“Yes but the former situation is symptomatic of a falling market, isn’t it? In a rising market an overpriced house is more likely to sell when the market price meets the asking price. Also houses are more likely to be overpriced in a falling market in the first place.”

Even in good and rising markets Sellers can drastically overprice the home. Market time always works against the Seller. I’ve seen countless examples where a Seller in a rising market did not do as well as he would have if he would have priced to the market.

A slightly over priced home in a quickly rising market can intersect the rise, and a quick price change can put the Seller back in position.

But yes, the whole issue is amplified in a falling market. Most sellers (and agents) do not understand the concept of pricing ahead of a falling market.

As I think you were saying in your last paragraph, pricing is both an art and science. We have great data, but people buy (and sell) with emotion.

Sometimes a home with a high emotional appeal will beat the numbers.

Yes but the former situation is symptomatic of a falling market, isn’t it? In a rising market an overpriced house is more likely to sell when the market price meets the asking price. Also houses are more likely to be overpriced in a falling market in the first place.

It’s very hard to control the parameters to find out what true cause and effect is. For a true test you’d have to look at substantially identical houses, selling at the same time, but one listed earlier and selling after price drops, and another listed later and selling at listed price. Not just aggregate statistics.

http://www.redfin.com/stingray/do/printable-listing?listing-id=609744

Listing Price History
Date Price
Mar 28, 2007 $630,000
Apr 13, 2007 $624,900
May 25, 2007 $609,000
Jul 27, 2007 $599,000
Sep 04, 2007 $575,000
Feb 05, 2008 $525,000

Say a home has been on NWMLS for 70 days at $450K. The seller decides they want to lower the price to $400K. If the listing says 90 days and $400K, it looks like the listing has floundered on the market at $410K. So in that respect, the buyer would have bad info, and potentially miss a potential reasonable deal. (Of course, in “special” Seattle, this type of reduction rarely happens, since people will lock in their self-selected comps from the peak. Never mind that they paid $225K only three years ago…)

Again, this DOJ challenge isn’t about what you can and can’t do with data. The suit is about “rules that unreasonably restrict competition.”

Sorry, I was not very precise with my wording. You are right. The suit is not about what you can and can’t do with the data. But it does seem to be about who has access to the MLS and under what terms. Not that I’m an expert – but that much seems clear from reading the site. and returning to my original post..

Silver9, you’re mostly right. The only thing I think you’re not getting is that this information IS available to those who need it. If you were a buyer, either you would be working with a buyer’s agent, who would have access to the data, or you would be buying directly from the listing agent (I don’t recommend this), who would have access to the data and is legally obligated to provide it to you under the law of agency. Once a home is listed on the MLS, you cannot cut an agent completely out of this process because the seller is contractually obligated to work with his listing agent.

The seller has already determined that an agent will be used on this transaction. The fact that you don’t like agents or don’t want to work with one is a moot point.

There is no absolute “worth” to a property. That is a major reason we are in a bubble. Home prices are more strongly influenced by emotions than math.

The answer to “what its worth” is:
Seller> as much as I can sell it for
Buyer> as little as I can buy it for

I seem to recall there are three methods of “estimating” the market value of a house but the only real answer is that it is worth what someone will pay you for it, ie the value is determined by negotiation.

Withholding any information that is material to the negotiation is significant. It is also significant that realtors are not rewarded for selling houses as cheaply as they can; they make more commission on higher priced homes. I think this fact is why the system is somewhat stacked against information that would help buyers negotiate a lower price. That conflict may be unconscious for some but shrewd investors are definately aware of it.

Someone else mentioned stocks and the same value-negotiation relationship is also true with stocks but stocks are much more liquid and fungible so you dont see the negotiation the same way one does with property. The bid-ask relationship on an item that sells every second is very different from one that sells every year but fundamentally it is the same. Look at real estate bonds. How much are those CDO’s worth today? We had huge markets suddenly freeze up because no one wanted to buy the “AAA” assets anymore. Their “value” essentially dropped to zero.

Re: Zillow
For a recent home purchase I spent a lot of time on Zillow looking at homes in the area. I can understand why they would not correct the “value” of a house by using the actual sale data if the other homes in that same area were “valued” much higher. It is easier for them to say that your house was sold at a huge discount than it is for them to say that the entire block is overvalued.

DOM/CDOM has no effect on any broker’s ability to compete via alternative business models.

deejayoh–huh? the DOJ’s antitrust suit is against NAR and the state/local boards, which are a totally separate entity from the MLS, at least in this area. The DOJ antitrust suit is primarily about minimum service laws, which do not exist in this state, and nothing in the suit would change who owns the information.

Sandy – perhaps you might want to read the page on the DOJ site entitled “Excluding Brokers from the MLS Harms Consumers”. It might be informative for you. Here’s the summary:
Real estate brokers must have access to their local multiple listing service (MLS) to compete effectively. Because brokers usually set the rules for each others’ participation in the MLS, it is possible for one dominant group of brokers to establish rules that disfavor other brokers who compete in a manner they dislike

Your “we own it so we can do whatever we want with it” comment (I paraphrase)is exactly what they are talking about

In reading this closer, I am in agreement on this oint.

The false advertising is being done by the comany that publishes the information not the MLS.

Perhaps the MLS should make a rule against publishing DOM and demand that any advertisment be CDOM.

…..and they’re not shy about the fines. They often start at $5,000.

There are MANY reasons why a property might be relisted. Here’s a typical scenario. Seller wants to sell his home, hires an agent, they set a price based on current market conditions, and put it on the market. Seller doesn’t want any long term obligations to the realtor, so opts for a 30 day listing. Nothing is done to prepare the home–agent does not believe in staging, and seller does not believe in cleaning. Home is priced reasonably compared to market, but not when you factor in condition. 30 days go by, home does not sell.

Seller fires the first agent, and goes and finds a new agent. This agent takes the listing but only on the condition that the seller prepare the home, clean it up, fix the roof, paint the exterior. Now, the home is in the best condition at its price point.

Is it REALLY a new listing, or is it an old one? Most buyers would look at it completely differently now.

What if instead of finding a new agent, the seller relisted with the same agent, but still made all the other changes above? Sometimes agents do things like this–for instance, if we are dealing with a difficult seller who just doesn’t believe that the 4 inches of moss on his roof will really turn off a buyer. 30 days on the market may be enough to convince him that the roof really does need work and he really is going to have to make some effort if he wants to sell his house. Once he gets things in shape, the 2nd listing is a lot different than the first one, even if the agent remains the same.

Contrast that with a situation where someone is really abusing the system. An agent for example that only writes 30 day listings so they can refresh the listing without doing anything else different. This is a bad practice, but from the perspective of a computer database, it’s practically indistinguishable from the example above. The only way to stop this practice is through manual intervention, which the MLS already has rules in place to do.

And here’s the thing about rules–rules only keep honest people from behaving dishonestly. Dishonest people don’t care about rules. So, it’s a bit difficult to pass rules that will stop abuse–dishonest people will just do it anyway.

It’s really a question of enforcing the rules we have, not about passing more rules. The rules are already pretty strict.

As Sandy pointed out, it’s the minority that abuse the system.

As Sandy pointed out, the NWMLS is one of the few large broker owned MLS in the country. They are a business entity, and like any business entity have the right to disseminate the information as it suits their business model. (Just like Microsoft, Amazon, Boeing, Starbucks….or your employer (unless you work for the government).

Want all the information? Get a license and pay the dues.

…every single member of the NWMLS pays $360 a year to create and maintain this database. If we did not do so, it would not exist.

That fact alone determines that we are the ones who get to determine what information is made available to the public, and what information is not made available.

Time for an analogy. The Coca-Cola Company pays to manufacture soda and print the cans they put it in. Let’s say they claim that a soda has zero calories when in fact it has 50. I mean hey, they’re just referring to “new” calories, and they pay to control the information, so it’s okay, right?

Bzzt. Incorrect. False advertising. Just like when a home appears as “new on market” and indicates a low number of “days on market” when in fact it has been on the market much longer. I get that the publicly viewable portions of the MLS are basically an advertisement. That doesn’t mean you can make up whatever lies you want. And let’s face it, reseting the days on market is a lie. It’s that simple.

First – Thanks to Tim for preparing the graphs and statistics. Although I don’t agree with all of them – I truly respect the amount of time that goes into tracking information from various sources to paint a picture. I am also a statistics nut and I may have some to share later.

I like this site because I like to stay plugged in to the public’s perception of the market. I also read other sites as well.

Also – days on market most definately affects a home’s selling price. Statistics have proven that a home that starts out overpriced and finally sells after price reductions will sell for less than a home that was priced right from the start and sold within a reasonable time. Buyers will perceive there is something wrong with a home that has sat on the market for too long – and will take that into account before making an offer – that is a fact.

As for the NWMLS statistics – they are very unreliable. Don’t worry about not being able to access the “days on the market” because most are wrong. The NWMLS has a glitch and the “CDOM” days function is not working properly.

Beware of the listing that was listed for 9 months last year and then the seller took the home off the market for 2 weeks during the holidays and then relisted it on the 1st – the ticker starts over. The only way to know the true days on market with any listing is to have a realtor do a property history search.

Even though there are NWMLS rules regarding re-listing property – there is quite a bit of abuse. I started to keep track of every listing that had violated the NWMLS policy – but it got to be so many it was distracting me from a study I am doing.

Also – new construction is an absolute mess in terms of CDOM. The property history of days on market is connected to the listing by the tax id number. New construction doesn’t have a property tax id number yet, so many times when an agent re-lists the property they make up a new tax id number and the ticker starts all over again.

I am currently doing a 6 month study of Bothell. By Excel spreadsheet I am tracking every single listing with a Bothell address. The study will go from October 1st to April 1st.

My study will show:
How many true active listings
Total price reductions for each listing
Commission Rates
Buyer Bonuses/Incentives
How many sales failed
True market time
How many are foreclosed properties
How many are flip properties
Previous Sales Price
1st Mortgage amt
2nd Mortgage amt
How many people are upside down
Rate of return/during ownership
Amount of equity
Vacancy factor

The study is already providing very interesting results.

That fact alone determines that we are the ones who get to determine what information is made available to the public, and what information is not made available. It’s somewhat like owning a house, in the sense that owning something gives you the right to do whatever you want to it (within reason!), even if it doesn’t make sense to anyone else.

This is kind of a case of looking the gift horse in the mouth, IMHO.

That said, I am not advocating that the information shouldn’t be available to the public–it’s a win-win for everyone to have it out there. I do think it’s important to remember who owns it.

Also, because it is impossible to create a set of rules that are strict enough to 100% prevent abuse withouth harming a substantial portion of people who are NOT abusing the system (which is the MAJORITY of agents out there), this number is not something that should be put out there when all it will do is harm sellers, without being PARTICULARLY helpful to buyers. As it stands now I think 95% of agents are following the rules, and we have 5% of agents who aren’t. However, NWMLS has literally hundreds of rules to enforce, and thousands of agents, so they only enforce this rule when someone complains. In fact, that is how they enforce

Economist said it well–price is what matters. Until a property is priced in the ballpark of where it should be, time on market doesn’t matter. Once the price gets in the ballpark, CDOM becomes a great negotiation tool. Prior to that, it is a great indicator of what the buying public thinks about it. You might be able to point to it and say, “hey, you’ve been on the market 180 days and you therefore should accept this lowball offer,” but it’s not as if there is a rule that says sellers have to drop the price after 180 days.

So again, it’s an indicator ABOUT price, not a driver of it.

PS–I come here because every once in a while I feel the urge to stir up a hornets nest. Beats doing my taxes.

(Actually I come here because sometimes there is good information. Other times, we get articles like this which are based on the confused notion that the fact we make the MLS information public, means it belongs to the public. Not true.)

No, it’s a signal that the asking price is too high. No house is “undesirable” at the market price. Well not in Seattle anyway.

Keep in mind that the Brokers own the NWMLS (and the information).

that is a good point Greg. I personally think that issue is what the government’s anti-trust investigation will turn on. There is really no reason why the listings could not be a separate business from agency – and IMO disintermediating the two would open up tons of competition and new business models.

but until/if/when this happens, there are other opportunities created…

I had a recent buyer who used this as a strategy. As I said above, when market time builds the Buyer can win amazing negotiations!

Often those long DOM properties are really good properties, that finally have arrived at a price they should have been at in the beginning. Everyone tends to all look at the same things: newest listings. Check out oldies and see what happens to your perception of value.

Keep in mind that the Brokers own the NWMLS (and the information).

The NWMLS is not a public utility.

My thought is that they should not allow any broker member to publish partial information. Everything that is allowed to be published should be as accurate as possible. So, either let go of CDOM, making it available (which I don’t think will happen) or stop members publishing of market times on current listings.

LIke it or not, the NWMLS must serve the member broker (and they are a diverse group!)

Market time has a direct bearing on eventual market price. It is one of the critical parts of the equation. (Which is why as a practicing Realtor, I lobbied hard for accurate market times on listings in the NWMLS.

Our nature is that if someone else wants something at the same time we do, we put more value on it. If nobody else seems to want it, we wonder why….”What’s wrong with it”.

Many time good sense goes out the window in a multiple offer scenario as bidders emotionally work against each other.

I’ve seen many properties with building market times, after a series of price reductions, hit it’s probable market price only to continue sit unsold. When the offer finally comes in, the Buyer, who knows the Seller is over a barrel, negotiates a very steep discount…….and wins.

In a Buyer’s market the solution for the Seller is to price the house aggressively to the competition. (And be in very good condition) In a market with declining prices, the Seller can actually CHASE the market down, never really catching it. The SELLER must get ahead of the market decline curve! Even at the right price, in declining markets, SELLERS will experience market time. If the SELLER prices to the market and prices are declining, any market time that builds at all could result in the SELLER chasing the market. Any price reduction must be looked at the same way. Every price along the way should priced ahead of the decline so market time will intersect market price.

As long market times build, a property can actually become stigmatized.

Yes, market time is a huge value factor.

Have you ever wondered why food and gas go up with housing costs; about the same rates too since 1990. Inflation is like 200% since in 1990 in 2008 dollars, especially with repressed salaries too.

Its overpopulation, it temporarily fuels the real estate bubble, but Jonestown Koolaid Banking deregulation can’t keep it afloat any longer and the whole house of cards is falling on our faces. Greed catches up with all of us eventually, but overpopulation, left unfettered will further reduce our wages with home prices too [the Koolaid ain't working anymore]; albeit continued overpopulation increases in America causes exponential massive increases in energy, health care and food…..figure it out, in a way, all of the real estate greed in America has made us blind to the obvious. Its like worshipping a false god. How much interest ya getting in your 401K retirement lately….lol

“Much more” important? It’s the only one that’s important at all.

If you’re buying a stock, do you care whether the selling party has had the sell order active for 5 minutes or 5 weeks? Or whether the seller has previously had an order which expired?

I can’t for the life of me understand why anyone cares. You’re buying a house, not a listing history. Pay what you think it’s worth. Period.

Lets talk real Estate tomorrow night and all weekend !! Ok , I got that outta my system…(Did I mention only 3 more days!!)

Time for more Gear Grinding. Come on Losh. ” MLS 4 Losers. ” They have provided an alternative for consumers for years. I praise Chris Nye!!

Now the one thing that is grinding me tonight is the giant Banner on the right for Legacy Escrow Service. Are people out shopping for Escrow Services? I believe they target US Brokerages. They are a complete bother at this point. I’m sick of Title and Escrow companies constantly calling and sending their reps out. Do I have to put up another NO Solicitor sign on the door?? I know they need work. I know I know I know. But heres the fact. I give you thousands of dollars in deals every month and what do you give me? “Better support, Service, and Value” NO..NO NO!

They screwed up! Now they are watched! RESPA ! 25.00 a year to a Brokerage giving you thousands! No cookies in the lobby anymore! No free fliers! No nothing! So I should utilize your services why? Why are you better? What will Legacy do for me that Old Republic, First American, Stewart, Ticor, etc.?..

Tell me please! Free mobile Notaries? 40 % off Escrow Service for Bubble Heads? Free anything? PLEASE TELL ME WHAT MAKES YOU DIFFERENT then all the other Escrow Companies. Why should I use you? Can you even give me a "golly" T shirt?

I’m sorry. I guess the Legacy Lady will be staring at me for awhile. I’m placing on our doors next week a specific Title/Escrow NO Solicitor sign next week. Lets see how that works!

Good Night!

http://www.500Realty.net

Shady Relists

A phone call. A fax. The fax can be anonymous. A complaint by a Seller. A call to the MLS from the broker.

Good agents have no problem reporting blantant violations.

g.) To add the to conversaiton
h.) To clear up basic misconceptions.

As for relisting, having the listing expire and relist is fine and I don’t think anyone has issues with that. We are not banning the sellers (as sandy seems to imply).

What everyone is upset about is those listings that are “flipped” just for the
sake of manipulating DOM.

On a side note, I have not come across a website that shows CDOM to the
public yet. Anyone know one ? This seems to be the one of the last pieces
of information that the “Realtors” are clinging on to, in the guise of service. :)

If one were so inclined, how would someone report violations to the MLS?

WHY DO AGENTS COME TO THIS SITE?

a) To offer counter-arguments to all the gloom and doom talk.
b) Spy on the enemy.
c) Free advertising (I’m not just referring to Ray).
d) To prove that they are not like “those other agents.”
e) Gain the trust of the bubbleheads (with hopes to pick off the weak).
f) Fear.

CDOM (continuous days on market) was established to create a more representative market time. Relists do not affect CDOM.

If an agent alters information to attempt to trick CDOM, fines can be quite heady (I’ve seen $5,000.)

At the beginning of the year NWMLS published strong warnings about cancel/relist for a new (2008) listing number.

Again, the fines are quite significant.

The whole issue is fairly clean now and becoming cleaner by the day.

I do think that it is deceitful to allow agents access to a cumulative days on market number, while providing a separate days on market number for consumers. Is there reasonable explanation about why consumers shouldn’t have access to this too?

No offense Sandy, but we don’t want to have to call an agent to get this info. Lately, I’ve taken to sending e-mails from my junk e-mail account to listing brokers if I have questions about a property. When you try to get a listing agent on the phone it’s become almost like calling a car lot to see if a particular model is available. Agents will do almost anything to get you down to ‘the lot’ for a FTF, or at least get your phone number for a callback.