A year ago we exposed a “dirty little secret of the real estate trade,” relisting to “refresh” a property on the MLS. This afternoon, Inman News delved into the practice:
Whether relisting is an acceptable practice that exemplifies creative marketing in a down market — or whether it is a misleading and potentially illegal practice — is a topic of heated debate in the industry. The National Association of Realtors trade group, which has about 1.3 million members working in the real estate industry, has not taken a formal stance on the issue and looks to local MLSs to set their own policies for relisting practices.
The National Association of Realtors Code of Ethics provides that “Realtors shall be careful at all times to present a true picture in their advertising and representations to the public,” though Lucien Salvant, a spokesman for NAR, said that MLSs are not considered advertising vehicles. “It’s a local MLS issue on how they address (relisting),” he said. “There is no NAR requirement on that particular point.”
We begrudgingly accept the practice, but to justify it by taking the position that “MLSs [and by extension their listings] are not considered advertising vehicles?” Sorry folks, but that’s an utterly asinine argument. And it’s disappointing to say the least.
At the risk of pointing out the obvious, consider any marketing materials, websites, or press releases that reference an MLS derived statistic such as average days on the market (DOM), or selling price to list price ratio (SP/LP). If any of the underlying data has been “refreshed,” do these statistics really “present a true picture” and representation of the market?
UPDATE: As “realtor” notes below, direct public access to the MLS will be pulled sometime soon on January 1, 2007.
∙ You Can Relist, But You Can’t Hide [SocketSite]
∙ MLSs attack for-sale home ‘relisting’ practices [Inman]
What the indistry doesn’t realize is that it makes it very difficult to purchase something of this magnitude where everywhere you turn is misleading or downright false information. Those of us with enough sense and no time to research these sorts of shenanigans just close our wallets and stay away.
Wanna know where the buyers are right now? You’ve chased them all away.
[Editor’s Note: Hmm…where else could you possibly “plug in” to find unbiased and insightful information about the local market, a new development, or even a particular listing in order to help inform your decision…]
The MSM is complicit in this as well, unquestioningly quoting “average days on market” as an indicator of market health, carefully ignoring the re-listing problem and the fact that the average can’t take into consideration all the properties that didn’t sell and were withdrawn from the market.
What drives me crazy: a property goes on the market, is reduced a number of times, finally sells for the lowest reduction and then goes on the record as “sold for asking price!” That in turn leads realtors to tell their buyers that properties always go for or close to asking price. Argh!
I keep swearing off commenting because the comments have become so much a witch hunt of Realtors. But here goes, let the sarcasm roll.
As everyone knows statistics can be skewed easily. As they say there’s lies lies and statistics.
Simply because a property has been on the market for a number of days is not an indicator that there is something wrong with it. Often times timing is a huge factor. There are numerous examples of properties that have been on the market for six months or more then receive multiple offers in the same week. DOM is also certainly no indication of whether you are going to make money on your property when you go to sell which should be your main concern when purchasing (other than can you afford the monthly payments).
Days on the market and past performance are also useless in both inclining and declining markets, and if relied upon do not paint an accurate picture. Aside from that any half decent agent is going to look up the history of the listing to see whether it’s been on and off the market a number of times regardless of what the current DOM says.
You start trying to control that and people are just going to find ways around it. List it in the paper and on Craig’s List forever without putting it in the MLS and there goes your days on the market completely.
For me, I’d much rather have the property list in the MLS and I don’t care if it’s pulled and re-listed because at least I can check to see that it has been. You throw that restriction out there and the sellers who know they are ‘testing’ the market with a high price are simply going to find other ways to market their property that cant be tracked.
For our friend realtor, the more, the merrier. Don’t be afraid to jump in. As for the quote, I think its “lies, damn lies, and statistics.”
Realtor – Thanks for commenting. We actually agree with most of your points (and this isn’t supposed to be a witch hunt). As far as we’re concerned, the problem isn’t related to tracking and evaluating an individual listing (although it can be a challenge), but rather the impact “relisting” has on the underlying market stats. Or as we just wrote, “It’s tough to set expectations for sellers, inform purchase decisions for buyers, and paint “a true picture” of the market without accurate data.”
And to be honest, as a Realtor, we’re surprised that you’re not just as disappointed by your association’s “MLSs are not considered advertising vehicles” copout. Even if MLSs are technically a means by which to manage interbroker compensation, sites like realtor.com and the marketing of MLS based stats have firmly established them as “advertising vehicles” as well.
Thanks for “plugging in.”
Two more cents to add. I agree with the notion that MLS *is* an advertising vehicle. If it was solely a tool for selling agents to locate properties for buyers or for listing agents to have market data for comps then there would be no public access. I feel mixed on the notion of relisting. Having the ability to “refresh” a listing, as you say, really helps some listing agents to serve their sellers well. If buyer-agents (aka selling agent) do their jobs as they should then they already are providing information that indicates whether or not a property has been refreshed because we have the ability to look at the “Property History” in MLS, where we can view how many times the property status has changed, how how many times the property has been relisted, and if when any price reductions/increases have occurred. If you are a buyer and your agent has not given you that information voluntarily, just ask for it.
Realtor wrote “…I don’t care if it’s pulled and re-listed because at least I can check to see that it has been.”
Yes, YOU can but the information remains opaque to the rest of the non-realtor public who can only access the public MLS site(s). Hence, this spurious DOM information is misleading (as so much else on the MLS, such as the ‘% sold over asking’ statistic).
[Removed by Editor] (I have to watch what I write or else the Socketsite owner will censor this post again)! [Editor’s Note: Yep.]
public MLS is about to be redundant anyway as they are pulling it from public use in the next two months. Also it is important to note there are listings in the MLS with an * by the sales price as well which means it sold but no one is telling for how much. One of the many ways statistics are easily skewed. I am a pay attention loosely to the stats kind of agent – but feel very strongly you have to know the market you are in which is why I dont represent myself or clients in certain neighborhoods – because I dont know in my gut if it’s a good buy or not at the time.
I bought a house in the Pennisula and used a local agent to represent me for that same reason. Someone who works the neighborhood on a regular basis is going to have information you can never ever get just by looking at cold hard numbers.
realtor wrote “public MLS is about to be redundant anyway as they are pulling it from public use in the next two months.”
Anyone else care to comment on the veracity of this?
C’mon Socketsite, instead of censoring our comments you should be giving us the real scoop on something like this – better use of your time / talents!
[Editor’s Note: According to a tipster, they’ll likely pull public MLS access within the next 90 days. As far as a better use of our time/talents, we really couldn’t agree more…]
What people here are saying here has some truth… from the BUYERS point of view. However, having worked with a Realtor, I see the other side, the SELLER’S side, more clearly.
Imagine you’re trying to sell your property now after witnessing a frenetic market like we had a couple of years ago. You want the best price and expect it. Your Realtor suggests you put it on at $1,995,000. You insist that it is worth $2,500,000. It sits on the market for 3 months before reality sets in and the price is reduced to $1,995,000 which generates multiple offers and goes over the reduced listing price.
If the price is only reduced in MLS, it creates the impression that there is something wrong with the property. (What problems made them lower the price $500,000?) And even with the new price, the listing becomes stale. Many Realtors may not see it again, or forget about this listing which is not serving the best interest of the SELLERS.
Finally, don’t forget, if the property had been withdrawn and placed with another broker, it would have shown up as a new listing anyway at the reduced price.
The last problem is easily solved:- if a property is relisted, even with another agent, within time period “x” then there should be a requirement that the prior listing be linked to it. Kind of like a “wash rule” for real estate listings. Of course, it won’t stop people listing after time period “x + 1”, but it will stop some of the more egregious abuses if “x” is sensibly chosen.
Amen to Amen’s suggestion. Let’s make “x” 30 days (or whatever is fair) in case there are legitimate reasons for taking a property off the market. ie: renovations, vacation, houseguests, etc.
And if a realtor wants to take the property off the market for the sole reason of removing the price history, then the 30 day requirement would make them think twice.
“C’mon Socketsite, instead of censoring our comments you should be giving us the real scoop on something like this – better use of your time / talents!”
Socketsite will only censor comments defending realtors. If you don’t want your comment to be censored, be sure to include an anti-realtor message.
[Editor’s Note: In all honesty, the majority of comments that we delete/censor are either related to a personal attack (calling somebody an idiot, scumbag, etc.) or a derogatory statement concerning an entire class of people or profession. (We’ll leave it up to you to guess at whom 95% of these comments are targeted.) The rest are usually off topic, factually incorrect, or spam. And believe it or not, we’re not “anti-Realtor.”]
Please keep in mind that the point of this particular post was to comment on NAR’s position that “MLSs are not considered advertising vehicles” (which we find to be specious, and a copout related to the Code of Ethics). That being said…
Mickster – in your example, we’d suggest an important question might be, “what led the seller to have had such an unrealistic expectation in the first place?” (And yes, while there will always be a number of sellers that are simply out of touch with reality (to put it nicely), keep in mind that 20% of active SFH/Condo/TIC listings on the SFMLS have been reduced at least once.) Thanks for “plugging in.”
The MLS already has a two week requirement for relisting a property, although there are a couple ways around it including re listing with a new broker. I would suggest 30 days would be both unrealistic and unneccessarily punishing to sellers.
A lot of the anger I keep reading is due to the fact it’s been a sellers market for the past decade with a few small blips. Historically that is not always the case and I suggest we will be having a lot less ‘unfair practice’ comments as the market continues to move to a more neutral market or even in the Buyer’s favor.
Socket site in response to your question to Mickster what led the seller to expect an unrealistic price in the first place? Usually their neighbor getting an insanely high price, or an appraisal they had for refinancing that is $300 or $400k over current market prices. That is the most common reason I find. It’s hard when an industry professional tells you your home is worth $1,400,000 and gives you a loan stating it….and 4 months later I have to come in and break the bad news market value is only $989,000….happened to me more times than I care to count.
It is a delicate discussion I can assure you. Because the seller is sitting there thinking I am are trying to get them to underprice their place so I dont have to work hard to sell it!
As far as the fact that 20% have been reduced – yes that happens in a declining market such as we are in now…that’s a great indicator the invunerable SF market is making a correction, and truthfully it’s about time.
“B” – that’s a fantastic comment, thank you. And while I agree that the prolonged sellers market has resulted in a lot of frustration, I personally believe that much of the “anger” stems from a lack of unbiased information and insight for both buyers and sellers alike (hence SocketSite).
The market has turned, but according to a number of industry statistics, properties continue to sell for at or over asking, inventory remains tight, and “Median Price Appreciation” remains positive. That doesn’t exactly paint a picture of a “declining market.” And based on that picture, it’s probably not too surprising that some sellers refuse to believe that their home is worth 5% less (rather than more) than the one next door (which sold last year in a very different market).
As the market continues to shift we will see far fewer ‘unfair practice’ comments from buyers, but I have no doubt that we’ll quickly see the emergence of a similar line of comments from recent purchasers who were led to expect “conservative” double-digit appreciation and the like.
Again, great comment and thank you for “plugging in.”
I pretty much agree with that assessment except to add I don’t think the buyers were ‘led’ to expect double digit appreciation. It simply was a fact for so long some may have come to ‘expect’ it – but cries of a bubble and crash have been debated now for years and I would argue the potential risks were not only continually debated and discussed but widely known.
The 2 most common google searches in 2005 were hurricane Katrina and Housing Bubble.
The truth about board of Realtors® owned MLS throughout the country
Antitrust complaint unfair trade practices update to previous complaints.
Shutting off service to your MLS as stated in the letter below and shutting out to prevent non Realtors ( real estate agents) on Realtor owned MLS boards in my opinion is unfair trade practices on a large scale.
When a Realtor list a home is it disclosed to homeowners at the time of listing that all Non Realtors (real estate agents) will not be able to sell or show any homeowners listings unless they join the local board? Of course not, therefore limiting competition in the marketplace by the thousands of potential home sales from real estate agents nationwide with Realtor own MLS boards… I do believe that there are around 1.7 million real estate agents VS 1.3 million Realtors that leaves a Hugh gap for home buyers and home sellers if this information is not disclosed up front.
Now that shutting down Supra display keys attached to Realtor owned MLS boards because of unpaid Realtor Board dues, Not unpaid MLS dues only compounds this problem even further for the consumers who have active listings on the Realtor own MLS boards with the agents that are now shut out from a service that is provided by GE/Supra and in which the dues are not not in default..
Lets look at what I call the poster child state, Georgia
Georgia has two major Non MLS Realtor Boards GMLS and FMLS that do not discriminate between Realtor or Real Estate Agents therefore providing 100% competition for the consumers and has created a fair marketplace with a level playing field for all to enjoy.
Why have I choose not to renew my Realtor dues is a very simple explanation for me, I am shammed to be associated with NAR and to be dragged into the DOJ lawsuits against NAR for all the public to see and judge me as a not trustful Realtor (Anti trust) guilty by association, and to further damage the already scarred reputation of being a Realtor.
Were is NAR ethics here ? http://www.google.com/search?sourceid=navclient&I.e.=UTF-8&rlz=1T4GGIH_en__214__214&q=the+doj+vs+nar
So with an estimated Realtor loss of 10% at the Orlando Regional Board of Realtors not renewing next years dues and are paid up MLS dues have had there Supra keys shut off also, what do they tell there listing homeowners clients and Home buyers? When they can not gain access to there listing, or show potential home buyers homes..
This is fair practice!! Sorry I call it unfair trade practices on a large scale and I support The Department Of Justice actions 100% to protect the general public from this unfair trade practice.