However, before securing the property, Gary had a bit of a look around online. The property had sold four times in eight years. Rightly or wrongly, he concluded from this information alone that there was something amiss and passed on buying it.
Gary may believe that knowing the transaction history of the home saved him from buying a lemon. The owner of the same home may also believe that the same information presented without any other context robbed him of finding a genuine buyer and negotiating a successful sale.
While information of itself is neutral, each end user will form their own opinion about what that information means to them. Buyers will always look for some advantage in negotiations if the
respective property has a ‘tainted’ market history. It is crucial that homeowners are aware of this and ensure they don’t damage the reputation of their major asset.
Protecting the value of your property
There are two important things you can do to avoid having your pricing and advertising history used against you. The first is to never include the address of your property when marketing it.
The second is to consider promoting the property without a published price. Early in your campaign, have the agent verbally quote your price expectation to buyers. If buyers think the price is incorrect, at least you won’t have to change your published pricing strategy later.
Another prudent marketing strategy is to only publish a price after you have received some genuine market feedback from fair-minded buyers. Promoting your property publicly with the wrong price, be it too high or too low, will put you at a major disadvantage.
Good or bad?
Given the huge impact digital information now has on the property market, it begs the question: is the availability of all this information good or bad? The answer is: neither. The availability
of information is here to stay and how people interpret it is not controlled. Buyers and sellers will form correct and incorrect conclusions from the same information according to the circumstances they find themselves in. Often the digital footprint can help buyers make better choices yet many can also rush to conclusions without having the full picture. Buyers will often form their offer on the basis of what the owner previously paid for the property and assess the general market growth (or deterioration) since that point in time. On one level, this seems logical for a buyer.
As a seller, this process of determining value can seem unfair particularly if they happen to have paid below market value for the property. If the seller has made substantial renovations since buying, all of these costs may not be reflected in the buyer’s offer.
None of this may be recorded in the digital footprint. This is exactly why both the buyer and the seller can’t rely on the Internet to be the font of all knowledge.
So buyers: beware of a half-told truth. Sellers: beware of your home’s online reputation and do what you can to prevent misinterpretation.
Because the Internet never forgets.