In states like California and New York, agents and prospective home buyers can easily find out if they are overpaying for a home by searching through public records to find out what the home next door sold for.
But that luxury isn’t available everywhere, and in states like Texas where such disclosures are prohibited, it appears to be causing more harm than good.
There are about a dozen nondisclosure states in the country, the Wall Street Journal reported. Rather than relying on hard facts, agents, homeowners and even tax appraisers have to rely on other agents and content aggregators like Zillow for an estimate of a home’s value. And as found in a study by the Federal Reserve last year, neither humans nor computer programs are all that great a estimating prices — half of the automated-valuation estimates and 40 percent by humans landed within 10 percent of an actual selling price.
In addition to causing uncertainty among buyers, the lack of information has caused major tax disparities in nondisclosure states. Studies found dramatically exaggerated tax appraisals in such states wherein some homeowners are paying large sums in taxes for lower-priced homes.
The real estate lobby has been fighting efforts to bring more price transparency, arguing it would diminish the job of a real estate agent and hurt consumer privacy. Still, realtors who have worked in states where sales information is available claim it allows them to do their job better and maintain a fair real estate market. [WSJ] — Natalie Hoberman