According to a recent article published in the Los Angeles Times, an assistant economics professor identified a mysterious charge that stemmed from the foreclosure listings site, RealtyTrac. UCLA Assistant Professor Maria Casanova discovered a $44.95 charge eight months after she canceled her RealtyTrac subscription.

Only through further investigation involving her bank did Casanova discover the charge stemmed from the RealtyTrac registration, where she unwittingly hit an orange “continue” button. According to a RealtyTrac representative the continue button was for an additional product for a completely separate company, Real Estate Promoter.

The article discusses the deceptive nature of the button, where it explains that a button stating ‘continue’ would be easily construed as the way to continue registering for the original service.

The article continues, “Unless you read the fine print, which consists of gray letters on a gray background, you won’t know that clicking continue will in fact sign you up for Real Estate Promoter’s service at a recurring cost of $44.95 a month.”

Undoubtedly this was the case with Casanova’s experience as she is quoted in the article as stating, “I was completely unaware that I was signing up for this other company,” she continues, “I thought the whole sign-up process was for RealtyTrac.”

As for the extraneous charge, Casanova contacted Real Estate Promoter to inquire about what it was she had in fact purchased. According to the article the company “had set up a house-hunting website on Casanova’s behalf and was billing her monthly for its use.”

Casanova, still confounded by the whole situation, explains that the company had failed to even send her information regarding this service and that she “wouldn’t even know where to find this website.”

It looks like Casanova is not alone. According to the article, a Google search for Real Estate Promoter lists numerous, similar complaints, “in virtually all cases, as a result of signing up for RealtyTrac.” If you also google RealtyTrac Ripoff Report you can also see 257 returned results, many of them are related to these types of issues.

While this may be an all too common practice among some online retailers, this should serve as a caveat as buyers should keep a sharp eye out for any covert, orange continue buttons.

While browsing foreclosure data on Zillow.com, a property came up with the following comment in the Q&A section: “Why is the same house listed for sale for $2,500.00 on RealtyTrac.”

The property on Zillow was a Foreclosure.com property listed at $39,900. See picture below.

With further investigation, the property, located at 145 Stoneybrook Road in Pacolet South Carolina 29373 was in fact listed on both Foreclosure.com and RealtyTrac.com priced at $39,900 and $2,500 respectively.

See RealtyTrac below

See Foreclosure.com below

In order to find out which service was correct, Foreclosure Research contacted the agent, D. Fowler, who verified the correct price at $39,900.

In conclusion, the property listed on foreclosure.com contained the more accurate information of the two.

One of the main complaints within the foreclosure listing arena is a lack of accurate data. It’s good to see that at least one company offers accurate information.

It is evident that ForeclosureResearch is not the only one with concerns over certain foreclosure reporting companies The Housing Assistance Council, a Washington DC non-profit, has also expressed concerns over foreclosure data in certain areas of the country. Such concerns were recently released in an October 2009 HAC report, “What is the housing foreclosure situation in rural America?”

The report specifically describes concerns over RealtyTrac figures. Here is a snippet of the report:

RealtyTrac presents data for approximately 2,200 counties across the United States. This excludes roughly 900 counties, most of which are predominately rural. RealtyTrac does not openly disclose its methodology for data collection; however, company representatives indicated that they generally do not collect data for a county if it has less than 10,000 housing units (RealtyTrac 2008a). The company has reportedly improved its quality control measures; however, duplicate and multiple counting of foreclosure entries is a particular concern when citing RealtyTrac data (Galvin 2007). Limitations related to over representation in some areas (namely urban), and under-representation in others (primarily rural), indicate substantial concern when trying to derive rural foreclosure estimates from RealtyTrac data.

Report References:
Realty Trac -a. Telephone discussion with ReatlyTrac representative, Mike Smith. July 25, 2008.

Galvin, Andrew. “Tracking the Truth on Foreclosures,” The Orange County Register. November 18, 2007.

It looks like the foreclosure giant RealtyTrac has laid off a considerable number of employees within the last month. According to Inman News “RealtyTrac has trimmed its workforce by nearly 30 employees and is moving away from some media partnerships.” The layoffs comprise roughly a quarter of its current workforce.

According to Hitwise, an online metrics company, the company has exhibited a steady decrease in traffic over the last few months. The company also moved down in the rankings to 18 from 10 for overall online real estate popularity.

In the article Senior Vice President Rick Sharga explains, “We’ve been in some media deals that weren’t profitable.” He continues, “They were delivering traffic, but not profitable traffic.”

Considering these “media deals” it is no wonder why the media relied heavily on their figures in many of their articles. Certainly being a deep-pocket sponsor for the media outlet had some pull with reporting content as well.

Now that these media deals have proven unsuccessful, perhaps the media will become more diversified in the figures it reports. Or better yet, RealtyTrac will now focus more on accurate data collection methods- the basics of a foreclosure listing company, rather than over-leveraging the brand.

According to a revealing article in the Hartford Courant, RealtyTrac “radically” revised its total Connecticut foreclosure filings for the month of June. The article published on August 15, 2009, written by Kenneth R. Gosselin, states that the company first reported an 80 percent decrease in foreclosure filings when actually there was an increase of 31.5 percent.

The original numbers were revised due to further investigation by Courant reporters following the surprisingly low level of filings originally reported by the foreclosure data company.

RealtyTrac first reported only 56 foreclosure filings while the revision claimed 991. That’s a head-turning difference of 1,670 percent.

In the article Darren Blomquist, a RealtyTrac spokesperson, admitted that the subscription-based company was having trouble with data collection in Connecticut. Yet it seems the company still continues to issue formal reports on Connecticut and other coverage-lacking areas.

In the past RealtyTrac has admitted to inaccurate data in some rural areas, specifically counties with less than 25,000 in population, but according to the US Census, all of Connecticut’s counties have well over 100,000 in population.

Which begs the question, “is it really just rural areas? Or perhaps smaller, less-important states are also denied the accurate reporting they deserve?

There really is only one solution, and that is to have some governmental control over foreclosure statistics in the media. If this were the case, at least the government grasps the concept of equal representation among the fifty states of America. In addition, the government would be less concerned about selling subscriptions in heavily foreclosed areas, which is obviously the main focus of the foreclosure listing company in question.

According to the most recent foreclosure news articles foreclosure have once again reached record highs- now said to be in the millions. RealtyTrac’s semiannual report was recently released titled, “1.9 Million foreclosure filings reported on more than 1.5 million U.S. Properties in first half of 2009.” At least the foreclosure listing company correctly assessed the records as foreclosure filings rather than simply ‘foreclosures’ as many reporters incorrectly state.

RealtyTrac also provides some additional information in the headline, which makes our job much easier, which is specifying 1.5 million homes received a foreclosure filing rather than 1.9. In other words, for once the company was being transparent in the fact that there were roughly 400,000 duplicate foreclosure filings in the last six month.

According to the article, Florida is said to have the second highest foreclosure rate in the country. In order to gain a better understanding of the actual foreclosure or REO market it’s imperative to gather additional information such as the number of actual bank repossessions rather than simply default notices.

The RealtyTrac report states that over the last six months there have been 268,064 foreclosure filings in Florida which account for 1 in 33 homeowners receiving a notice. In order to gather bank repossessions for the last six months (which is not available in the latest report) Foreclosure Research calculated these figures from prior month’s reports. The following is a breakdown of those figures.

Florida REOs
January 5,594
February 5,972
March 4,322
April 6,114
May 6,045
June 7,367
Total: 35,414
Housing Units: 8,718,385

Based on past months’ figures, there were 35,414 foreclosures or bank repossessions in Florida. Factoring in U.S. Census housing data, this would account for 1 in 246 bank repossessions rather than 1 in 33.

One could then deduce that foreclosures account for only 13% of the foreclosure filings or 0.4% of Florida housing units. This estimate may be the reason the report does not mention REO data as the total foreclosure filings are an undeniably larger number at 268,064, presumably meant to instill shock in the readership base.

As a result of the onslaught of articles questioning RealtyTrac’s latest report, the company has offered insight into its data collection methods and its role in foreclosure data reporting. In the company’s defense, Rick Sharga, vice president of marketing, has been quoted as standing by the numbers.

RealtyTrac’s formal position regarding the Atlanta data exposé can be found in an Inman News article titled, “RealtyTrac numbers under fire in Atlanta,” published on June 23, 2009. According to the article written by Matt Carter, “RealtyTrac is standing behind the methods it uses to collect and report foreclosure-related filings, but says its reports should not be held to the same standards as statistics compiled by government agencies for the purpose of making public policy decisions.”

Interestingly enough, while the company states their data should not be used to the same standards as government agencies or for influencing public policy, the company has touted offering the data for that exact use.

In fact, a press release located directly on the RealtyTrac Web site states, “RealtyTrac’s foreclosure data has also been used by the Federal Reserve, FBI, U.S. Senate Joint Economic Committee and Banking Committee, U.S. Treasury Department, and numerous state housing and banking departments to help evaluate foreclosure trends and address policy issues related to foreclosures.”

It seems RealtyTrac has always been the first to proclaim their information is used for governmental agencies. In the very same article that initiated the latest accusatory whirlwind, a RealtyTrac spokesman, Daren Blomquist, even attested to the fact by stating that “both federal and state governments have asked RealtyTrac for its data.”

It seems that although the company knows their information is inaccurate, it still lauds the fact that the data is used by government agencies. A simple logical argument would conclude that RealtyTrac’s data should then not be used by government agencies.

Foreclosure Research was one of the first online publications to report that RealtyTrac numbers had yet to show much improvement from previous years’ allegations of inaccuracy.

There have been a whole slew of news articles pin-pointing current data discrepancies from the listing provider. The first of these coming from the Atlanta Journal-Constitution published on June 21, 2009, titled “Foreclosure numbers don’t add up.” Author Carrie Teegardin assessed that RealtyTrac actually under reported foreclosure notices for the month of April by almost 4,000 filings, a disparity of nearly 100 percent.

The AJC concluded the difference following an analysis of newspaper records for five metro Atlanta counties. Because Georgia is a non-judicial state for foreclosures, there are no court records on the proceedings.

The article offered an excerpt from a local foreclosure expert, who described Realty Trac’s method as “not scientifically rigorous.”

Another issue that has been noted by Foreclosure Research in the past is the lack of coverage in rural areas. Teegardin notes that in Georgia, Realty Trac “reported that April’s foreclosure tally represented a 21 percent increase over the previous year. But the company made no adjustment for the fact that it collected foreclosure data in about 100 of Georgia’s 159 counties last year but expanded to statewide coverage this year.”

Daren Blomquist responded by stating, “We don’t believe it makes any significant difference in the percentage change,” regarding the tallying of additional counties.

If this were the case, let’s do some quick calculations under this supposition.

According to the most recent report 1 out of 377 homeowners in Georgia received at least 1 foreclosure notice in May. You could then apply this figure to the areas that are not counted or at least were not counted last year.

Sample average for rural populations in Georgia*: 13,557. 35 foreclosures per county times 59 counties not counted, equal an additional 2,121 foreclosure filings per month.

April 2008
7,136 Notice of trustee sales plus 2,050 REOs, plus an additional, estimated 2,121 = 11,307 total.

April 2009
7,809 Notice of trustee sales plus 3,712 REOs equals a total of 11,521

Considering this information, Georgia foreclosures only increased 1 percent from April 2008 to April 2009, not 21 percent. If you ask me, this is a very ’significant change’ and perhaps this article can serve as a lesson on how the company can improve upon its scientific rigor in the future.

*Sampling average taken from counties with less than 25,000 in population.

Yet another economically depressing article has made its way into the media and with an aptly named title, “And Now For This Morning’s Gloom…” The article, written by Henry Blodget and published in The Business Insider on May 5, 2009 offers more insight into foreclosures, job loss, and the economy.

However, there was one noticeable red flag where there was a reference to an unlikely source when discussing the implications of foreclosures on job loss. The following is a snippet from the article:

“According to RealtyTrac, job losses result in a home foreclosure 10% to 15% of the time. If job losses narrow from the monthly average of 670,000 in the first quarter to 325,000, almost 3 million more jobs will be lost before year end. That will translate into another 300,000-450,000 foreclosures, and an unemployment rate of almost 11%. But what if that estimate of job losses is too optimistic?”

The first question that should have come to a reader’s mind is, ’since when does RealtyTrac monitor job loss and general economic statistics?’ Which then begs the second question, ‘if one can’t monitor their own industry with accuracy, why try and gauge another?’

In an attempt to try and identify the source of the job loss statement, I did a search on Google News and on the RealtyTrac site for job loss figures. In both searches there was no mention of RealtyTrac reporting on job loss in either outlet.

Considering this information there are only a couple of conclusions. One, RealtyTrac gave a very unofficial statement to a news reporter, in order to further broaden their media reach; or two, the reporter made their own assessment based on RealtyTrac’s estimated and quasi-convoluted figures.

Referring back to a recent Foreclosure Research article highlighting the law past by the state of Colorado, makes it illegal to utilize unofficial foreclosure figures when used to pass legislation or to gauge the economy. Translation: figures from a commercial listing service should not be used to sway opinion regarding economics.

If the reporter did utilize RealtyTrac’s foreclosure figures to extrapolate a job loss statistic, then most likely the concluding statistic is false. In another respect, the statement does not even specify whether job loss results in a ‘[pre]foreclosure or a regular foreclosure 10% to 15% of the time,’ as we’ve seen many reporters in the past confuse the two phases. And the fact that RealtyTrac always combines these two figures in their press releases is yet another concern.

Bottom line is that not only should there be a cautionary note when utilizing commercial foreclosure statistics, but those statistics should not be used to form an even greater, more influential statistic, especially when coming from an unqualified source.

It looks like the foreclosure fishermen are at it again. There is no telling just how big… the foreclosure crisis is getting. The size and method of catch all depend on which statistical fisherman you ask.

RealtyTrac is just one purveyor of such foreclosure fish stories. Their figures have been up for debate for several years now. In the most recent press release the foreclosure rate per household left out one major piece of information. According to the release titled, “Foreclosure Activity Increases 9 Percent in First Quarter,” the company states that “one in every 159 U.S. housing units received a foreclosure filing during the quarter. However, this is incorrect.

According to the beginning of the press release, RealtyTrac explains that the Q1 report includes “foreclosure filings — default notices, auction sale notices and bank repossessions.” As has been exposed in the past, many of these foreclosure properties can have up to 3 filings. For example, one home first receives a default notice, then receives and auction notice; and finally the home is figured in with the REO repossessions.

Considering this, RealtyTrac should have offered the following statement: one in every 159 U.S. housing units received [AT LEAST one (more like two)] foreclosure filings during the quarter.

Upon further analysis, the entire statement still contains falsities because the filings would be much less if they were based on per single household foreclosures.

The important number continues to be REOs, actual bank repossessions, which were only 190,543. Considering this figure combined with U.S. Census figures, the more accurate and pertinent statement would be as follows: 1 in 671 housing units were foreclosed during the first quarter of 2009.

There is another error in the report when RealtyTrac mentions how many properties received the fillings. In the release the company states, “Foreclosure filings — default notices, auction sale notices and bank repossessions — were reported on 803,489 properties.” This should actually read, 803,489 filings were reported on x amount of properties. Not vice versa.