BusinessWeek is putting the spotlight on one of the more common and blatant real estate agent deceptions -- manipulations of the Days on Market (DOM) statistic. I've often wondered how it can be here in Marin that agents can claim DOM statistics between 50 and 80 (recently) when there are so many examples of Marin houses languishing on the market for much longer than that. From recent memory, there's this one of course (my favorite). And this one. And there was Agassi's house, but that was probably exceptional because of the price tag. Oh, and this one. And others. In fact, many of the houses on the Marin POS blog still have not sold so there are a bunch of examples.In fairness, it seems to me to be rather hard to know for sure when one can say with certainty when a house should be considered first put on the market. For example, a seller might put the house on the market in January with no real intention to sell; just "testing the waters". It "languishes" for six months. Then, oops, a job transfer and it's put on the market for real in August. If it's now September, has the house been on the market for nine months or just one? I'd say just one. But what about houses like this one which have clearly been on the market, off and on, for over a year but with its DOM statistic resetting to make it look fresh?
That's why buyers desperately need something akin to the MLS-2, or what Patrick.net is doing.
Anyway, here are some excerpts from the article. If buyers know what tricks to look for, then they will be better prepared at the bargaining table:
Real estate agent Ross Simone wasn't attracting any potential buyers for a house in Mechanicsville, Md., that had sat on the market for months, so last November he took action. He pulled the house out of the regional database of active listings and then immediately reinserted it, changing the property ID number used to track properties over time. The result: The house appeared to be hitting the market for the first time.I say we need to even the playing field. The balance of power needs to be just that...balanced...balanced between buyer and seller. As it is now, the system is rigged in favor of the seller. We can demand honest DOM statistics. We can demand the removal of the real estate agent commission (which biases the buyer's agent to seek the higher sale price which is the exact opposite of what a buyer's agent should be striving for). We can remove all of the officially sanctioned interference (scroll down to the section entitled "The Role of Government") in what should be a free market.
Fresh listings attract attention and can fetch higher prices because buyers are less likely to make lowball offers.
Real estate is largely self-regulated.
What's perhaps more surprising is that in some regions, the local MLS does nothing to prohibit relisting a house in a way that makes it appear new on the market.
When many homes in an area are re-listed as new, it skews the "average days on market" statistic, making the market look healthier than it really is. For sellers, refreshing a listing can also disguise the fact that the previous listing was at a higher price. Buyers often regard a price cut as a sign of weakness.
...the practice of relisting houses to give them a new debut is a symptom of an imbalance in market knowledge.
Is this wrong? Many MLS organizations think so.
It could happen. But people have to stand up and make it happen.
12 comments:
Sign me up!
How do we make this happen?
Who regulates these creeps?
It would also be interesting to see if there is a list available for houses that were for sale, and are now for rent. I can honestly say that as much as 30% of the homes that were for sale and didn't sell ( most didn't sell last year) are now sitting with for rent signs out front.
It would be good to know for a few reasons:
A: anyone that is planning on renting one of these needs to know that they are likely going to be serving as live-in gerbils, simply there to knock off some of the owner's mortgage only to be forced out once the owner either must sell, or they feel the market is in their favor.
B: Adding the number of rental conversions to the grand total of homes for sale or available ( because these simply one short step away from being sold anyway) would create a more accurate image of the true level of inventory. Bubbles get their fuel from invented or manipulated supply.Rental conversions are yet one more manipulation.
I would begin by writing lots of letters to local agenecies, MLS admins, congressment and senators, the nar. Document clear examples of abuse and make it public and before you know it the real estate industry will be regulated.
"Never underestimate the power of a small group of dedicated people to change the world, in fact, it is the only thing that has."
~Margaret Mead
Yep. This is one of the first things that should change, just because it would be an easy first step.
Anyone who spends just a bit of time each week checking their local MLS could come up with many examples without even trying.
It's gotten so bad that they've even started putting year- old DOM homes on the front covers of those supermarket RE mags with "New on Market!" splashed across.
This is just simple, garden variety honesty. So how do we make it happen? Ideas?
It's gotten so bad that they've even started putting year- old DOM homes on the front covers of those supermarket RE mags with "New on Market!" splashed across.
Please, if you can document examples of this (digital photos of the pages for example) please send them to me so that I can post them. That's one way to encourage change.
I'd like this blog to be a focal point for reporting this sort of stuff but I lack the time
This is "unethical conduct" and is a no no,of course,since it is not enforced...anyone who is curious should take a look at DRE regulations and basic agency law,and of course CAR and NAR ethical guidelines also prohibit unethical behaviour.we have plenty of laws and regulations,enforcement is another matter.for more egregious examples,read the constitution,examine any branch of fed gov.
What's the big deal about DOM? A buyer these days is free to lowball as much as they want. They can use domania.com and other sites to check the tax basis for the current owner. A "new on the market" house is not suddenly going to attract a bunch of high bidders irrespective of its price. Is it?
Deception? What deception? The fact that a house gets its DOM's reset after 30 days off the market is, just that, a fact.
When a competent Realtor performs a comparative market analysis, he or she provides the Buyer with the history of the surrounding market for the last 6 months. Homes that were removed from the market and re-entered as new listings are included in that analysis. Plus, when a competent Realtor runs a History on the house, all of the home's appearances on the MLS for years are displayed. This includes EVERY price reduction, every appearance, removal, etc. It's all there for EVERYONE to see. No secrets. No deception. No big deal.
In actuality, it is those homes that are sold For Sale By Owner that escape this kind of public record and scrutiny.
Why are you blaming Realtors for "deception"? It's nothing of the sort.
How can you enlighten people when you are getting such fundamental ideas so perfectly wrong?
Bringing a house on the market as a "new listing" is just a way of getting the house more exposure.
Buyers using Realtors understand that often listings aren't actually "new" (never before on the market). Agents don't tell their clients that they're "new". They show the buyer what the house was originally priced at before it was removed for 30 days. They show the Buyer how many times the price was reduce. They do their job.
None of this needs to make a difference to the Buyer. As someone said above, the Buyer can offer whatever they want.
If you are silly enough to buy a house without the help of a good Realtor, you deserve the consequences.
I'd say the same thing to someone trying to get an operation without the help of a qualified doctor. Or a fool who decides to act as his or her own lawyer.
You're telling us that Realtors don't have a value but you apparently don't understand what they do.
What the heck are your credentials in anyway?
Maybe you work for Help You Sell and have some sort of undisclosed reason for your absurd bias.
I agree that agents shoudn't say "NEW listing" on the flyers or ads if it's their OLD listing that they've just recycled after a 30+ day pause for more exposure. That's tacky.
On the other hand, it's extremely unfair to call Realtors "creeps" because they're advising their sellers on how to bring more exposure to the home by taking it off the market for the holidays and bringing it on with 0 DOM's.
As long as the property's actual history is transparent -- and it is ALWAYS transparent and clear as long as it's sold on the MLS by a licensed Realtor -- there does not appear to be a real issue here.
No reputable agent would ever write an offer on a house without first looking at the sales history of that house for their client. And no reputable listing agent would ever conceal a property's history from the public. If you find such a Realtor, complain to their manager or company!
It really does seem like the authors of these critical and angry blogs should learn more about the subject before they become so self-righteous and mean.
If there is any class of people the public SHOULD be concerned about, it's the agent-LESS owners who are often ignorant, think they can work outside the law, and are not regulated in any way.
Many of these people don't fully understand the concept of Disclosure (which is the primary way to stir up a lawsuit).
The idea of just hiring an attorney instead of a Realtor is a poor substitute for a Realtor. Unless the attorney is watching the local market on a daily basis, is constantly prepped in new city and county laws and practices, stays up to date on all current lawsuits affecting buyers and sellers, and maintains an ongoing relationships with various Real Estate service providers (other Realtors, contractors, electricians, etc.), the Buyer (or Seller) is paying for a handicapped advisor.
Your home is likely your biggest asset. Don't screw around. If you're seriously considering buying or selling your biggest asset, call a Realtor and hire their expertise.
The individual running this blog -- while perhaps well-intentioned -- does not appear to be very knowledgable about ACTUAL Real Estate issues and practices.
As others have posted, a buyer's realtor will know how long a property has been on the market.
The seller's realtor has an obligation to get as many eyes to look at the house as possible. It is often the case that a home has been on the market at an unrealistic price and if there is a substantial price reduction it can now be a good deal. With the sellers knowledge and approval it can be cancelled as a listing and relisted in some MLS systems. That is not an unethical practice if it is allowed by the MLS.
Neither is it unethical to take photos of the nicest sides of the home while ignoring the junk pile behind the garage or in the back yard.
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