Magical Mystery Sales Appear in Latest NWMLS Data

Okay, I’ve got good news and some bad news for you. The good news is that the NWMLS did in fact release their monthly statistics today, as I expected they would. The bad news is that the data they published this month is highly suspect. In fact, I’m going to step out and go so far as to say that their published sale counts for July are flat out bogus.

If I’m going to make such a strong claim, I’d better back it up with some data, right? Well here you go.

For the last six months or so, I’ve been pulling down every single-family home sale record available via Redfin’s search and saving them into one giant spreadsheet. In case you didn’t know, you can download some fairly detailed closed sales data in csv format right from Redfin’s map. Here’s an example search, similar to the type I am using to pull the data used in this post. This is the same set of data that I used to generate the nifty price histograms in this June post.

Using this method, I was able to pull sold home data dating back through April 2009. Here’s a look at the sale counts from a Redfin sold home search and the monthly NWMLS reports over that time period:

King County SFH Closed Sales: Redfin & NWMLS

In an average month, I would expect to see the number of sales returning from a Redfin search come in slightly higher than the number reported by the NWMLS, since Redfin gets their records not only from the MLS, but also from the public records (which capture FSBO sales and other off-market transactions). This has been the case most of the months between April 2009 and March 2010.

However, something odd seems to be happening after March. In April, the number of sales being reported by the NWMLS came in almost exactly inline with Redfin’s search results, dropping from 15% over in March to just 1% over in April. Then in May, the relationship swapped, with the NWMLS reporting 5% more sales. In June, 7% more sales. In July, 16% more.

Here’s what it looks like when we just chart the difference between the number of King County SFH sales returned by a Redfin search and the number reported by the NWMLS:

King County SFH Closed Sales: Redfin - NWMLS

Note the dramatic trend of increasingly negative numbers since May. I have done some spot-checking of other counties and condo data as well, and they all show similar trends.

Before I jumped on the NWMLS for reporting bogus data, I wanted to double-check the results I was getting from my Redfin searches. So, I got on the phone with one of our Seattle Bubble regulars who happens to be a local real estate agent with NWMLS access. My friend did a search for me on the internal NWMLS system of all single-family homes sold in King County during July.

While this month’s report from the NWMLS claims there were 1,474 single-family homes closed in King County in July (click “Current Recap” in the upper-right and scroll to page 2), the NWMLS’ own system returns only 1,253 search results for that same query.

Here’s a plot of NWMLS-reported closed SFH sales in King County, with pending sales overlaid on a different scale and shifted two months to the right for reference, and both versions of NWMLS data plotted for July:

King County SFH Closed Sales: NWMLS vs. NWMLS

As one final sanity check, I compared the NWMLS SFH sold data with the King County Warranty Deed data I report on every month in our stats preview posts. In the chart below you can see the percentage difference between Warranty Deeds and NWMLS-reported SFH closed sales, with data based on the alternate number reported by NWMLS’ internal system shown in red.

King County SFH Closed Sales: Warranty Deeds vs. NWMLS

Interestingly, as you can see in the second chart above, the NWMLS-reported sales counts really began to smell fishy with the May data. This just happens to coincide with a major “technology upgrade” of the back-end system the NWMLS uses to track all of its data. A technology upgrade that led to all sorts of problems spanning weeks.

My working theory at this point is that the NWMLS is not intentionally publishing deceptive, incorrect data, but something has gone wrong with the way the NWMLS is pulling their monthly statistics from their new system. Whatever the problem is, it appears to be resulting in some sort of cumulative error that is amplifying the problem each month.

Until this issue is resolved, I’m afraid I will not be able to trust the NWMLS data enough to continue publishing the usual monthly stats charts based on their numbers. Hopefully they will discover the problem soon and return their systems to normal functioning order.

Note: The Tim is employed by Redfin. However, no proprietary Redfin data or special Redfin access was used in this post.


About The Tim

Tim Ellis is the founder of Seattle Bubble. His background in engineering and computer / internet technology, a fondness of data-based analysis of problems, and an addiction to spreadsheets all influence his perspective on the Seattle-area real estate market.

93 comments:

  1. 1
    David S says:

    Yummy, that home cooking smells good. What’s in the pot? Books?

  2. 2

    In the past there has been some conjecture here that the NWMLS simply reports late reported sales in the next month’s figures. Thus, rather than re-state the results from June when 30 sales are reported late, they just report those sales as having been in July. I don’t have a big problem with that because if it happens each month it would largely wash out, and not that many people really care whether a sale occurs on the 30th or the 1st. But in June we had the expiration of the tax credit, meaning lots of sales pushed to get to the end date, and we had a holiday at the beginning of July which could have affected agents’ reporting sales. Is it possible that pushed the variation from being maybe 30 units to being 200? I don’t know. To test this out someone would need to try to run the numbers from both June and July. That would take a long time to do, and not something I plan on doing any time soon, since Matrix still does not have an agent statistics function like Discover had. And to fully test that theory you’d need to go back to one month prior to Matrix. That’s something that can wait until they add statistics to Matrix.

    As to Tim’s theory it has something to do with Matrix, I find that a bit hard to believe, because I don’t know what it could possibly be (other than perhaps more agents not reporting timely because they can’t figure out how to do it). It is though a PITA that agents still cannot do statistics for a whole month, so perhaps the NWMLS’s own statistical generation is a bit of piecework too.

    Finally, the other thing I have to question is Tim’s decision not to publish the figures at all. The number is only suspect, and so there can be an asterisk next to it, but in addition there are the mean and median numbers. Once you get over about 1,000 sales the mean and median don’t jump around so much (something agents could see under the old system, but not Matrix). Thus the mean and median are not all that suspect. In addition though, there’s been a fair amount of debate here how much the median would jump with the first time buyers out of the picture. The answer is to $395,950. Why not publish that here? I would note though, that to the extent the variation is due to late reporting by agents, the median would have been even higher for July, so it’s possible those numbers are understated. We’ll know more with August’s numbers.

  3. 3
    Cheap South says:

    Hey, my money is on the butler. He did it!!!

  4. 4
    David Losh says:

    Actually I find the redfin data, sales information, and listings pretty suspect also. Houses that I look for on refin, that I know are for sale, I can’t find on refin. They are on Zillow. There again Zillow is pretty suspect all the way around.

    John L Scott listings seem to be true to what I see in my daily driving, but as I noted earlier John L Scott has been closing offices.

    What would be interesting is to see if the Real Estate sales system in general is struggling to keep up. The switch to Matrix really doesn’t seem to be going well. Other companies that would normally dump more money into the breach may not have the disposable income.

    Could it be that no one in the Real Estate sales industry is making enough money to float the sales data?

  5. 5
    Flotown says:

    What types of deeds does Redfin pull to populate its database? Could it be grabbing some number of transactions that are not actually arms-length?

  6. 6

    One other possibility. Whoever did the NWMLS count for Tim, if they didn’t check both residential and manufactured homes, they would come up with a lower result than what I think they should. Stated differently, I think the NWMLS SFR data includes manufactured homes. Surprisingly, that’s only a difference of under 30 units for the month because most manufactured homes w/ land are just under residential.

  7. 7
    The Tim says:

    RE: David S @ 1 – I’m going with Halon’s Razor on this one. “Never attribute to malice that which is adequately explained by stupidity.”

    RE: Flotown @ 5 – I don’t inherently trust the Redfin search results, which is why I looked at the Warranty Deeds and called someone with NWMLS access to run the numbers directly against their system. All three checks come up with numbers lower than what the NWMLS published in their report.

  8. 8
    What the Heck says:

    OK, then where does Case Schiller get their numbers?

  9. 9
    deejayoh says:

    Is the NWMLS pulling Foreclosures back into the count? Those aren’t typically going to show up in either place, right? Could that be part of it?

  10. 10

    I just did a spot check on some of the NWMLS areas, comparing the number of transactions I get from the system to the published numbers. I only checked about half of the areas in King County, but I did check all of the ones with large numbers of transactions.

    For some of the areas the system is actually reporting a slightly larger number of sales than the reported numbers. Those are typically small differences though of one or two sales, and are likely the result of the late reporting I discussed in my first post above. For a few areas there is a larger discrepancy downward, but it doesn’t seem to be that well correlated to volume.

    I then took one of the most over-reported areas for July, and went back to June data. For that area that was most over-reported in July of my sample, it was only off by 1 in June. So the problem apparently isn’t related solely to agents not reporting timely (unless perhaps I went back to May and saw a problem there, which I’m not going to do).

    Anyway, my numbers are not compiled are guaranteed by the NWMLS, and it is possible I’m doing something wrong (just as whoever Tim contacted didn’t include mobile homes in their search). But I think Tim has raised some valid concerns. Again though, I don’t think that justifies not reporting the mean and median.

  11. 11

    By What the Heck @ 8:

    OK, then where does Case Schiller get their numbers?

    Never. Case-Shiller doesn’t report a volume figure.

    If you’re talking about their value number, we’ll get that for July in just under 2 months. And since it’s a 3 month moving average, you’d really have to wait two more months to be free of the tax credit sales.

  12. 12

    By deejayoh @ 9:

    Is the NWMLS pulling Foreclosures back into the count? Those aren’t typically going to show up in either place, right? Could that be part of it?

    I don’t think so. Foreclosures wouldn’t be part of the database at all.

  13. 13
    The Tim says:

    By Kary L. Krismer @ 11:

    By What the Heck @ 8:

    OK, then where does Case Schiller get their numbers?

    Never. Case-Shiller doesn’t report a volume figure.

    Actually, they do. Head over to http://www.homeprice.standardandpoors.com/ and click the link next to “Home Price Sales Pair Counts.” However, I’m not really sure how that’s relevant to this particular discussion.

  14. 14

    RE: The Tim @ 13 – That’s just their pair count though, the ones they included in their calculation. It’s not something that purports to be volume for the three county area.

  15. 15
    The Tim says:

    RE: Kary L. Krismer @ 14 – True. I just thought you were saying they don’t publish any sales count at all, and I was just pointing out that they do. Since they filter out “non arms-length” sales and some other outliers, it’s not especially useful, but it is something.

  16. 16

    Tim’s last graph doesn’t make sense to me. But the reason the number reported by the NWMLS was higher than what I expected was because of Tim’s count of warranty deeds. For July it was 1,943. If you add the 1,474 SFR to the 300+ condo, that doesn’t leave much of a cushion for FSBO, commercial, and other non-NWMLS sales. I’m not sure how the last graph conveys that.

  17. 17
    softwarengineer says:

    RE: Kary L. Krismer @ 2

    Leave the Math Statistics Analysis to an Engineer Type Kary

    You have a plethora of legal professional skills that I admire BTW.

    It’s just guys like Tim and I do statistical analysis for a living, we admit we’re not perfect [but either are great attorneys]; but our track record in math areas makes guy’s like Tim the experienced technical. Especially in this real estate area he specializes in.

    It sounds like NWNLS needs to hire some math experts like Tim to check their analyses consistancy too, or maybe they don’t want to? LOL

  18. 18
    blueskitten says:

    Are closed sales the only statistic showing the anomaly? I’m curious whether the anomaly trickles over to sales prices, as well. Could a different mean sales price (skewed higher or lower than on the closed sales in your Redfin data) help indicate what’s happening?

    Posed a different way – say in actuality you had 100 sales last month with a mean price of $1000. But if you are the MLS and your statistics program is reporting 105 sales, would your mean still be $1000? Does it arrive at the mean calculation by dividing the total sale value (in this example, $100,000) by the number of sales it captured (105)? Because if it did, the resulting mean price would be only $952.38 instead of the actual $1000. If you only had the one program to track/calculate your stats with, you’d never know your mean was wrong. But if you had some other system to compare against, you might be able to see that your problem goes a little deeper than you thought.

    I am not a software programmer, real estate agent, or statistician, so this could be a ridiculous notion – it’s just where my accounting brain went. I’m just spitballing here. :)

    [edited because I do know the difference between mean and median]

  19. 19

    One last thing. Using a feature of Matrix I was not aware of until “someone” told me about it today, it appears that they system doesn’t correlate that well with the published data on a monthly basis. Many of the months are under-reported and many are over-reported. I found two months this year that were under-reported by about 100 and 150 sales. It’s very possible that the agents not timely reporting sales is a bigger problem than what I estimated.

    If I do the entire YTD though, the system numbers are off from the published numbers by less than 100 sales, and that’s probably a carry over from 2009. Thus, I think this is most likely just a problem with the timing of reporting.

  20. 20

    RE: softwarengineer @ 17 – If you have a problem with something I say, say it. Otherwise just be quiet. To the extent that you can’t refute a single thing I said as being flawed in some manner, that simply means your comment in this post is completely irrelevant and off topic and a waste of time.

  21. 21

    RE: blueskitten @ 18 – As I said, the mean and median don’t jump around that much when you get over 1000 sales. But yes, to the extent you have a different group of sales reported the mean (and usually the median) would undoubtedly be slightly different.

  22. 22
    The Tim says:

    RE: Kary L. Krismer @ 19 – So Kary, if I understand you correctly, you’re suggesting that July’s inflated numbers may be a result of them just tacking on a bunch of sales that actually occurred in April and May to their July report? Even if that’s what’s going on, it still counts as an error in my book.

    The correct way to handle that (IMO) would be to publish revised reports of the previous months, not to surreptitiously include a bunch of sales in the “July” report that didn’t actually occur in July.

  23. 23

    RE: The Tim @ 22 – That’s what I was referencing in the first post. The NWMLS never republishes data, but frequently agents report sales late. I think it was here that last year I reported that in Kent I found about 10 properties listed as pending that had been sold over a month prior. It was the worst case of that I had found. But unless the NWMLS starts checking every deed recorded against listings, they’re going to have this problem. And I don’t see that they are going to start republishing data as new sales come in. As I said, most people really don’t care that much whether a sale is on June 30 or July 2.

    That said, I had thought that the problem wasn’t as big as it seemingly might be, and that it largely washes out. Since it does appear to be a more significant problem, perhaps the NWMLS should do two things: 1. Start reporting sales data a few days later in the month; and 2. Start fining agents who don’t report their sales timely.

    BTW, the YTD data wouldn’t be as affected by this at this point in the year, and the published numbers show the YTD median for July as being only $1,000 different from 2009.

  24. 24
    Willy Nilly says:

    RE: The Tim @ 7

    Since you are now employed by Redfin it seems you should have a set of keys to the castle and be able to access any MLS data you choose at will. Someone get this man a badge!
    Or do you have to have a special “Agent” membrane that allows you to view the data without being annihilated.

  25. 25
  26. 26
    The Tim says:

    By Willy Nilly @ 24:

    RE: The Tim @ 7

    Since you are now employed by Redfin it seems you should have a set of keys to the castle and be able to access any MLS data you choose at will. Someone get this man a badge!
    Or do you have to have a special “Agent” membrane that allows you to view the data without being annihilated.

    I’m not an agent, so I don’t get access to the NWMLS. If I want to see anything in their system I have to get it from an agent, and even then I’m strictly forbidden from using any of that data on Seattle Bubble. Also I should point out that the agent I spoke with via phone to get the 1,253 number quoted in this post was not a Redfin agent.

  27. 27
    DrShort says:

    Redfin doesn’t seem to have this feature on their site, but if you search for properties where:

    Sold date between 3/1 and 6/30
    and
    MLS Listing last updated > 7/4

    This would probably pick up houses being marked “sold” in July that actually occurred in prior months.

    You could make the hypothesis that this is being caused by agents with listings that were pending in the old system. After conversion to the new system, the house sells. But the agent doesn’t know how to get into the new system to update the listing as sold. Months later, maybe those past sales are just now being marked as sold in the MLS?

  28. 28

    RE: DrShort @ 27 – Last modified works. That number pretty well accounts for the difference.

  29. 29

    RE: DrShort @ 27 – I did the same thing for the same period in 2009, and if you go through modified today it was slightly more units. If it was modified 7/4/2009-8/5/2009 it was about 60% of the this period’s number. So this is nothing new.

    I wonder though whether July is more affected by agents not reporting June sales timely as a result of the holiday?

  30. 30
    DrShort says:

    RE: Kary L. Krismer @ 29

    So are you saying that agents entering sales in late explains the difference? Mystery solved?

  31. 31
    deejayoh says:

    I kind of agree with Kary. This may be an issue, but don’t think it rises to the level of something I would use to justify not reporting on July sales figures

    By the way, the story I read on July results seems pretty consistent with what was expected here – sales were way down, and the median was up as the mix moved to more higher end (+$500k) homes.

    I am not sure that I agree with the assertion in the Times that “more” high end homes were sold. Looks like they were just a higher proportion of the mix. Overall, fewer high and low-end homes were probably sold (although I haven’t dug into the numbers) but the big picture of results seems right to me.

  32. 32
    The Tim says:

    RE: DrShort @ 30 – If that’s the explanation, it still (IMO) raises significant questions about the reliability of their reports. That would mean that the report they put out on “July” data is really “July (plus some unrevealed amount of June, May, April, and maybe even further back).”

    If they’re making claims about the “current month” compared to the “previous month” without revealing that each of those reports includes a bunch of data from other months, that’s deceptive.

    In this case, the real data shows a 31.4% month-over-month drop in closed sales, while their reports claim only a 21.6% drop. That’s a pretty big difference.

  33. 33
    DrShort says:

    RE: The Tim @ 32

    This would be an example of “garbage in. garbage out.”

    It appears the MLS needs to, at a minimum, strongly remind their members that sales info must be entered within 3 days. Perhaps throwing out a few $500 fines would fix the problem?

  34. 34
    The Tim says:

    RE: deejayoh @ 31 – All right, all right. When I get home today I’ll publish a post on their release, but it will be full of giant asterisks and will probably include some extra charts so readers can have some idea of how messed up the numbers are.

  35. 35
    mobry says:

    Well done Tim. Your data seems to align more with what everyone is seeing with the market. I love seeing these real estate agents, who have heavily contributed to the bubble, squirm. Keep up the great work and excellent posts. If you get a chance, please detail how your compiled data compares with historicals, so that we can get the correct current picture of the local market.

  36. 36
    ray pepper says:

    Kary is 100% correct in that Agents report sales very very late. This will definitely skew data…

    When I close a file as sold for one of our Buyers I ALWAYS send a courteous email to the listing Agent reminding them to remain in compliance with the NWMLS Rules and report this listing as SOLD. I then recheck in 72 hours and if its still not done I fax in the update form for them..

    I always did it this way before closing out a file….Agents have gotten progressively worse at updating STI, PENDING, and SOLD. Seems so many are working other jobs now and I rarely get a call back the someday. In addition don’t get me started on the Agents that handle REO’s or Short Sales predominately…..It seems nobody is manning the ship at these offices.

  37. 37
    deejayoh says:

    RE: The Tim @ 34 – Thanks Tim. Better to get your version of the story out there, IMHO.

    You might want to take a look at this post off the redfin forum. Seems to suggest that all the data is not flowing to Redfin from the MLS as it should. Owner posts that their home closed 2 weeks ago, and Redfin still shows as pending

    http://forums.redfin.com/t5/Seattle/Sammamish-Home-STILL-listed-as-Sale-Pending/m-p/119599#M15379

  38. 38
    Jonness says:

    By DrShort @ 30:

    RE: Kary L. Krismer @ 29

    So are you saying that agents entering sales in late explains the difference? Mystery solved?

    It looks to me like total sales in the last month dropped by about 30%, and the error increased by about 60% (double the rate of RE agents’ decreased workload). Given there were most likely less month end sales than the prior month, I’m skeptical of Kary’s hypothesis. If he is correct, wouldn’t we see more month to month variation and less long-term trending in the data pattern? Then again, the data range is pretty limited, so we could be looking at a noisy pattern that irons itself out over a longer period. Next month’s data should prove interesting. To support Kary’s theory, I would expect to see the redfin line adjust upward substantially relative to the NWMLS line. In the meantime, I remain quite skeptical his hypothesis provides a complete explanation of the data pattern.

  39. 39
    Kary L. Krismer says:

    By DrShort @ 30:

    RE: Kary L. Krismer @ 29

    So are you saying that agents entering sales in late explains the difference? Mystery solved?

    I think so, and that it’s more apparent this month due to: (1) Declining sales; (2) The 4th of July affecting June entries; and (3) Possible agent confusion regarding Matrix.

  40. 40
    Kary L. Krismer says:

    RE: Jonness @ 38 – With the method Dr. Short posted of searching NWMLS data by modification date, what I’m saying is hardly a theory.

    BTW, one other thing the NWMLS could do is just report the July as July, but the YTD as whatever has come in to date. But again, this really isn’t that big of an issue most months, unless you want to make something of small changes, which I call noise. This month it is big due to the factors I mentioned, most notably the declining volume (meaning increased volume prior recent months) resulting from the tax credit.

  41. 41
    Kary L. Krismer says:

    By mobry @ 35:

    If you get a chance, please detail how your compiled data compares with historicals, so that we can get the correct current picture of the local market.

    I don’t think Tim will be able to do that without using Redfin sources he can’t use.

    From what I’ve seen, if the earlier sales were excluded, the median would have been even higher, but I’m not going to quantify that.

  42. 42
    The Tim says:

    RE: deejayoh @ 37 – That’s interesting. We’re taking a look at that property, as that sort of thing shouldn’t happen. If you see any others like that, send them our way via data-issue [at] redfin /dot/ com.

  43. 43
    Jonness says:

    Then again, perhaps the reporting mechanism is so poorly designed that it explains the long-term trending pattern flying in the face of the decreasing workload.

    What is in it for the NWMLS? Being able to gain validation of expertise using the deceptive labeling technique while simultaneously being able to partake in substandard data warehousing techniques. Perhaps I’m missing the greater motive, but that’s what comes immediately to mind.

  44. 44
    The Tim says:

    RE: DrShort @ 25 – Interesting list. Six of them are really still in some state of pending in the NWMLS system itself. Five of them have been updated as sold in the MLS, but the status change did not come through on their feed, probably due to the system update problems back in May.

    We’re running a process now that should go through and clean up any properties with incorrect statuses. Thanks for the heads up.

  45. 45
    Daniel says:

    By Kary L. Krismer @ 40:

    But again, this really isn’t that big of an issue most months, unless you want to make something of small changes, which I call noise.

    When you compare month to month sales you usually talk about exactly that: small changes. To discern seasonal differences it is also very important to actually have clean data. Their way of reporting essentially means that the data is useless for determining such seasonal effects.

    Apart from that effects like this have a huge theoretical impact. To illustrate this lets look at models that assume that future states depend only on the current situation and not on the past. (I am not claiming this is sensible in this case, I just want to illustrate a point.) A stochastic process with this property is called a Markov process and the property is called Markov property. This Markov property however has profound theoretical consequences and many proofs do not hold if the property is violated. Therefore data like the NWMLS data can not be used as input for such models, which are commonly used in the financial sector.

  46. 46

    RE: David Losh @ 4

    Redfin pulls from the MLS just like John L Scott does. Since we pull every 15 minutes I think you’d be hard pressed to find a house for sale on John L Scott but not on Redfin.

    As an agent I’m sure you’re aware that Zillow is not MLS powered and that they’re at the mercy of the information they receive from brokers and agents. If agents have a hard time keeping the MLS up-to-date just imagine how difficult it is to keep third party sites like Zillow and Trulia up-to-date.

  47. 47
    creed says:

    I don’t see why any discrepancy should bother people. I would always consider the MLS numbers suspect. If you read the “spin” they put on the numbers each month in the press, especially those of a certain prominent NW broker, you can’t help but think they have so much at stake that tampering with the statistics would be an obvious way to help build their case that the market is improving. All it would take would be to remove a few strategic sales from the statistics, such as distressed properties selling for all cash. After all, that’s almost like a foreclosure, isn’t it? Except that those sales are done with agents, and are valid arms length transactions.
    I would never trust the real estate industry to put out honest statistics in the face of a declining market. Just look at what they did during the bubble. If you want a good laugh, try reading “Are You Missing the Real Estate Boom,” a book written on behalf of the National Association of Realtors. It blatantly misuses statistics of all kinds to prove its totally bogus point.
    Agents reporting late are subject to hefty fines, so I don’t think that’s the problem. I think the problem is much more sinister…..

  48. 48

    RE: creed @ 47 – The only problem with that theory is the same problem apparently existed in a rising market, it’s just that the variations weren’t as significant. And if they were concerned about the stats, they would publish sales excluding short sales and REOs. And that change would provide a lot more useful information in any event, but it would mess with the historical figures.

  49. 49

    By Daniel @ 45:

    By Kary L. Krismer @ 40:

    But again, this really isn’t that big of an issue most months, unless you want to make something of small changes, which I call noise.

    When you compare month to month sales you usually talk about exactly that: small changes. To discern seasonal differences it is also very important to actually have clean data. Their way of reporting essentially means that the data is useless for determining such seasonal effects..

    When the normal sales are say 1500 a month, and the normal variation from late reported sales say 50-100 either way, it really doesn’t matter for any given month, even when comparing YOY. If you had three or four months where the YOY sales increased by more than 100 sales, at that point you’re getting to something that is almost a significant trend, but not that significant. One month by itself at 200 more YOY, not significant.

  50. 50
  51. 51
    creed says:

    The county assessor, when determining values in the local market, has specific rules to follow to determine actual value. These rules require dismissing foreclosures, family sales, and other non “arms length” transactions. What kind of rules does the MLS follow? Does anyone even know? I’ll bet there is a lot of monkeying around with numbers, especially now. I’m sorry, but I don’t think the NWMLS has any credibility, so although I look at their numbers each month, I don’t believe they are representative of the actual market. I think things are much worse than the numbers indicate.
    In the words of Mel Brooks, “We’ve got to keep our phony baloney jobs, gentlemen!”

  52. 52

    By creed @ 51:

    The county assessor, when determining values in the local market, has specific rules to follow to determine actual value. These rules require dismissing foreclosures, family sales, and other non “arms length” transactions. What kind of rules does the MLS follow? Does anyone even know?

    No foreclosures are included in the NWMLS. Very few family sales would be or other non-arms length transactions, because such transactions don’t typically involve commissions, and if commissions aren’t involved, agents don’t tend to be involved, and the property is not typically listed.

  53. 53

    I’ve done a bit more looking into this, with a combination of the tool “someone” told me about today and a variation of Dr. Short’s search method. What I did was go back to January 2009 to find out how many transactions for each month were reported past the cutoff for that particular month (e.g. the 4th for some months, the 6th for others, etc.). The data is for King County, SFR.

    I don’t want to go into detail, but in 2009 the average number of late reported transactions each month was about 110-115. April, June and July 2010 saw significant increases, and were all higher than any month in 2009. Those late sales have to be reported sometime, and in just one week in July over 100 late sales from June were reported. That one week would have been pretty close to an entire typical month for all prior months in 2009.

    As for the reason for the increase, again one of my guesses is Matrix. It kicked in during May, and the beginning of May is when many of the sales from April should have been reported (due to how many sales close at the end of a month). April had twice as many sales reported late as March.

    So anyway, it appears much of the problem is due to agents, and specifically agents using the new Matrix system. Remember that many agents might not have a sale for a two month period, so three months into this there are some agents who still have not reported a sale, and have not learned how to do it.

    Numbers from NWMLS sources but not complied or guaranteed by the NWMLS. Also, since this is a new type of search for me, it’s more likely I made a mistake.

  54. 54
    creed says:

    RE: Kary L. Krismer @ 52
    I guess that’s my point. How do we know that the MLS is actually including short sales or distressed sales, the kind of sale an assessor would not consider “arms length,” in their stats? Is there any independent agency checking their process? How easy is it for an influential broker to get in there and monkey with stats by arguing that this transaction or that one shouldn’t be in the monthly totals? I suspect more of this goes on than anyone would want to admit.

  55. 55

    RE: creed @ 54 – Actually, with Matrix, and the search parameter Dr. Short pointed out, it’s now easier to check than ever, at least at the area level. You could run a search for area XXX, see the 56 listings in that area that are included for a given month, and even determine the median listing.

    Also, there’s very little incentive for anyone at the agent or broker level to exclude a listing from being reported, unless maybe it doesn’t sell at all, but then it’s too late because it’s already been in the system as an active listing.

  56. 56
    creed says:

    RE: Kary L. Krismer @ 55
    Little incentive? Let’s just imagine a broker with dozens of offices, closing thousands of transactions each year in the local area. What incentive would he have to constantly provide positive statements spinning the local numbers to the press? His entire livelihood is threatened by the declining local market, and if it were possible for him to “dismiss” transactions that were so far below market value they would skew the numbers, then why wouldn’t he?
    I am not saying individual agents have any incentive, but then, they don’t have access to other agents’ sales and listings. MLS board members might. I strongly suspect that some monkeying of statistics goes on, at least among those who have access to the system. And even without access, it would be easy to ignore the closing of a short sale and just cancel the listing, after all that’s what happens often when the property is foreclosed on during the process. If the transaction actually closes and commissions are paid, it’s often months after the original listing. I know of several pending short sales which are not currently listed. Why bother reporting them if the numbers will only reduce the median sales price and further discourage buyers? I see a huge incentive to ignore them.
    If only 10 percent of the sales were short sales and half of them weren’t reported, the median price in our area would be dramatically skewed on the plus side. I find this question very troubling.

  57. 57
    deejayoh says:

    RE: Kary L. Krismer @ 55 – Is there any reason an agent (or the buyer) would want to “back date” the transaction? Maybe so they could get in under the extension to the tax credit window?

  58. 58
    SeattleMoose says:

    Anyone who listens to market advice/analysis from someone who derives their income from RE is a fool.

    The Lawrence Yun “mini-me’s” have never stopped towing the party line.

    After all, what do you EXPECT those with conflicted interest to say?

    Regardless, we still have at least two more years of declining prices……

  59. 59
    Hp says:

    Wow, It’s amazing to me when Technology has advanced so much the NWMLS still seems to be living in stone ages. Isn’t it just simple to change the report based on the “Closed Date” rather than using the “Agent reported on” date. What’s so rocket sciency about that??? Just report 3 months of rolling data every month to account for slacking agents.. big deal.. Give me a weekend a 2 day supply of energy drinks and I can write a database query for free to generate this report if you just give me access to the data..

  60. 60

    By creed @ 56:

    RE: Kary L. Krismer @ 55
    Little incentive? Let’s just imagine a broker with dozens of offices, closing thousands of transactions each year in the local area. What incentive would he have to constantly provide positive statements spinning the local numbers to the press? His entire livelihood is threatened by the declining local market, and if it were possible for him to “dismiss” transactions that were so far below market value they would skew the numbers, then why wouldn’t he?

    Well if the transaction wasn’t ever reported in the monthly numbers just because it was reported a day late, that would make it very easy for brokers, or even agents, to affect the numbers a tiny amount. So the current system prevents that. Even a restated report, something Tim said he would favor, would allow brokers and agents to do that somewhat, because who would ever go back to the restated report and report on it?

    I really don’t think unreported short sales are a problem because if they were ever active they’re likely reported, and in any case, when it gets to be time to do the real work, trying to value a particular property, it’s easy it include and exclude short sales as part of the process.

    When it comes to the NWMLS numbers, the one area that is suspect is new construction. I’m not involved in that area, but I’m not sure there’s any requirement for every sale in every project to be reported.

  61. 61

    By deejayoh @ 57:

    RE: Kary L. Krismer @ 55 – Is there any reason an agent (or the buyer) would want to “back date” the transaction? Maybe so they could get in under the extension to the tax credit window?

    I don’t think anyone looks at the date that the property was taken sold on the NWMLS system. They do look at deeds.

    But as I mentioned, assuming that was a reason, you’d have to somehow be able to get the listing agent involved in that, because they are the ones that change the entry, not the buyer’s agent.

  62. 62
    David Losh says:

    RE: Matt Goyer – Redfin @ 46

    Well, I checked again today with other search sites, and found Skyline has a better search function than redfin. John L Scott is still the best.

    As you know, normally I wouldn’t pay any attention to redfin until Tim took a position there. Now I’m really wondering about the site in general. It must have a very limited appeal.

    I know you’ll give some stats about demographics, but people should check the over all function of the site to see what they are paying for.

  63. 63

    RE: David Losh @ 62 – Each site has its strengths and weaknesses, although some only have weaknesses. But to say Redfin’s site has only limited appeal is laughable..

  64. 64
    DrShort says:

    RE: David Losh @ 62

    Go to Alexa.com and compare the traffic stats of Refin.com to johnlscott.com. Redfin has 15x the traffic, is doubling its traffic year over year, while johnlscott traffic is flat. Pretty much everyone I know uses the redfin site even if they don’t use a redfin agent.

    Some of the features redin has over other sites includes:

    + Data on past sales and price changes
    + Cumulative days on market
    + An iphone app
    + Lists the county property details
    + Tons of stats/data about recent sales and inventory
    + An active forums section where you can get questions answered
    + Quick links to AVMs like zillow, cyber homes, etc.
    + More that I probably can’t think of

  65. 65
    wreckingbull says:

    RE: David Losh @ 62 – This has to be one of your oddest comments to date. I look at it this way: When someone I know sends me a link to a particular property, regardless of the reason, 95% of the time it is a Redfin link. I think that says quite a bit about their site.

    Edit: After reading Dr. Short’s post . CDOM is probably the most useful feature. I always wonder why more sites don’t post this. Is it because it exposes sketchy relisting by their own agents?

  66. 66

    RE: DrShort @ 64 – I just went and looked at three broker sites, and it looks like Redfin has made some improvements since November, when I looked at them last. The one glaring remaining deficiency is bathrooms. They are still in the world of whole bathroom units (as is JLS), except that they added 1.25 baths for some odd reason. I have no idea what they were thinking with that. Also, JLS still has them beat in advanced mapping.

  67. 67
    David Losh says:

    RE: Kary L. Krismer @ 63

    No it’s not, just because a site promotes itself doesn’t make it useful.

  68. 68
    David Losh says:

    RE: David Losh @ 67

    In thinking about this I was looking for 124 NE 52 by Green Lake. That’s when I noticed the redfin site had limited search functions. JLS, and Skyline have more fluid searches.

    I agree about the data on the site, but like anything else that is a dedication of funds.

    My original question was where a site like redfin will find the funds to continue.

    In the Real Estate business, in a Real Estate company, there are a variety of things that can keep a company afloat through tough times. There is residential, commercial, property management, and business opportunity. Most larger companies have staff that can write contracts at almost any level, even contracting for property maintenance.

    Just looking at the redfin site, with the guy, and his shirt tails hanging out, or the woman with the weird boots, I would say that limits the people who would take that site seriously. More importantly residential sales is just one segment of the Real Estate market place.

    That’s what I mean by limited appeal.

  69. 69
    DrShort says:

    By David Losh @ 68:

    My original question was where a site like redfin will find the funds to continue.

    Well, they closed $10M in venture capital about 10 months ago. They’re growing, close to profitable, and appear to have the faith of VCs.

    Just looking at the redfin site, with the guy, and his shirt tails hanging out, or the woman with the weird boots, I would say that limits the people who would take that site seriously. More importantly residential sales is just one segment of the Real Estate market place.

    That’s what I mean by limited appeal.

    They’re entire value proposition is that they’re not slick salespeople out to get a commission check. I think those images are trying to convey that message.

  70. 70
    DrShort says:

    RE: Kary L. Krismer @ 66

    The biggest benefit of the Redfin site to me is that it lists which floor the beds and baths are on. No longer do we have to be tricked into looking at a 3 Br house only to find the third bedroom is in the basement. The listing history is also a must have.

    Here’s the same listing at 4 different sites. There’s really no comparison. Redfin is so much better than the others. The other sites are purposely designed to make you have call an agent for more info.

    Redfin: http://www.redfin.com/WA/Seattle/815-NE-80th-St-98115/home/108712

    JLS: http://www.johnlscott.com/propertydetail.aspx?GroupID=226241625&ListingID=300613402&CMID=-1&Sort=0

    Skyline: http://www.skylineproperties.com/property_detail.php?ln=70083&ptype=RESI

    Windermere: http://www.windermere.com/index.cfm?fuseaction=listing.listingDetailUpdated&listingID=67746163&paginate=true

  71. 71
    David Losh says:

    RE: DrShort @ 69

    My interest is in monetizing Real Estate web presence. Being selective, or conveying a message, doesn’t get that job done. My opinion, for a very long time, has been that sites like redfin, Zillow, or Google Search, are looking at nationalizing a Real Estate data base for the mortgage industry.

    The way I’m currently looking at it, that will be a race against time. Being profitable has to be sustained. Residential Real Estate sales won’t do that. A Real Estate company, like Skyline, collects from the agents. The agents can make any type of deal they want with the consumer, as long as they pay the monthly.

    So from the perspective of profit, Skyline is all over that, as is Coldwell Banker Danforth. You’d be many dollars ahead by making a deal with some one like Nathan Belo at Skyline, if he would make you a deal, than shopping at a redfin. Hey, you might even find the property you’re looking for.

  72. 72
    DrShort says:

    By David Losh @ 71:

    You’d be many dollars ahead by making a deal with some one like Nathan Belo at Skyline, if he would make you a deal, than shopping at a redfin. Hey, you might even find the property you’re looking for.

    You can tell me that Nathan Belo will save me much more than the commission refund from Redfin, but how do I know that’s true? I google him, go to his website, and see listings of tiny restaurants, stale listings from Federal Way to Finn Hill, but nothing to make me think this guy is special or is right for me. Any reviews on Angieslist? Nope. Any reviews anywhere? Nope. How can I verify he’s one of the 10% of agents that are worth the money?

    The Redfin value proposition to consumers is clear: they’ll refund 50% of commission, their agents are compensated on satisfaction, and their agents are reviewed on each transaction. I know what I’m getting. Maybe Redfin isn’t the absolute best deal, but you’ll probably do better than average. And for most people that’s good enough.

  73. 73

    By David Losh @ 68:

    RE: David Losh @ 67 -My original question was where a site like redfin will find the funds to continue.

    My guess is that developing the site takes a lot more than maintaining it, and that in any case that cost of site maintenance is much less than the cost of having agents on salary.

    As to the Skyline comment, what you get with Redfin, that you won’t get with most other brokerages, is sort of what you get with McDonalds or Starbucks. Consistency. There are unlikely to be any glaring serious errors in the contract they write for you. Broker oversight most everywhere else seems to be a lot less stringent.

  74. 74
    David Losh says:

    RE: Kary L. Krismer @ 72

    Not at Skyline, the contract goes through three sets of hands. The theory is that because they have so many agents with second language skills, that they have to use extra caution in the paper work.

    And just to be clear, agents, brokers, don’t write contracts in residential Real Estate.

  75. 75

    RE: David Losh @ 74 – To be clear, when I said “as to your Skyline” comment, I wasn’t trying to say they were worse than average. I was just trying to say Redfin is better than average, IMHO.

    And I’d agree agents don’t write contracts. They select the proper forms, fill in blanks, check boxes and supply attachments. And in my opinion, the broker supervision of agents of these tasks at many firms is deficient.

  76. 76
    David Losh says:

    RE: Kary L. Krismer @ 75

    Broker over sight is severally lacking at many Brokerages.

    Actually to tell a story on myself, one of the reasons I left Skyline is because they began questioning my transactions. One was a purchase for myself another was an offer for $500K on a property listed for $650K. My client prevailed with the offer, but the Broker of the listing agent wanted to be sure my Broker was aware of the transaction.

    It just seemed odd to me that in an office that had agents as mortgage originators, and a group in a back office buying, and selling pre foreclosures, that they would be questioning me.

  77. 77
    sleepwalker says:

    RE: David Losh @ 62

    Well.. Redfin’s site is free, so I’m not so worried about “what I’m paying for”.

    I’m using their website/service and like it quite a bit. I haven’t toured in a while because I’m not liking where prices are now, but I’d recommend it.

  78. 78
    ChrisM says:

    I like RedFin because I can search nearly the entire state of Washington for specific criteria.

    I just wish I could filter on basement (hint, hint).

  79. 79
    ChrisM says:

    deleted (dupe)

  80. 80
    David Losh says:

    RE: ChrisM @ 78RE: sleepwalker @ 77

    This is exactly the point. The monetization has to be for something other than those who will buy a property from a salaried sales person. It’s all over head.

  81. 81
    sleepwalker says:

    RE: David Losh @ 80
    http://blog.redfin.com/seattle/2010/08/redfin_agents_take_the_top_8_spots_for_buyers_agents_in_king_county_.html

    1.5% of 400k is a lot of money. I have no clue what their operating costs are, but it does appear people are using the service. The site was honestly garbage when it came out, so I don’t see why you’d expect it *not* to improve.

    If they can turn a profit in residential; I don’t see why they couldn’t expand into commercial or prop management.

  82. 82
    David Losh says:

    RE: sleepwalker @ 81RE: sleepwalker @ 81

    Because profit comes from the agents performance, and paying into the system, paying out to an agent is an expense.

    Anyway when you add it all up it comes out to be about 1.5 million dollars in three months, or $500K per month. Agent pay out in salary must be about 10%, over head 30%, and that leaves 60% for lead generation. Let’s also remember those were the tax credit months in the middle of a pretty long, dry, year.

    I don’t know, but the margins seem pretty tight all the way around.

    Last, but not least, is that Real Estate is a brutal business. Residential sales is the most benign.

  83. 83
    David Losh says:

    Let me put this into perspective for you. The two guys who own Skyline Properties, with the four offices in the Seattle area, net, I mean net, well over a million dollars, a piece, per year.

    These are a couple of great guys, who in my opinion, have actually made a positive contribution to the Real Estate community.

  84. 84

    By David Losh @ 82:

    Anyway when you add it all up it comes out to be about 1.5 million dollars in three months, or $500K per month. Agent pay out in salary must be about 10%, over head 30%, and that leaves 60% for lead generation.

    60% for lead generation? I had no idea 60 Minutes charged that much! ;-)

  85. 85

    I was recently working on a CMA for an upcoming Kirkland listing and I called 4 agents who had pending listings to see what the agreed upon price was. Two of the four admitted that the home had actually closed a couple of weeks previously and they they hadn’t gotten around to updating the status to sold. Might explain why some homes that you see as sold (driving around) are still listed as pending.

  86. 86
    David Losh says:

    RE: Kary L. Krismer @ 84

    60 Minutes doesn’t come cheap. That’s a lot of grand standing to stay in front of the press for that long.

    Anyway that only comes to $3.6 million per year, over I don’t know how many states. That’s not a lot, and as I pointed out that’s using the numbers from premium months over the course of that year.

    Those are tight margins.

  87. 87
    DrShort says:

    RE: David Losh @ 86

    Redfin stated a few months ago that they’re at a $30M revenue run rate which was double the year before. Their challenge will be controlling costs as they expand, hiring the right people, and maintaining the same level of service.

    It’s a completely different business model than a traditional brokerage. Lots of fixed costs from an expensive infrastructure and salaried brokers. I think the jury’s still out on how that model works in an industry with huge variations in volume. Right now, Redfin’s only been growing so it hasn’t been as issue. But from a management perspective, a commission sales force is much easier because it matches costs to revenue. Long term, I think they’ll have to make their broker costs more variable.

  88. 88

    RE: DrShort @ 87 – I would agree with pretty much all of that, except that I would say “right now they’ve been living on VC funds, so it hasn’t been an issue.”

  89. 89
    David Losh says:

    http://360digest.com/2010/07/28/what-bill-gates-said/#comments

    This post by Marlow Harris of Coldwell Banker Bain, is what started my train of thought. It makes sense that during the run up in housing prices, when everything seemed to be golden, that a business model that gave a rebate of commissions made some sense.

    Over on the Rain City Guide there was another article about how a virtual tour technology in 2008 was going to change the face of Real Estate.

    Today, with millions of people stuck with properties that are worth less than the prices paid, it seems to me that agents who actually advised clients during the run up in pricing may be vindicated.

    I don’t think John L Scott, or the technology they brought to the Real Estate community will go away. I think there are uses for Zillow, and Trulia for framing properties as a subscription based site, or advertising.

    What I severely question is if the consumer will be getting more by paying less. As a matter of fact, like with the mortgage debates Rain City Guide seems to be having weekly, the consumers may be paying more for getting less from the Real Estate community in the future.

  90. 90

    RE: David Losh @ 89 – Bill Gates’ view of the world, when it comes to real estate sales, would have come true, if only everyone had virtually unlimited money to change things after they bought!

  91. 91

    By The Tim @ 34:

    RE: deejayoh @ 31 – All right, all right. When I get home today I’ll publish a post on their release, but it will be full of giant asterisks and will probably include some extra charts so readers can have some idea of how messed up the numbers are.

    Apparently giant asterisks take a long time to produce! ;-)

  92. 92
    The Tim says:

    RE: Kary L. Krismer @ 91 – Yeah, yeah :P Got home late on Friday and decided to put it off until this morning.

  93. 93

    […] by Seattle Bubble regular Kary L. Krismer, we believe we have discovered the explanation for July’s 200+ magical mystery sales. Basically it appears that when the NWMLS puts out their monthly reports, the sales counts are not […]

Leave a Reply

Use your email address to sign up with Gravatar for a custom avatar.
Your email address will not be published.

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>

Please read the rules before posting a comment.