Michael Clarkson is one of Denver's highest profile brokers. He’s been featured in Realtor® Magazine three separate times, Denver Post, Denver Business Journal, KOA Radio, KHOW Radio, and the Colorado Radio Network. Michael is a licensed Managing Broker in Colorado and a GRI (Graduate Realtor® Institute). He is also a partner in the firm, Cash Path Real Estate LLC. Michael has an MBA in International Business from Regis University in Denver.

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Friday, January 16, 2009

The Daily Dirt - Foreclosures - RealtyTrac Numbers Don't Add Up

Mile High Home Hunter Realty
01/2009 Vol 2, Issue 1.16
Home Value
RealtyTrac Numbers Don't Add Up
Dear Blog,
 
Michael Clarkson
Bad reporting costs you. Check out this article to see what I mean. 
 
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RealtyTrac Numbers Don't Add Up
 
Money In Your Home
 
 
By Michael Clarkson -
The Mile High Home Hunter
 
 
 
 
If your real estate broker said: 
  • This home is $200,000, plus or minus $140,000
  • This home has 4 bedrooms, plus or minus 2.5 bedrooms
  • This home is 2000 square feet, plus or minus 1400 square feet

Chances are, you might think that your real estate broker "never left Woodstock", and, then make the decision to find your own way back to the real estate office. 

Well, it's ironic.  Why?

Because the same appropriate doubt one would have with regard to the above is totally dismissed when put on the evening news.  
 
I hear you saying: "What does that mean?"
 
The Denver Business Journal published the annual report from RealtyTrac yesterday (source: http://denver.bizjournals.com/denver/stories/2009/01/12/daily48.html ), January 15, 2009.  RealtyTrac Inc (www.RealtyTrac.com ) is a leading online marketplace for foreclosure properties, and one of the fastest-growing real estate sites on the Internet. RealtyTrac is often quoted in the media. 

In that story, the following was noted, "In the past, state officials have disputed Colorado's high position in RealtyTrac's rankings, saying that because the state's public trustees report foreclosures at multiple stages of the process, RealtyTrac may overcount Colorado foreclosures. RealtyTrac officials have denied this, saying they have taken steps to ensure accurate counts."  (Kudos to the DBJ for that notation.)
 
Well, that's great to hear, but by how much?  How about 70% inaccurate?  Yes, OVER 70% inaccurate. 
 
Here are the citations for my statements:
Sources:

Public Trustees are the folks that begin a foreclosure and close out a foreclosure. 

Getting foreclosed?  You will hear from the Public Trustee.
 
So, one would think their data is the REAL AND ONLY DATA. Right? It has to be. They implement the Foreclosure Laws in Colorado.
 
Let's see how RealtyTrac deviates from the Colorado Public Trustee Association. 
 
Foreclosures Actions Opened

                                                                              2007          2008          Change      % Change
 
Colorado Public Trustees
Association (CPTA)                            39,607       38,450           (1,157)          -2.92%

RealtyTrac                                          71,149      66,795           (4,354)           -6.12%

Overstatement/(Understatement)
by RealtyTrac                                     31,542      28,345           

% Difference -
Overstated/(Understated)                    79.64%     73.72%

 
Foreclosures Completed (in Colorado, known as a Public Trustee Sale) 
                          
                                                             2007          2008          Change         % Change
 
Colorado Public Trustees
Association (CPTA)                            24,929       20,825            (4,104)             -16.46%

RealtyTrac                                         39,403        50,396           10,993               27.90%

Overstatement/(Understatement)
by RealtyTrac                                    14,474        29,571           

% Difference -
Overstated/(Understated)                   58.06%     142.00%
 
So, let's get this straight:
  • Colorado Public Trustees (the folks doing the foreclosures) - show foreclosures are down 17%
  • RealtyTrac (the company that has a vested interest in hyping foreclosures) says they are up 27.9%

Who do you believe?

 
Compounding this is the following regarding completed foreclosures:
  • 2007 - Overstated by RealtyTrac by 58%
  • 2008 - Overstated by RealtyTrac by 142%

When putting the corrected numbers into a national context, the following revised ranking is found for Colorado. 

Foreclosure Rank
 
 

                                                            2007          2008          Change

Colorado Public Trustees
Association (CPTA)                                  15             23              ( 8 )
 
RealtyTrac                                                 5               5                0
 
Please remember that this revised ranking is ASSUMING that RealtyTrac's numbers for the 49 other states and the District of Columbia is accurate. As noted, that is not a given.
 
Congratulations to the Denver Business Journal for noting that accuracy controversy in their article.
 
CONGRATULATIONS, COLORADO!  You are not number 5 in 2008. You are #23.
 
So, why do I do this? I wonder aloud: How many homeowners have lost equity due to the inaccurate reporting?
 
For continued updates, sign up for my eNewsletter at http://www.milehighhomehunter.com/contact.html or read the latest at my blog at www.TheHomeHunterBlog.com .

 
"A pessimist sees the difficulty in every opportunity; an optimist sees the opportunity in every difficulty."  - Churchill
 
 
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Kind regards and happy "Home Hunting",   
 
Michael J. Clarkson
 
Broker/Owner - Mile High Home Hunter Realty 
303.332.6393
MJ@MileHighHomeHunter.com     
 
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