From BusinessWeek:
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. “It’s in the best interests of my client [the seller],” Simone said in a November interview. “I started doing it consistently this year. I do it as much as I can.”
With open houses as quiet as death lately in many parts of the country, sellers’ agents are trying everything they can to make a sale, including sometimes tweaking the computerized data that potential buyers depend on. Fresh listings attract attention and can fetch higher prices because buyers are less likely to make lowball offers.
Real estate is largely self-regulated. In most of the U.S., agents are responsible for entering information about the homes they’re selling into a database that is maintained by the local Multiple Listing Service. Each of the 900-plus MLSs sets its own rules. The trick of making old listings appear new is against the rules of Simone’s MLS, although he said later that he didn’t know it at the time.
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. In Atlanta, for example, First Multiple Listing Service Inc. charges sellers’ agents just $25 to withdraw a listing. When they then relist the home, it shows up on “hot sheets” of homes that are fresh on the market. A buyer’s agent who investigates can see that the house was for sale before, but not for how long. First MLS President Cantey Davis acknowledges that the system could give buyers a wrong impression of how long a home has been for sale but says he has received a “minuscule” number of complaints about it.
…
Whether it’s within the local rules or not, the practice of relisting houses to give them a new debut is a symptom of an imbalance in market knowledge. Buyers can sometimes spot manipulation of the databases, but you have to know what to look for, and many buyers’ agents don’t.Is this wrong? Many MLS organizations think so. In Massachusetts, MLS Property Information Network Inc. recently improved disclosure of sales histories. Metropolitan Regional Information Systems Inc., which covers Mechanicsville, Md., says it checks its listings nightly for violations. In fact, it says it eventually caught and corrected Ross Simone’s gambit, which was first pointed out by the Southern Maryland Housing Bubble News blog. (Simone’s boss, Wayne Wivel, president of Re/Max 100 in Annapolis, Md., said in December he had no knowledge of any manipulation.)
But brokers often resist change. Northwest Multiple Listing Service in Kirkland, Wash., discloses the history of listings, but relists still show up on the hot sheets. CEO Jack Johnson says, “We’ve had difficulty convincing the board of directors” to eliminate what he calls “cancel/relist.” As long as the buying public knows less about properties than the agents who list them, caveat emptor.
The first thing I do for a buying client is run the entire listing history of any home we’re considering. It takes about 10 seconds, and even mediocre agents do it.
Any homeowner who directs his agent to play the “relist game” is actually hurting himself. Serial relisting is a red-flag for overpriced homes and desperate sellers…just the right conditions for a sucessful lowball.
More insidious is what happens to RE statistics when serially-relisted properties finally sell. Companies such as Weichert may market a home under 2-3 MLS listings for 200-300 total days-on-market, but when the home goes under contract and sells during the final listing period, only the stats from the final listing are presented to the public. Not surprisingly, the final listing period is often a seller capitulation, and those listings sell quickly. So, a home that takes forever to sell- and sells at a steep discount to the ORIGINAL list price- gets promoted as “just 7 days on market…an almost full-price offer!”.
There is also a secondary reason that companies play the “list-relist” game: to be able to claim market primacy in listings taken. That’s right; if your local Weichert or Coldwell Banker glances the stats and sees that they’re running in 2nd or 3rd place in listings taken, they will withdraw and re-list a slew of inventory to assume first place!
These manipulations all have one thing in common: they do nothing to advance the interests of sellers.
I couldn’t imagine a buyers agent NOT looking up the history of a home. Like you say, it takes all of 10 seconds.
It’s odd that other MLS systems in other states don’t have this stat.
And you’re right about re-listings too. It does raise a red flag and makes the buyer look desperate.
The only bebfit is the change to the DOM stat which I’m sure many ignore at this point.
Rich
The only industry that can make up its rules as it sees fit.
But how can a buyer really find out if someone has relisted? It would take a buyer who watches the MLS very carefully and/or an honest agent who does the same. How can we find that?
I agree with clot, I am not sure about when he does it, but… because the mls sometimes makes you search for info, when my buyers are interested in sitting down to make an offer- that is when I say okay let’s run the history. I don’t do it until there’s an interest. I email clients listings, I leave them at my office for pick-up, I call them with the info. Until I get a response I don’t run the history.
Spinning my wheels all the time makes me dizzy.
KL
Gary (#3)-
What about the pharma industry?
NJ Gal (#4)-
Too much listing velocity to track the activity yourself. You have to find an honest Realtor. Start asking friends, family and co-workers for recommendations; that’s always the best way to get someone good.
FACT: Homes stayed for months in the listing.
Sellers changed their Real Estate Brokers for a newer listing.
“Homes not Selling well last Summer and Fall, how much more at Winter and Spring time ????”
Oh please, all you crybaby wannabe homeowners should just suck it up. Big deal, houses are relisted and listed again, and again and again. I don’t see anyone complaining about not knowing how long the new car they just bought had really been sitting on the dealers lot. 5 days, 15 days, two months, who cares? Its worth whatever you are willing to pay for it!
People repost ‘for sale’ listings on all kinds of crap on Craigslist (show tickets, DVDs, and yes, homes for sale) over and over again, sometimes a few times a day to keep the listing at the top and ‘fresh’. Who buys a house because its a fresher listing? It’s not an avocado people, its a house!
Evaluate it on its merits as a place to live and thats all. The relisting scam has been exposed for the sham it is and hopefully, until the MLS changes its ways, we see an article like this once a week. Its the only way for newbies to know what they are getting into.
Shame on any reporter who quotes the latest DOM stat without noting that realtors regularly mess with the actual DOM number.
Personally, I prefer the homes that do show they have been on the market for 240 days ++. The ‘fresh’ listings, if legit, are probably from folks who still think they are going to get 2005 peak prices on their homes. No sense in wasting time with those people. I prefer to work with those people who have already felt the pain of paying another years taxes on their home as it sits bare and empty. Give me a motivated seller anyday. The reality is, if you relist your home and I missed it on the first go ’round, I won’t even bother looking at it so really, sellers are just hurting themselves with this practice.
Oh wait, I am not like most buyers – too pragmatic, no agents would even be willing to deal with me. hmmmm…. good thing I have been following the MLS for towns I am interested in for almost a full year now. And, good thing I read the NJRE Report. Thanks to James, I am aware of all the tricks used on the MLS and I now pass along this info to anyone I know who is looking to buy.
Realtors could really help themselves in the credibility department if they moved towards an accurate MLS dashboard. If the MLS is waiting to hear complaints from Joe Average, they will be waiting a long time.
I suppose that’s my option – I just think if there are people practicing the relisting, it’s going to be hard even for a good agent to find out if a house had been listed previously under a different number, unless they had reason to notice it. But, I suppose it’s an agent’s job to know all of the houses in all price ranges for sale in their area. Now to find someone when we actually start to look!
Housing market pain not revealed by stats
Home sellers are crying but the data doesn’t seem to reflect their woes.
By Les Christie, CNNMoney.com staff writer
January 11 2007: 6:09 PM EST
NEW YORK (CNNMoney.com) — We hear lots of stories about the pain:
An Indiana man writes to say he can’t sell his house even asking less for it than he paid – four years ago.
A Duluth, Minnesota, reader writes, “The housing market is brutal, has been for months. Prices dropping at least $20,000, some as high as $60,000 just to get them sold. Most aren’t selling even with the drop.”
It’s not just the Rust Belt.
A reader from northeastern Connecticut moved to Maine and can’t find a buyer for his previous house even though all he’s looking for is to sell for what he owes.
Help! Home for sale – the Otts
A Gulf Breeze, Florida, reader reports, “The market here went sky high and now went down – houses are selling cheap and people are not buying.”
Yet, when the National Association of Realtors (NAR) released its third quarter median sales prices, the downturn was very modest, just 1.2 percent compared with 12 months earlier.
The government’s Office of Federal Housing Enterprise Oversight (OFHEO) home price index actually showed a gain for the same period.
Why is there such disconnect between the numbers and reports from the front lines?
According to Janet Branton, vice president of business specialties for NAR, one reason is that real estate markets are very local and you hear from the ones suffering the most. “People selling their homes in Florida have a totally different experience than people in Colorado,” she says.
But the main factor, she says, is that many consumers – and a high percentage of real estate agents, the majority of whom have been in the industry less than five years – got used to operating in a bubble. “Most agents and many sellers haven’t seen a normal market,” Branton says.
6 hot home design trends for 2007
Expectations also come into play. “What sellers are most complaining about is expected price,” said chief economist for the Mortgage Bankers Association, Doug Duncan.
People, he explains, hear that a neighbor’s home sold for $500,000. They think that their house is better so it’s worth more. They price it at $550,000.
But the house’s objective value is really only $500,000. Since the seller has priced it too high, it sits for months. In today’s market, the house may not sell, even after a price reduction to $500,000, partially because the house is now slightly stigmatized because it has sat on the market so long. To the seller, the market just stinks.
Another factor may be problems with the statistics themselves. Some of it is just not very accurate, according to Jonathan Miller, co-founder of Miller Samuels, a leading real estate appraiser based in Manhattan.
For example: “A significant portion of the OFHEO index,” he says, “is based on refinanced mortgages, not [solely] on actual market transactions.”
With a refi, the price recorded is an appraised value rather than an actual market price and could have been higher (or lower) than what the property would have brought if had it been sold.
Miller also believes that bad news travels much faster these days and comes down harder, causing people’s perception to be more extreme. “We seem to pile on the cheerleading when the market goes up and we pile on when the market falls,” he says. “And we pass the word on faster through the blogosphere.”
The one area of the industry that has produced truly negative numbers was new home sales. From peak to trough, the number of new homes sold will drop 23 percent from their annualized rate of about 1.3 million that was attained in mid-2005. That’s according to Dave Seiders, chief economist with the National Association of Home Builders (NAHB).
He forecasts that the rate will bottom out early this year at about 1 million and turn sharply up again in the second quarter and reaching a rate of 1.2 million by mid-2008.
But even though the stats on new home sales showed a dramatic drop, new home prices did not. The median new home price came in at $251,700 in November – the latest stat available – up from $248,500 in October and the second highest on record, after the $257,000 mark reached last April.
But there’s an awful lot of wiggle room in new home prices, according to Duncan.
“There are no adjustments for differences in the statistics,” he says.
The data does not account for rebates, upgrades and other incentives made to goose slow sales, he points out. Builders will throw in granite countertops, hardwood flooring, upgraded appliances, reduced financing charges, even swimming pools, all of which effectively lower the price of the house without showing up in the data.
Duncan is not as sanguine about a swift recovery in the housing markets, by the way. He says that although the fundamentals are still sound – economic, job and population growth is intact – he still believes, based on past slowdowns that the slump will take until at least mid-2007 and likely late 2007, to work through.
“We have to work off the excess inventory before real estate returns to trend lines,” he says. That will take 24 to 30 months from the peak, which he has pinpointed as July 2005. Recovery might even take a little longer this time.
“The long run up may mean that the recovery takes a little longer,” he says.
All part of the Realtor “Code of Ethics”…
In addition to this rampant practice of deceiving consumers, the fact that this realtor is so care free about discussing this practice with a BusinessWeek reporter, speaks volumes about how the NAR (National Association of Realtors) implicitly endorses such behavior, and certainly does not impose any penalties.
The whole argument that “Well, the individual MLS systems make their own rules” is total crap.
If you’re a Realtor™ and you re-list a property, you’re fired. That would end this deceptive practice immediately, and lend at least some credibility to an organization that touts its “Code of Ethics” as a primary reason for doing business with them
#6 – Not even close.
There are plenty of “new listings” on the MLS with photos taken in the spring and summer. It doesn’t take much imagination to see what’s going on with these type of “new” listings.