Connect with us

Real Estate Big Data

How serious are the errors in MLS sales price data? [stats]

For the first time ever, the accuracy of sales price data in the MLS has been analyzed, and the study’s authors express to us how these inaccuracies could have happened and what we must do now.



For years, appraisers, economists, and other experts have quietly questioned the discrepancies between multiple listing services (MLS) prices the legal prices recorded on HUD-1 forms (and filed in local jurisdictions).

A new study published by the journal of the nation’s leading appraisal organization provides the first hard evidence that errors in sales prices reported by MLSs could be significant, especially when peak prices start to decline.

Though the study’s scope was limited to one large MLS, its findings suggest that potential for similar errors in the nation’s 800 multiple listing services could have such serous impact on consumers that the three economists at Florida Gulf Coast University who conducted the study advised appraisers that are suspicious of a price to use another source for verification.

l6.25% of transactions overstated HUD1 data

Reported Price Errors: A Caveat for Appraisers” by Marcus T. Allen, PhD, Kenneth M. Lusht, PhD, MAI, SRA, and H. Shelton Weeks, PhD is published in the current issue of the Appraisal Journal.

The economists looked at 400 transactions in a Southeastern state from 2004 to 2008, including the two years prior to the peak price year of 2006 and the subsequent two years. They compared data from HUD1 forms with prices reported to their MLSs by listing brokers, usually after sales contracts were signed by before settlement.

They found that MLS-reported prices differed from HUD1 prices 8.75 percent of the time over the four-year period. Some 6.25 percent of the transactions overstated the HUD1 data and 2.50 percent understated the HUD-reported prices.

The largest overstated error was 21.44 percent of the of the HUD-reported price and the largest understated error was 1.09 percent of the HUD-reported price. The average overstated price was $14,038, or 6.69 percent of the HUD-reported prices.

Data suggests that errors were not random

Considering the size and complexity of MLS databases, an error rate of less than 9 percent of all sales over a four-year period is an issue to be addressed but not unexpected.

What rings alarm bells is the timeframe in which the errors occur.

Errors weren’t spread evenly over the time period, but doubled in 2006 to more than 15 percent of transactions, when prices peaked and began to fall in the Southeastern state, followed by nearly as many errors in 2007 and 2008, when the crash accelerated.

The timing of the errors suggested they were not random mistakes but were driven by marketplace conditions.

Are prices intentionally inflated?

From the evidence, the authors suggested two viable explanations for the market-driven error rates. The first was that some brokers intentionally inflated sold price information in the MLS, perhaps to make it appear that they negotiated a higher price for their clients.

If brokers and agents were overstating sales prices to bolster reputations seven or eight years ago, what’s happening today?

MLS sales price data is more important than ever for agents who want to “prove” their value to customers. The emergence of ratings services that use MLS sales data to rate agents and brokerages increases the pressure on brokers and agents to quantify their value to their customers and clients. Some rating services use public sales data to assess sales prices, others use MLS sales data and others allow agents to enter their own. MLS sales data also gives brokers a way to assess the value of agents in their local markets.

What could have caused the misstated prices

“I don’t think agents were deliberately misstating prices, though that’s a story that fits the facts,” Dr. Kenneth M. Lusht, one of the study’s three authors, tells us. Lusht is a Distinguished Professor of Real Estate at Florida Gulf Coast University, past president of the American Real Estate and Urban Economics Association, and a past trustee of the Appraisal Foundation.

“The second thing that could have happened, and it’s pretty likely, is that when you’ve got a down market, buyers get cold feet. They start thinking about not going through with the sale and giving up their deposit. So another story that’s consistent with what we found is that the price the broker submitted was the agreed upon price but between that the time he submitted it to the MLS and the settlement day the price was changed and the broker never changed the data because there is no incentive to do so.”

Lusht added that conveyances can add to the post-contract price. “In a down market that’s more likely to occur when a seller says, ‘Look, I’ll throw in the furniture to try to make the deal.’” Likewise, in down markets, sellers are more likely to subtract the cost of repairs rather than quibble over them at closing.

Whatever the cause of the errors, the study concluded, “Regardless of the motivation or source of the error, the result is the same – a misstated price.”

More research is now necessary

The authors admit that the study’s small size limits the generality of its conclusions. The geography and time frame might also be an issue. Prices in the Southeastern markets they studied were some the most volatile in the nation during the four years of the study – it was the height of Florida’s foreclosure crisis. Only one MLS was involved and policies toward gathering and checking price data vary by MLS. Much has changed in the world of MLS data and appraisal standards since 2008.

However, Lusht maintains that the problem of MLS errors is longstanding and certainly not limited to one or two markets. “I would say that any appraiser who has a reasonable amount of experience already knew there were errors in the MLS. They knew that it is very possible some of the prices weren’t right. But no one has ever measured it before and found how frequent the errors were or how big they might be.”

The study is receiving a lot of interest and Lusht believes more research is warranted.

“Maybe someone else will get interested in it and look at different areas to see if what we found is typical or not. My guess is that what we found here, we will find in other markets, especially during down markets,” he said

In search of a solution

MLS price data is valuable because it is current, and available within days of settlement. But if the Florida Gulf Coast University study is right, an average or one out of every twelve sales prices is wrong, and one out of every seven during down markets.

It can take local governments as long as three months to post official sales price data.

That’s why price reports like Case-Shiller and CoreLogic that only accept public data come out as late as two and a half months after the fact. That’s a long time when you’re a home seller or buyer trying to figure out what prices are doing in your market.

There’s no doubt that long delays seriously compromise the usefulness of public data.

Currency is a major reason the use of MLS price data is widespread. Hundreds of MLSs themselves and Realtor associations at the national, state, and local levels use the data in market reports for their members and the general public.

National web sites and brokerages, from to Redfin and RE/MAX use MLS price data in their reports. Hundreds of thousands of agents and brokers rely on it to counsel their clients and customers.

For MLSs themselves, the sale of data, including price data, has become a significant source of income that would be even more valuable if this issue of price errors can be resolved successfully.

And now for the solution

So where’s the solution? Is there a way to make MLS data more accurate or public data more timely or both?

One possibility has been created by TRID, the new closing process that took effect last October.

Lenders are required to provide their borrowers with final costs, including final prices three days before settlement. With final numbers available earlier than ever, will brokers be able to report prices to their MLSs months before they are posted in the courthouse?

Unfortunately, this solution may not be as easy as it looks. Privacy concerns are an issue and many lenders are resisting making the new TRID forms available to agents. Discussions are underway to work out a solution.

Other parts of the solution might include:

  • Double checking broker-supplied data when public data becomes available, an expensive proposition for MLSs that corrects errors after the fact, but doesn’t really solve the problem;
  • Better education and training to encourage agents and brokers to file corrected contract prices that have changed between contract signing and settlement;
  • Clearly label contract prices as pending sales and be sure they are replaced with sold prices after settlement. This might include user-friendly software, including mobile apps, that reminds agents to file price data and makes it easy to enter data. The software could also aggregate accurate price and sales data for agents and brokers to use in their marketing efforts;
  • Conduct additional research that builds upon the Florida Gulf Coast University study to identify market conditions, geographic regions, property types, seasons of the year and other factors that correspond to increased errors; and
  • Undertake periodic analyses of errors by MLSs to identify specific brokers and agents who might account for a preponderance of errors.


Real Estate Big Data

Home values are on the rise – What will homes be worth in 2023?

(BIG DATA) The housing market is on fire. Will we continue to see home values increasing over the next 2 years? This prediction poll has the answers.



Houses representing increasing home values.

Ask 12 experts in real estate about the future of home values and you’ll probably get 20 or more different opinions. With mortgage rates rising, the housing market is expected to slow down, but that doesn’t mean that home values are going to decline. Here’s one prediction from GOBankingRates about home values in 2023.

Predictions for Home Values

GOBankingRates used the median home value rate to predict what home valuations will do over the next year. The median home value is the property’s actual valuation, not the list price or home price. It’s interesting to note that there were no predictions in which home values would decline. In most states, home values should increase by 10% or more. Only three states, Louisiana, North Dakota, and Alaska, had predictions of less than 10%. Some states, Utah, Florida, and Arizona had a prediction of over 20% gain.
Here are some of the predictions:

  • Texas – the median home value in 2022 is $290,527. The projected home growth is 15.29%.
  • West Virginia, the state with the lowest median home value of $129,518 has a projected one-year growth rate of 10.39%.
  • Tennessee – with a median home value of $276,250 in 2022, the projected growth rate is 18.19%.
  • Florida – the 2022 median home value is $373,735. By 2023, the projected home value change is 22.04%.
  • Hawaii – the state with the highest median home value of $972,147 has a projected growth rate of 16.65%.

This information is valuable for both homeowners and home buyers. Read the report and find your state here.

The real estate market is promising

Although there were concerns that the pandemic would cause a housing crash, what we’re seeing is much different. It’s not even the housing bubble of 2008. Housing prices are rising because of a lack of supply and increased demand. There’s less likelihood of foreclosure today than 15 years ago, due to more stringent requirements. The housing market looks good, not just into next year, but hopefully over the next decade and more.

Continue Reading

Real Estate Big Data

Median home prices hit $407K, home sales fall 3.4%

(REAL ESTATE NEWS) Home sales dip for a fourth consecutive month in May – what does this mean for the housing market going forward?



home sales

For the fourth consecutive month, existing home sales (real estate contracts signed) fell 3.4% in May from April, and slumped 8.6% from a year ago, according to the National Association of Realtors (NAR). The average days on market fell from 17 days in April (and May 2021) to 16 days in May, and 81% of all homes listed sold in under a month.

The median home price rose 14.8% over the last year to $407,6000, the first time it has ever exceeded $400K. May marks the 123rd consecutive month of annual increases, the longest-running streak in history.

Inventory remains tight, but did rise 12.6% from April to 1.16 million by the end of May, marking a 2.6 month sales pace. Inventory is down 4.1% from May of 2021.

“Home sales have essentially returned to the levels seen in 2019 – prior to the pandemic – after two years of gangbuster performance,” said NAR Chief Economist, Dr. Lawrence Yun.

“Also, the market movements of single-family and condominium sales are nearly equal, possibly implying that the preference towards suburban living over city life that had been present over the past two years is fading with a return to pre-pandemic conditions,” Dr. Yun added.

He notes that it is expected that home sales in coming months will continue to decline in light of rising mortgage rates, yet appropriately priced homes will continue to sell quickly.

First time buyers made up 27% of sales in May, down from 28% in April. This diminishing number remains troubling, as the average hovered around 33% for years, and was at 31% in May 2021.

All-cash sales rising to 25% (up from 23% in May 2021), and individual investors or second-home buyers accounted for 16% of sales in May.

“Declining home purchases means more people are renting, and the resulting rent price escalation may spur more institutional investors to buy single-family homes and turn them into rental properties – placing additional financial strain on prospective first-time homebuyers,” said NAR President Leslie Rouda Smith.

“To counter this trend,” Rouda notes, “policymakers should consider incentivizing an inventory release to the market by temporarily lowering capital gains taxes for mom-and-pop investors to sell to first-time buyers.”

Continue Reading

Real Estate Big Data

NAR Chief Economist predicts housing market uncertainty

(BIG DATA) Warning bells on the housing market have been ringing for over a year. While this prediction isn’t a surprise, it’s disappointing news.



Multitude of colorful homes representing housing market.

The housing market is booming. Many experts are concerned about another bust like we experienced in 2008, but the conditions are much different today. Homeowners aren’t extended like they were when the market crashed in 2008. National Association of Realtors® Chief Economist Lawrence Yun suggests that the housing market is still uncertain, even though he says, “housing kept the economy afloat” during the pandemic.

What is impacting the housing market? 

Yun cites record-low inventory and inflation as “curveballs” to the housing market. Many economists, including Yun, have been concerned about low inventory for many years, especially in certain markets. Even though builders are working hard to construct new residences, supply chain and labor issues are not accelerating the process.

Yun is more concerned about inflation impacting the housing market. He says,

“wages have risen by 6% from one year ago…but inflation is 8.5%.”

Rising mortgage rates have made mortgages cost $300 to $400 a month more, according to Yun. Many working families can’t afford that. Yun predicts inflation is going to be high for several months. The market will slow as the Federal Reserve raises rates.

Yun also cites the Russia-Ukraine war as another contribution to the uncertainty of the market. The war is also driving inflation, not just overseas, but in the United States. With gas prices climbing higher each week, this is impacting the housing market.

Is real estate a good investment in this market?

Last year, when Yun opened the Residential Economic Issues & Trends Forum at NAR’s annual REALTOR® Conference & Expo in San Diego, he expected the “housing sector’s success to continue,” but he did suggest that 2022’s performance wouldn’t exceed 2021s.

“Rising rents will continue to place upward pressures on inflation,” he said. “Nevertheless, real estate is a great hedge against inflation.”

There’s a lot we don’t know about the future. It’s disappointing to think that the housing market may be uncertain, but real estate is still a good investment.

Continue Reading

Our Partners

Get The Daily Intel
in your inbox

Subscribe and get news and EXCLUSIVE content to your email inbox!

Still Trending

Get The American Genius
in your inbox

subscribe and get news and exclusive content to your email inbox