Shady Practice of Relisting Gets National Attention

A few people pointed out this national story that ran on last night’s Nightline: Buyer Beware: Unsold Homes Are Often ‘Re-listed’.

It’s a tactic called “re-listing,” which is legal and more common than you think.

“Re-listing is just refreshing the home on the market,” Niece explained, “making the home look like it just came on the market.”

“When you re-list a home, you know, it’s still been on the market for X amount of time, but a buyer that comes in with another agent very likely won’t know,” Niece said.

Here’s how it works: Niece cancels house listings when they reach 70 days on the market, and then re-lists them as new, with 0 days on the market.

Here in the Seattle area, the NWMLS began tracking Cumulative Days on Market (CDOM) in the summer of 2006, but I believe that information is available only to agents with direct access to the MLS (though since I don’t have such access, I could be mistaken). As regular readers may recall, we had an ongoing discussion about pulling homes off the market and relisting them to appear “fresh” back in January 2007. It was finally explained to us that while canceling a listing and relisting it (without a change in price) is against the rules, writing a short contract with the seller and letting the listing expire, then relisting it is 100% permissible.

From the description given in the Nightline story, this appears to be exactly what the agent in Minnesota is doing. And just like in Minnesota, despite CDOM being tracked in the NWMLS, this tactic will still result in a listing appearing on the home search websites as “new.”

Apparently it’s still legal for multiple listing services to engage in what would in any other industry be considered blatant false advertising. This doesn’t seem likely to change anytime soon, so it’s always good to keep this in mind if you’re browsing the online home search sites looking for a deal in a slow market.

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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. Tim also hosts the weekly improv comedy sci-fi podcast Dispatches from the Multiverse.

72 comments:

  1. 1
    S-Crow says:

    Buyers can easily overcome this issue by asking an agent who is representing their interests about the listing history. Further, many online brokerages already indicate cumulative days on market.

    I think a larger issue is dropping a price by $1000 or some other menial move after being on the market for a long time.

  2. 2
    Jess-Pumpkin says:

    As youknow, I’ve been watching the market to buy for well over a year, and I recognize houses that were on before when they relist as “new”. It’s quite common inside the city limits, and we have talked about a few of them on the forum (especially under “audacious flips”). I can point to about a dozen listings on right now that are truly old — if anyone cares (this problem adds to the perception that there is lots of inventory in N. Seattle — there is, but the houses are as stale as a bowl of cheerios left in the sink by a pre-teen for a few days).

  3. 3
    Sniglet says:

    I certainly don’t want to defend re-listing, but I don’t think it really matters all that much. An over-priced home won’t sell regardless of whether it has been “listed” for 5 days for 105 days. Buyers shouldn’t rely on the days-on-market stats for making valuation judgements anyway, even if there weren’t abuses of serial re-listing. For example, there are homes that have been taken off the market for several months, or a year, only to be put back again. No one is doing anything improper by adding these properties as “new” listings, even though they have a spotty history.

    One thing I am curious about is how realtors handle re-listings during their new listing tours? Many cities organize regular tours of the most recent listings for their realtors, to familiarize themselves with new inventory. Do these listing tours just skip the properties that were re-listed, or do they repeatedly keep going back to the same (re-listed) properties month after month?

    I can’t believe the realtors themselves wouldn’t notice that some of the properties on their tour were the same ones from a couple months earlier.

  4. 4
    Garth says:

    I would imagine the listing quality and truthfullness is the responsibility of the NWMLS member who posted the listing and not the NWMLS.

  5. 5
    Sandy says:

    Sniglet–we do notice. And when they are relisted, we tour them, which is usually a good thing because by the time a few months go by you start forgetting the details about the place. Also, sellers also frequently make changes while their homes are off the market so not touring the homes when they are relisted would mean you might not know what has changed and whether or not that factors into the current price.

    Whether or not a property is relisted is usually a major topic of conversation among us when we tour a property and most good agents will also bring up this fact to our buyer clients when they go to see a property.

    That said you will probably only get one chance to relist a property and have agents tour it again. If it happens repeatedly they won’t keep coming back.

    Also, thanks for noting that this practice doesn’t really matter all that much, because it doesn’t. How long a product (in this case a house) has been on the market doesn’t change what the product is unless there is an issue with shelf life. Houses do not go bad, so shelf life per se is not an issue. And time on market is not a defect or a quality issue so it’s not really material to the price in a sense. It might indicate something about what the rest of the buying public thinks about the price, and it may indicate that the price is high…but time on market doesn’t lower value in and of itself. Mostly, it is one of many things you want to look at when you are looking at the house and trying to decide if the price is right. Which is to say, it’s more of an indicator about the price, than a driver of it, if that makes any sense.

  6. 6
    Sandy says:

    BTW, I am not defending the practice nor do I engage in it, I’m just trying to clarify a point.

    Also, Garth, you are mostly right that each individual agent is supposed to police themselves, but the NWMLS does have to enforce the rule.

  7. 7
    singliac says:

    I agree that the price is much more important that days on the market, but I guarantee that agents are still using these numbers to create a sense of urgency. “It’s only been on the market 10 days. You’d better snatch it up before it’s gone!”

  8. 8
    Sandy says:

    Singliac–true enough, because there will always be a few bottom feeders out there who are ethically challenged.

    But I will say that most agents want their clients to get the best price they can on a particular house, because we want our people to be happy with our service. Most of us prefer to work with clients who are referred to us, and happy clients refer business. So if we have knowledge that a client might be able to use to their advantage to get a better price or any other terms that are more favorable to them, we make sure they know. Besides as a buyer’s agent, it is our state-mandated DUTY to do this.

    That applies to buyer’s agents, but not necessarily to an agent that represents the seller–that’s the rub when you buy a home through the listing agent.

  9. 9
    Silver9 says:

    Re-listing must have an affect on the price negotiation or else realtors would not do it in the first place. They are clearly going out of their way to hide the fact that these homes are not selling.

    As a buyer, it makes a huge difference to me if a property has been on the market, unsold, for 4 months or if it was just listed last week. These two situations should also have a big impact on the seller and their expectations.

    Re-listing also has an impact on people that use websites to watch the market and are not privvy to the secret MLS data because it creates misleading information. It is relevant whether homes are selling after a few weeks or whether they sit on the market for 5 months before being withdrawn or relisted.

    If you are going to show any information at all, it ought to be accurate. I continue to be surprised with how lax ethics (and laws) are in real estate.

  10. 10
    Dan Edwards says:

    This issue is indeed solved by a quick question. Ask the agent.

  11. 11
  12. 12
    Sandy says:

    Silver9–yes, it has an affect but it doesn’t drive the price. I’m not saying that the fact that a house has been relisted or how long it has been on the market isn’t important, or relevant, or interesting. I’m saying, that relisting a property isn’t false advertising in the same sense that saying something has 5 bedrooms when it has 4 would be. It’s something that we can look at as an indicator of whether or not the price is high, but the days on market doesn’t drive the price.

    I’m not sure what the options here would be anyway. I suppose we could say to sellers, “well, you had 90 days to sell it and it didn’t work so you are now banned from listing your home for XX period of time so that buyers won’t get confused.”

    Or we could say, “no matter what happens, you can’t relist a house and have it pop back up on the website.”

    We have to keep the rules on relisting somewhat nebulous because there are just too many situations why a seller might be in that position, and bottom line, the NWMLS is a marketing tool that is intended to be used to sell homes. It has become an excellent (though not perfect) source of data, but that was never the intention or the purpose of it.

    PS–The laws and ethics aren’t lax. The problem is we have people who abuse the system. Unfortunately I don’t think it is possible with the technology we currently have, to do a whole lot more than what has already been done to try to stop this.

  13. 13
    Sandy says:

    Dan–good point!

    I would have said the same but I was working from the assumption that most folks on here would rather have bamboo placed under their fingernails than actually have to talk to one of us! :-)

  14. 14
    uptown says:

    Just as the number of bidders in an auction, tells you about interest (and therefore price) of an item; “days listed” tells the potential home buyer about competition and relative market value. As we all know – an item is only worth what someone is willing to pay for it.

  15. 15
    AMS says:

    “An over-priced home won’t sell regardless of whether it has been “listed” for 5 days for 105 days.”

    But what about an under-priced home? If I am looking for an under-priced home, I probably am not looking at those that have been listed for “105 days.”

  16. 16
    Sandy says:

    AMS–you might be, after that big $100K price drop the sellers just agreed to!

    (Point being, ya never know).

  17. 17
    AMS says:

    Sandy-

    Notice how our strategies differ: I am looking in the “bargain bin,” but you are negotiating down an over-priced home.

    I would guess that the owners of a home that has truly only been on the market for five days are less likely to agree to that “big $100K price drop.”

    One never really knows if the offer is not made…

  18. 18
    rose-colored-coolaid says:

    Re-listing must have an affect on the price negotiation or else realtors would not do it in the first place. They are clearly going out of their way to hide the fact that these homes are not selling.

    Maybe. But sometimes people do things because everyone does it, or because it worked once and since then the world has changed. Football coaches call timeouts prior to last second field goal attempts, despite most kickers saying it gives them more time to get focused. People play lucky slot machines even when they lose over all. Many people don’t walk under ladders even though it’s unlikely to affect your life in any way. Even your genome contains billions of worthless bits.

    The point is, some non-harming behavior is retained even if it is wasteful, redundant, or just ridiculous.

  19. 19
    Sandy says:

    AMS–What I was getting at that a seller might spend 105 days priced too high and then drop the price, at which point, he’s no longer new on market, but also, no longer overpriced.

    Hey, I have nothing against the bargain bin. In fact, I love the bargain bin. However, I would not limit myself to that.

  20. 20
    budbrad says:

    Someone is gonna make mint when they develop a database which tracks all of a home’s data, including all of the listing and sales data. Kinda like an electronic abstract combining the assessor’s data and the MLS data and archiving it by property.

    There’s your billion dollar idea. My hands are full at the moment. You can toss me a boat or something when you’ve made your money.

  21. 21
    rose-colored-coolaid says:

    budbrad, did you just describe Zillow.com?

  22. 22
    b says:

    rcc –

    I think he means zillow but accurate :)

  23. 23
    laxtosnoco says:

    I see this all the time and it is a minor annoyance. When I logon to Redfin, my default search is for new listings within 2 days. I frequently see the same old stale listing pop up as new. This is with no major price changes, upgrades, or lapse in listing time.

    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.

  24. 24
    SteveH says:

    Hey rose-coloured-coolaid – Zillow does a pretty sh*tty job of reporting actual values. Out of curiosity I watch two houses that I used to own and I have to tell you Zilllow does not report MARKET values. For example, I used to own 1047 NE 98th, 98115. It recently sold for $450k. The Zillow estimate before sale was in the $550 range. After the sale, which Zillow lists, the Zestimate is $509,500, still way above the actual sales price. So what is the value? What someone paid in December 2007 or a estimate? I would go with the December 2007 sale as a real value. So Zillow is pretty much bullsh*t. They have the recent sales data but refuse to value the house at what someone was willing to pay, and what the owner was willing to accept, which is the best definition of market price. Believe Zillow at your PERIL.

  25. 25
    SteveH says:

    Sorry, should have been “… an estimate…” I like well English.

  26. 26
    Greg Perry says:

    Expert from NWMLS rules:
    NWMLS will initiate disciplinary proceedings against agents and brokers who improperly cancel and relist properties or input meaningless price changes. Canceling and relisting is only permitted when there has been a substantial change in the quality or condition of the property. A price change should be input only when there has been a material change in the price of the property. Otherwise, canceling and relisting and inputting changes are deceptive and misleading marketing ploys, designed only to gain undeserved market exposure at the expense of other properties. Both of these practices are prohibited by NWMLS’s Rules and both have been and will continue to be subject to disciplinary action and monetary sanctions.

    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.

  27. 27
    singliac says:

    I love to see all these agents posting on the blog. I have no malice toward them, but I am curious what draws them to the site. Here’s a Poll for you, Tim:

    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.

  28. 28
    singliac says:

    g) curiosity

  29. 29
    laxtosnoco says:

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

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

  30. 30
    jon says:

    h) there is occasionally useful information here

  31. 31
    just_checking says:

    Answer – c & d

    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. :)

  32. 32
    Greg Perry says:

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

    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.

  33. 33
    laxtosnoco says:

    I just added a thread in the forums where people can post examples of shading re- listings. I started with an REO that showed up as ‘New’ today even though the property has been on the market about 30 days. The ‘New’ listing shows ~6% price drop and it appears to be in the exact same condition–same torn up kitchen and everything.

    Shady Relists

  34. 34
    david losh says:

    I have no problem telling anyone why I come here. I’m a new agent after ten years of consulting. I’m an idiot savant about Real Estate. I started working on houses in high school and just kept doing it. My wife and I buy and sell. Sometimes I get the idea to help other people buy and sell Real Estate.
    My good and long time friend told me that in today’s Real Estate market place you have to be involved in the blogosphere. WTF,LOL, and BTW, go see RCG, the dog guy in Arizona, Seattle Real Estate Professionals, and join Active Rain. While doing that all these flying monkeys from Seattle Bubble would lurk, rant, rave, and terrorize the Real Estate blogosphere; I thought, cool.
    As it turns out I did see the budding blogosphere business model developing here the same as the on line Real Estate business models, like Ray, rodfun, and mls for losers. You don’t want to call a Real Estate agent and I don’t blame you. The system, as I’m discovering more and more each day, is broken.
    So I come here now for amusement. This is another piece of the system. I would really like to find a way to fix the way people buy and sell properties for themselves. I’m agreeing that in today’s market place you can do it yourself as well as asking eighty per cent of the real estate agents working today. That’s just wrong, but I don’t see any solutions here.

  35. 35
    Ray Pepper says:

    Why do I come here? Hmmmmmmmmmmmm. Blatantly obvious… To unload shirts, bumper stickers, and yell at people. I took a day off from Home Show and I’m revitalized!!!!!!!!!!!!!!!!

    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 damn 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

  36. 36
    economist says:

    I agree that the price is much more important that days on the market

    “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.

  37. 37
    Alan says:

    In an auction, the actions of other bidders acts as a signal that provides information about the value of the auction item. In the case of a house, if it has been on the market for a long time, that is a signal that no one else wants it and that the house is undesirable for some reason. It makes it that much more difficult to sell.

  38. 38

    WE’VE SOLD OUR SOULS TO THE REAL ESTATE BAAL GOD

    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

  39. 39
    Greg Perry says:

    There is an old saying about negotiation:
    “Time is the enemy of the SELLER”.

    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.

  40. 40
    Greg Perry says:

    “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. :)”

    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!)

  41. 41
    Cougar says:

    N – North
    W – West
    M – Monopoly
    L – Listing
    S – Secrets

  42. 42
    leanne finlay says:

    Here’s a second look at DOM. If you’re looking for something that possibly is underpriced, go look at everything that has a very long DOM first. Often a very long DOM property gets ignored or overlooked by buyers because they think something is ‘wrong’ with it. Could be that all that is wrong is that a seller chose to list at too high a price for too long a period of time.

    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.

  43. 43
    Greg Perry says:

    Leanne,
    Great point.

    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!

  44. 44
    deejayoh says:

    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…

  45. 45
    singliac says:

    David Losh, I agree with the idiot part, but not the savant part.

  46. 46
    economist says:

    if it has been on the market for a long time, that is a signal that no one else wants it and that the house is undesirable for some reason.

    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.

  47. 47
    Sandy says:

    Greg and Leanne–last night in the heat of the moment I wrote a comment here to the effect that 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. 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.)

  48. 48
    JJL says:

    I’m a licensed Realtor with 20 years experience and I’d like to add my 2 cents.

    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.

  49. 49
    Sandy says:

    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.

  50. 50
    The Tim says:

    Sandy said,

    …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.

  51. 51
    Greg Perry says:

    In 1995, the public had bumpkiss for statistics. In about 1998 or so, listing information started coming online, and later statistical information. 95% or more of all the statistics we banter about are courtesy of the NWMLS. (who I believe in most ways is quite open)

    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.

  52. 52
    Greg Perry says:

    Tim,
    The NWMLS struggled for years with DOM. I fought along with others to create CDOM. I’ts not perfect, but getting better. They are putting teeth into abuses. This number will continue to get better over time.

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

  53. 53
    Sandy says:

    Tim–I don’t think that is a fair comparison. Why? It’s much more complex than the analogy you are giving.

    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.

  54. 54
    Greg Perry says:

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

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

  55. 55
    Greg Perry says:

    “I get that the publicly viewable portions of the MLS are basically an advertisement. ”

    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.

  56. 56
    Sandy says:

    Also, I think it’s better not to post days on market at all. Which is why Windermere doesn’t. We put up a little “new” tag on the supposedly new ones, but the total number of days on market is not available to the public. I think the fact that some of the other websites do show this number is a mistake on their part, given that the information that ends up being shown is subject to these abuses.

  57. 57
    deejayoh says:

    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

  58. 58
    Sandy says:

    dj–I’ve read the page, thanks. Several times. Couple things to note: NWMLS is not a named party in this lawsuit so it will not have any effect on the way the issue we are talking about here is handled. If you read beyond the opening page you copied and pasted from, you will see that what the DOJ is trying to challenge as antitrust violations are “MLS rules that unreasonably restrict competition by brokers who use alternative business models.”

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

  59. 59
    deejayoh says:

    Well. my comment wasn’t directly referencing NWMLS – but I suspect any ruling on the matter of what you can and can’t do with MLS data would have broad impact on all regions. I’m not so sure being named will matter.

  60. 60
    Sandy says:

    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.” I suggest you actually read the report issued by the DOJ, paying particular attention to the last section called Conclusions and Recommendations, where it outlines very specifically what the DOJ wants to see happen. Nowhere in there does it say anything about what we do with the data. DOJ doesn’t care about that, they care about MLS’s passing rules that make it difficult for new business models to compete. The DOJ’s main concern with regard to our industry is a price concern–they do not want us trying to band together to maintain any particular price structure.

  61. 61
    Sandy says:

    And by price, I am talking about commissions, just to be clear.

  62. 62
    Silver9 says:

    Pay what its worth? Maybe I am missing something that is obvious to others.

    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.

  63. 63
    Sandy says:

    Okay, before I blast off again (I’m having fun with this…sorry if my writing style comes off as snippy–I know it can and I really don’t mean it that way) I just want to say I do enjoy Seattle Bubble. I really do. And most of the comments here are good, and at least food for thought. That said, I’m ornery today. And like I said, arguing about this beats doing my taxes which is what I SHOULD be doing!

    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.

  64. 64
    deejayoh says:

    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..

  65. 65
    budbrad says:

    Zillow does about 10% of what I described. Zillow just scrapes data from KC iMap. And many of Zillow’s features only work when a property is manually listed with zillow.
    Someone should be scraping the data from all the listing agencies.

  66. 66
    Mark L says:

    Relisting – In some cases a non-trivial price reduction is warranted, and using an existing listing can be misleading.

    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…)

  67. 67
    Mark L says:

    Meant to say “floundered on the market at $400K”.

  68. 68
    femto says:

    There are some counter examples if you look hard enough. This listing is coming up on a year and they’ve dutifully lowered the price just enough to not get a new sale every couple of months. Probably a case where they really should have taken it off the market, done some cosmetic work, and relisted at a single big drop.

    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

  69. 69
    economist says:

    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.

    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.

  70. 70
    Greg Perry says:

    Ecomomist, your question is a good one.

    “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.

  71. 71
    david losh says:

    Like i said i come here for amusement. This is the most useless discussion I have seen on the internet. You either buy the house or not. The product on the shelf doesn’t have an expiration date. WTF???!!! BTW you’re having this whatever because at the beginning of every year agents relist properties to change the first two numbers of a listing. We work in the sellers best interest and it’s not in the sellers best interest to have a 27 listing in 28. Sorry it’s a fact of the business.

  72. 72
    dECIBEL says:

    Cumulative days on market is readily available and this practice is SOOO transparent to be ridiculous. Hardly false advertising when the MLS isn’t selling the product to you. It’s more like they are a “distributor” for info that’s given to them by the agents. CDOM is a good thing to look at, but ultimately if the house is good and the price sits well versus its comps WHO CARES if it’s been on the market a long time?!

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