Reader Question: What’s With Off-MLS “Hot Sheets”?

A reader forwarded me this email, which he received from a local real estate agent in his area:

Having a hard time finding a house? Here is a list of houses that are investor owned and will be coming on the market soon. Call me for more information and/or a showing appointment! If occupied please do not disturb occupant!

What follows is a list of twenty-three homes, with address, description, and vague pricing statements like these:

  • “Will be affordable – no more than $139,900.”
  • “Final asking price will be in the very high 200s.”
  • “We haven’t set an asking price on this one yet.”
  • “It will be at the high end of the comps.”
  • “We could sell it as is in the $240k range, or fix it and sell it in the $279k range.”

“I’m unclear what the point is – would they really sell before it hits the MLS,” asks the reader.

At first glance, it does seem odd that anyone (whether an investor or just your average home owner) would try to sell a home without giving it the most exposure possible by listing it on the MLS.

I believe that the motivation here is probably that the investors are hoping to find some sucker that thinks they are getting a “good deal” by snagging a home “before it’s listed.” The hook that these homes “will be coming on the market soon” gives the potential buyer a sense of urgency—hurry up and act now, before everyone else finds out about these amazing deals!

This sort of thing is pretty rare in a market where there are plenty of homes on the market to choose from, but with the increasingly scarce inventory we’re seeing on the market recently, I’m not surprised to see it making a comeback.

Actually, I’m fairly certain that the people I bought my home from fell for this sort of scam when they purchased back in 2006. After being held by the same owner since 1980, my home was listed on the MLS in January 2006. It went pending in just a week and the sale to a presumed “investor” closed in February at $267,000. In July 2006—just five months later—it sold again (to the family I purchased it from), this time completely bypassing the MLS. The sale price: $364,000. And no, there had not been any improvements on the home during those five months. It was just a pure, unfiltered ripoff.

That’s the kind of thing that I suspect these investors are hoping to pull off. It probably won’t work as well today as it did during the height of the housing bubble frenzy, but then again, as Einstein is alleged to have said, “Two things are infinite: the universe and human stupidity.”

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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.

57 comments:

  1. 1
    Ray Pepper says:

    just a thought………Did you call the Agent who sent the letter? Instead of the “investors looking for a sucker” is it possible the Agent is “looking for suckers”? Hmmm? Possibly build up a client list… Ya think??

  2. 2
    JoeBlow says:

    My sister sold her house before it hit the market. They had already put an offer in on another house so they didn’t mind if it didn’t get “bid up”, which only happens on well priced houses these days. Her house sold at the full price they were going to ask for it and closed in less than 30 days. I’m not sure how anyone can complain about that. On the other hand a random unsolicited email from someone trying to drive “investor owned” properties sounds a bit shady to me.

  3. 3

    When I Was In the Seattle Market Analyzing FC Homes

    That’s exactly what the skilled FC realtor told me who’d grab them up half price and sell’ ’em for 75% price. Get ’em before they’re FC’d on and offer the old owner living in them some cash too, better than just an eviction. He warned me never tell an attorney about any of them, they’d grab ’em up from under you.

    BTW, the book of pre-FC’d homes back in the early 90s was huge [about 50-100] with new stock every month too, its got to be far worse today. I got my home listings before auctioning and evictions from a source called the Investor’s Edge, this publication is no longer available to my knowledge. It had the Listing agent’s name too, so you could get the property listing information [lien’s, etc] before you bought it too.

    I imagine a degree in psychology would be helpful when dealing with the owner being evicted.

  4. 4
    Pegasus says:

    I have it from a good souse that doing business in this manner is a “necessary evil”. Ripping off people is just part of doing “God’s work”.

  5. 5
    Nick says:

    I’ve noticed that in my local (Los Angeles) market as well: there are properties I run across where there was a sale without hitting MLS, and usually the price is “abnormal” for the market at the time. I always assumed it was indicative of some sort of scam, either against the buyer or lender (if the price was artificially high), or the government (if the price was artificially high).

    On a semi-related note, that’s one of the things I wish redfin would do: allow you to see shadow inventory homes, with approximate prices. Specifically, this would include post-foreclosure REO’s which are not currently on the MLS (ie: no public sale since the foreclosure completion); this data should be available, as far as I know. The other “side” of the feature would be to show homes which were previously listed within a configurable time window (eg: 3 months), but are not pending or sold; that is, people who are likely trying to “refresh” the MLS listing. Approximate pricing could be based on their new pricing approximation tool. Having this be available as one of the redfin filter options would be great for judging the amount of latent inventory in an area, though, and would be valuable to both buyers and sellers.

  6. 6
    Jon says:

    I think this is the foreclosure list with homes that are going to auction on Friday morning. No MLS violation, but you have to bid it up on the courtsteps.

  7. 7
    ARDELL says:

    To be a member of the mls you have to agree to put your listings in it and not promote selling outside of the cooperative system. So technically it would be an mls violation anywhere to promote this type of thing. That doesn’t mean it doesn’t happen, and in L.A. where the fine is $25 they don’t give a RA. But here the fines can be as high as $5,000 or more.

    The mls is an “I’ll show you mine if you show me yours” kind of system. There are rules…many…almost 200. That doesn’t mean you can’t represent a home where the seller doesn’t want to be in the mls now and then. But you can’t make a habit or business plan out of that practice.

    That looks like an email that I got…and sent to Ray. :)

  8. 8
    StillRenting says:

    Speaking of scarce inventory: we went to a few open houses on Sunday, and all three of the homes in Bellevue that we saw are already under contract. People must be really desperate, because two of the three had serious location and renovation issues that were deal breakers for me at the listing price. At a lower price they would be a ‘maybe,’ but it would have to be a much lower price. They went under contract so quickly, I’ll be curious to see what they close for.

  9. 9
    Mike says:

    Funny to see this post today as I was complaining about the lack of inventory this morning and had a co-worker who bought off-market and suggested we could do the same. They knew the seller’s via a friend and it was basically just a FSBO transaction without a middle-man so sounds different than this.

    While I really don’t believe that there is 6% value in using an agent, it just seems sketchy if there is a non-agent/non-seller party trying to push these. Are there any rules on what sort of fees they can charge or make or what disclosures they’d need to give? There are enough formal FSBO and other lower cost seller options that it just seems like the odds would go through the roof that the same guy pushing “pre-listing” homes also has a bridge he’d be willing to sell you as well.

  10. 10
    Nick says:

    @ARDELL, very informative info re the MLS… I did not know that. I just assumed when something was sold without hitting the MLS, it was just an underhanded deal, designed to defraud someone (seller, lender, bank, government, etc.), and that it was a fairly common practice. I see no reason to doubt that assumption, but it is interesting to know that it might run counter to the rules for the MLS.

    As a side-note, this would be another one of those things which would be trivial for redfin to flag, if they were so inclined (since they get both MLS info, and public sales info). I’m not sure if they would have any business reason to do so, but with an automated system, it would be pretty easy to identify offenders.

  11. 11
    Dweezil says:

    Sounds like bait and switch, even if just to drum up clients.

  12. 12
    John Bailo says:

    Another scam I’ve seen around town is the sign posted near a road that’s supposed to look like it was hand written with a marker — but of course, the type is completely uniform and legible — advertising some must sell great house deal.

    Then again, it’s no more deceptive than “from the 200s”.

    By the way — and no offense to Redfin, Tim — but looking at the John L. Scott house finder, there’s a whole lot to like. For one, it’s the only site that seems to let me exclude the bunch of mobile home on rented RV plots and manufactured homes when I search on the low end as well as the To Be Built stuff with no picture and a photo of a blueprint.

    Based on the recs of Scottsman I went bottom fishing in my own small pond of Kent and have been finding some really interesting items!

    If you want a Sign O’ The Times check out this townhome across the street from me:

    http://www.johnlscott.com/PropertyDetail.aspx?GroupID=265322619&ListingID=301267700&CMID=-1&Sort=1&RTR=30&LI=45

    When I arrived here more than a decade ago, these things were selling for $100,000. Some went up to $200,000 and beyond….the asking price now…$32,000….yes. Thirty. Two. Thousand!

    That comes out with standard mortage numbers to $127 a month.

    Please…tell me why there is any homeless problem at all?

  13. 13
    David Losh says:

    RE: ARDELL @ 7

    You can have an off market transaction if the seller agrees. All fees are negotiable.

    The way I read this is that it ties into the quick sales that have been more common lately. Of course this agent is building a client list by working with investors who are looking for a quick turn on properties. This might also have to do with those cash sales that the last post talked about.

    Why wait for a project to be finished before you show it? I have done that several times, where we show the properties as a work in progress. Some buyers may have things they want, like custom tile where we would put subway tile in the tub surround.

    Just a thought, but I think this where people not in the Real Estate business would label this as a scam when it is kind of market we are in.

  14. 14
    ARDELL says:

    RE: David Losh @ 13

    Incorrect…it’s the other way around. “You can have an off market transaction if the seller agrees.” You can accommodate a seller who doesn’t want to be in the mls…but you can’t be the one who suggests that he do so. That is true of all mls systems, but if there is no major abuse of the rule it is often not enforced.

  15. 15
    ARDELL says:

    RE: Nick @ 5

    When I worked in “Los Angeles”, in Manhattan Beach, many of the highest priced properties sold as “pocket listings” outside of the mls. Usually because the owner mentioned at a party, with several agents present, that he was going to be selling his house. Just mentioned it in passing. Instead of trying to “get” the listing they would all run to their friends and find the buyer. This is especially true of Strand and Walk Street properties. Two agent friends would put the deal together before it hit the market. Not because the seller didn’t want it in the mls. Just because he wasn’t quite ready to do so.

  16. 16
    David Losh says:

    RE: ARDELL @ 15RE: ARDELL @ 14

    You just had two contradictory comments, but the point is investors have a number in mind, they want a return as quickly as possible.

  17. 17

    By David Losh @ 13:

    RE: ARDELL @ 7 – You can have an off market transaction if the seller agrees. All fees are negotiable.

    You can have an off system transaction, but you can’t have a pocket listing, where you’re holding the listing, and trying to find a buyer, but not entering the listing in the system.

  18. 18

    By ARDELL @ 14:

    RE: David Losh @ 13

    Incorrect…it’s the other way around. “You can have an off market transaction if the seller agrees.” You can accommodate a seller who doesn’t want to be in the mls…but you can’t be the one who suggests that he do so. That is true of all mls systems, but if there is no major abuse of the rule it is often not enforced.

    What rule are you referring to that would allow you to have a pocket listing if that’s what the seller asked for?

  19. 19
    ARDELL says:

    RE: Kary L. Krismer @ 18

    A “pocket listing” isn’t “a listing”, Kary. If you tell me right now that you want to sell your house…you become “a pocket listing”. If I have a client who wants what you own…and I approach you with that fact and my client buys it, that is a “pocket sale”. No permission needed.

    It works more like an Open Listing.

  20. 20
    GrizzlyBear says:

    RE: StillRenting @ 8

    I think people still are desperate. The bubble is still so fresh in their minds, any drop in price has them salivating. I think the good deals are years out.

  21. 21
    David Losh says:

    RE: Kary L. Krismer @ 17

    Of course you can have a pocket listing.

    Here’s what’s interesting; people involved in the Real Estate business, that includes you Tim, are trying to convince the readers that the MLS has all the listings they need to look at. That’s just not the case.

    Sellers, the same as buyers, many of whom post here, don’t want to be involved with Real Estate agents. Not every seller wants a bunch of lookiloos, or Real Estate agents, mucking around thier property. Some sellers, like some buyers, know what thier property is worth, and just want a clean deal.

  22. 22
    The Tim says:

    By John Bailo @ 12:

    By the way — and no offense to Redfin, Tim — but looking at the John L. Scott house finder, there’s a whole lot to like. For one, it’s the only site that seems to let me exclude the bunch of mobile home on rented RV plots and manufactured homes when I search on the low end as well as the To Be Built stuff with no picture and a photo of a blueprint.

    If you’re seeing mobile homes and manufactured homes in a Redfin search, you just need to un-check the “other” box in the “Property Type” section of the search options.

    As for excluding “to be built” homes, Redfin doesn’t have such an option, although you can filter by year built and just set a max of the year before the current year. I’m not able to find that option on John L. Scott’s site, either. Where are you setting that? I’d be interested to see exactly what they’re doing there.

  23. 23
    ARDELL says:

    RE: Kary L. Krismer @ 18

    Did you mean what rule allows you to have a listing that is not in the mls? That is not a “pocket” listing. That’s a real listing…not in the mls.

  24. 24
    Nick says:

    As an example of what I was referring to, I’d point to:
    http://www.redfin.com/CA/Santa-Monica/907-4th-St-90403/home/6780622

    This house never hit the MLS (as far as I can tell), and sold for about 1/4 the prevailing rate for the area. Now, I have no idea if there are exigent circumstances here or anything, but redfin doesn’t flag it as an “abnormal transaction”, for what that’s worth. I’m just assuming this was either recorded fraudulently (maybe for tax purposes), or a pretty sweet insider deal. It’s just one example, of course, but it’s illustrative of what I was referring to.

  25. 25
    fubarrio says:

    RE: John Bailo @ 12 – good find. not trying to be funny but, my reasons not to buy include:

    1.) it’s in kent — my employment isn’t there. not sure about overall opps there.
    2.) hoa or deferred maintenance issues — what happens if others don’t pay their dues?
    3.) insurance/taxes? how are those trending?
    4.) neighbors in that building. (i know, for many it would be an investment prop)

    sounds crazy cuz it doesn’t look awful, but i almost can’t imagine the price i’d want to buy.

  26. 26
    Scotsman says:

    I think this is a perfect example of a market the Feds should get involved in. Off market, pocket listings, whatever you want to call them they hurt the market as a whole. By not having every transaction be fully exposed to all potential buyers pricing suffers, comps suffer, future sellers suffer. The idea that these are private property transfers died long ago with heavy government involvement in financing, bank bailouts, etc Sales that are anything less than arms length with full market involvement hurt all of us.

    I’d suggest federal standards for and control of the listing process, time on the market before any offers can be considered, standards for properly posting listing photos, etc. Federal licensing of real estate agents/brokers, limits on their compensation, upfront disclosure of who is actually paying for their services, clearly stated buyer’s rights, etc. Obama should appoint a real estate czar so that all functions could be controlled by a centralized office. Together these changes would work to restore confidence in a broken market model. It could also be an opportunity to invest in the nationalization of fragmented state oriented computer networks. A small tax, paid by the selling agent, could be used to fund all of it. And the sooner the better.

    Maybe Michael Moore could be recruited to make a movie about past transgressions, corrupt agents, and particularly hurtful past pocket listings. That would help galvanize the public- and the government- to action

  27. 27
    wreckingbull says:

    RE: Scotsman @ 26 – Now now, why would you propose a new federal organization when the neighborhood commissar can handle those responsibilities with ease.

  28. 28

    By ARDELL @ 19:

    RE: Kary L. Krismer @ 18

    A “pocket listing” isn’t “a listing”, Kary. If you tell me right now that you want to sell your house…you become “a pocket listing”. If I have a client who wants what you own…and I approach you with that fact and my client buys it, that is a “pocket sale”. No permission needed.

    It works more like an Open Listing.

    That’s not a listing at all, nor what a pocket listing is. That’s just knowing someone wants to sell. That gives you no right at all to a commission. Your only right would be to a commission through the purchase and sale agreement you sign.

    A pocket listing involves a signed listing agreement.

    http://en.wikipedia.org/wiki/Pocket_listing

    But you’re sidetracking the issue. You indicated that you couldn’t suggest staying outside the MLS but that the client could. What rule do you base that on?

  29. 29

    RE: Nick @ 24 – Try to pick something local so that we can tell you something about it.

  30. 30

    By Scotsman @ 26:

    I think this is a perfect example of a market the Feds should get involved in. Off market, pocket listings, whatever you want to call them they hurt the market as a whole. By not having every transaction be fully exposed to all potential buyers pricing suffers, comps suffer, future sellers suffer. The idea that these are private property transfers died long ago with heavy government involvement in financing, bank bailouts, etc Sales that are anything less than arms length with full market involvement hurt all of us.

    You should go to work for NAR! ;-)

  31. 31

    By wreckingbull @ 27:

    RE: Scotsman @ 26 – Now now, why would you propose a new federal organization when the neighborhood commissar can handle those responsibilities with ease.

    He has inside information that the Supreme Court will uphold the individual mandate of Obamacare. Once that happens we’ll soon start referring to communism and socialism as being free market economies in comparison, but on the bright side we’ll all enjoy owning a new car every three years, as mandated by the Automobile Recovery Act of 2016.

  32. 32
    mukoh says:

    RE: Scotsman @ 26 – LOL. Scotsman maybe we should have the feds create Board of Listing Control and Equality Assurance for All Buyers ala Ayn Rand?

    Good luck on that. I know realtors who specialize on finding the seller of a property for investors that they already have who is not on the MLS. They pound phones all day. They do 10-15 deals a month like that. Its either land/multi/preforeclosures. But thats what makes these deals profittable. Its because shmucks like “investor” types on here do not get to them.

    One such purchase last year worked out to a 38% profit margin within 8 months for someone.

  33. 33
    David Losh says:

    RE: mukoh @ 32

    So what are those people called? 38% profit? Those people sound like investors.

    Actually, taking into account your body of comments, they sound like boiler room scammers.

  34. 34

    RE: Pegasus @ 4

    Actually Using the Bible [Old Testament] as a Reference

    The whole real estate business is against God’s Will:

    “…25 ” If you lend money to any of My people who are poor among you, you shall not be like a moneylender to him; you shall not charge him interest….” Exodus

    “…19 ” You shall not charge interest to your brother — interest on money or food or anything that is lent out at interest….” Deuteronomy

    http://www.tentmaker.org/lists/UsuryScriptureList.html

  35. 35

    Nick, from comment #5:

    “that’s one of the things I wish redfin would do: allow you to see shadow inventory homes, with approximate prices. Specifically, this would include post-foreclosure REO’s which are not currently on the MLS”

    Redfin does this. Go to their search page, then from the menu at the top, under “Search Listings” in very tiny font says “more options.”

    Under “include” make sure the “foreclosed homes” purple house icon is checked and refresh your search.

  36. 36

    RE: John Bailo @ 12

    Here’s a Big Cause and Effect of Why a Homeless Job Scarcity Problem Exists in America

    It causes a massive reduction in income tax churning and Wash State tax churning too. I was reading in April’s Fast Times today that $483B a year [yes Bubble Heads, about a half a $Trillion] is sent out of the American job market to other countries in the form of laundered money. Imagine if all that was put into domestic only job holders [i.e., homelesss and chronically unemployed, like Y Gen] and not sending a lion’s share of the American made occupations loot out of our country, but kept in our local economy?

  37. 37
    FenceSitter says:

    RE: Jill Schlicke @ 35

    Make sure that there is no price minimum or maximum as well – otherwise the purple icons will not show up.

  38. 38
    John Bailo says:

    RE: The Tim @ 22

    Yes, you’re right that works.

    (I may have been thinking more of Zillow.)

    Right now there are some condos where the Homeowner Dues could be a significant percent of the monthly mortgage.

    I wish that could be brought out more fully in the calculations on the right hand side…

    For example in this condo:

    http://www.redfin.com/WA/Kent/25801-116th-Ave-SE-98030/unit-301/home/12092874

    A 30-yr mortgage is 286/mo…but the dues is $258 — nearly doubling the total payment!

  39. 39

    RE: John Bailo @ 38 – A $258 dues is the worst you could come up with? That’s one of the lower ones.

  40. 40
    The Tim says:

    RE: John Bailo @ 38 – I have double good news for you.

    1) We just added the ability to filter your search by HOA dues.

    2) We’re working on a better version of the calculator, and I think it will include HOA dues in the calculation.

  41. 41
    wreckingbull says:

    RE: John Bailo @ 38 – I’m no fan of condos, but I easily spend more than $3K/year on home maintenance. If that condo has a decent HOA, $258/month is a steal, as it also includes water/sewer/garbage. While I don’t have those expenses now, I seem to recall that when I was in Seattle, those three utilities alone added up to more than $100/month.

  42. 42

    RE: wreckingbull @ 41 – If you keep a green lawn it would probably cost well in excess of that.

    BTW, in many condos your heat is also less (if not included in the dues) because you share common walls and/or have a unit under you providing heat.

  43. 43
    Nick says:

    RE: Jill Schlicke @ 35 – I search with foreclosure listings enabled, but that’s not really the “shadow inventory”. The properties I’m referring to are those which are not on MLS currently, but you could reasonably infer are effectively still waiting to be sold, where their owners are simply waiting for a better time to list them. For example, there’s a lag between when a property goes back to the bank (becomes a REO) and when it is listed on MLS/redfin. There are also properties that go on/off MLS semi-regularly, as the seller agents attempt to “refresh” the listing to generate interest. Both of these types could be considered additional potential inventory, at least in terms of being aware of all the properties which might potentially be on the market, even if not actively listed at the exact moment.

  44. 44
    Nick says:

    RE: The Tim @ 40 – That’s great to hear. Will that include additional recurrent mandatory costs (such as land lease payments) as well? Either way, good add. :)

  45. 45
    The Tim says:

    RE: Nick @ 43 – What Jillayne is talking about is the purple icon “Foreclosed homes” on Redfin, not “foreclosure listings.” These are homes that have been repossessed by the bank but not yet listed on the MLS.

    Here’s a blog post on Redfin with more info, and here’s an example search, showing the 210 such homes currently in Seattle.

  46. 46
    ARDELL says:

    RE: Kary L. Krismer @ 28

    Kary, I have at least 5 “pocket listings” right now. Most every active agent does. I’ve been in the business for almost 22 years in 5 States. I don’t need a Wikipedia link to tell me what a “pocket” listing is.

    Given our mls does not allow us to have a signed listing agreement until we are ready to put the home in the mls within 24 hours, there’s hardly an agent in town who doesn’t have a pocket listing from time to time. None of them involve “signed listing agreements” because they must be entered in the mls within 24 hours of that signed listing agreement, per mls rules. This is feeling very deja vu. Didn’t we have this conversation before?

    Pocket Listings are part of Shadow Inventory. One of mine, in Seattle’s Maple Leaf neighborhood will be on market near the end of April, and has been a “shadow inventory” item for 2 to 3 years. I have a similar one in Meadowbrook, but that will stay “in the shadows” for at least another year. 4 years total. Another pocket listing, but not my pocket listing, in Houghton will also stay in the shadows for at least another year, and be rented for one year at $2,700. Owner thinks next year will be a better time than now. This year it’s a pocket rental listing. But since I don’t do rentals as the norm, it’s not my pocket listing unless I run into someone who happens to want to rent a house in Houghton for $2,700 a month. In that case…the listing…is “in my pocket”.

    There are many rules about “pocket listings”, but there can’t be a rule about there not being any “pocket listings”. Every time a seller calls me to ask me to sell their home…later and not today, next month…next year…that is a “pocket listing”. The seller is willing to sell it today…but not ready to list it today and put a lock box on the door.

    Usually it is not in the best interest of the seller to sell it “while in pocket”. But once in awhile if there is a handicapped child or elderly person or other personal reason why the seller would rather not have a lot of people traipsing through via a lockbox on the door, they would prefer it be sold “out of pocket”. In that case it could be either with or without a signed listing contract.

  47. 47
    Pegasus says:

    RE: ARDELL @ 46 – How does this relate to Tim’s original post here about an agent sending out an email with a list of twenty-three homes, with address, description, and vague pricing statements ?

  48. 48
    ARDELL says:

    RE: Pegasus @ 47

    “Vague pricing” is a normal feature of a pocket listing. My Maple Leaf is expected to be $450,000 or so, but not pinned down yet. Every pocket listing I’ve ever run into among my colleagues has had “vague pricing”. Talked to an agent last week about one coming up in Lake Forest Park. I asked her if the price will be over $500,000. She said no. That’s all I needed and she didn’t know the actual number yet. Pocket Listings are always subject to variance, some more than others. All Shadow Inventory has “vague pricing”.

    I know at least three guys (agents) who send those email lists. They are usually homes that will be available at the Trustee Sale. Often ones their investor clients plan to buy at the auction. They don’t know what they will sell them for until they know what they get them for. Usually they are fishing for the buyer in advance, so they know what to bid at the auction.

    I’ve gotten calls from the auction as well. As Jillayne noted, they are a lot slower then they used to be. A couple of years ago it was not uncommon for my phone to be ringing off the hook the day of the auction asking if my buyers would be interest in X house, and at what price, so they knew what to bid on it at the auction.

    When you think about it…isn’t every Listing Price of a home for sale “vague pricing”? Clearly every List Price of a short sale is “vague pricing” that is usually no indication of what the lien holder may actually accept.

    No List Price is an absolute given without a range of potential sold prices. “no more than $139,000”, “very high 200’s” doesn’t seem odd to me. Doesn’t every builder say “A dozen homes starting in the mid $600s”?

    Vague Pricing does not = “unethical”. It means we don’t know yet…but feel free to make us an offer while we’re working on pricing.

    There’s a new development of 12 houses in Rose Hill Kirkland. The builder is only opening up the first 5 lots. Aren’t the other 7 “shadow inventory” with “vague pricing”. They will likely be at about the same price or so of 4 of the first 5, don’t you think? Only 3 are listed…at least 2 more are available. Isn’t that “Shadow Inventory” with vague pricing?

    Pulte’s putting up a slew of new homes up on Education Hill. Aren’t they “Shadow Inventory” with “vague pricing”. We all know how many there will be and that the prices will range from x to x, but they will never appear all at once in the mls or on a public site.

    In my world shadow inventory and vague pricing is an everyday occurrence, not an abnormality.

  49. 49

    By ARDELL @ 46:

    Kary, I have at least 5 “pocket listings” right now. Most every active agent does. I’ve been in the business for almost 22 years in 5 States. I don’t need a Wikipedia link to tell me what a “pocket” listing is..

    I know you like to admit things that you shouldn’t admit on the Internet, but in this case I think you do need a Wikipedia link to tell you what a “pocket listing” is. Even after 22 years, being wrong is hardly something new for you.

    While terminology and understanding of terms can of course vary, just knowing that someone wants to sell is not a pocket listing. Just working with someone who wants to sell in the future is not a pocket listing. To the extent you want to use the term that way, it’s not a very useful term. With so many people under water, lots of people want to sell.

    Seriously, you should invest in a dictionary and look up the terms “pocket” and “listing.”

  50. 50
    Pegasus says:

    RE: ARDELL @ 48 – I think you are correct in your statement about what these emails are about:

    ” I know at least three guys (agents) who send those email lists. They are usually homes that will be available at the Trustee Sale. Often ones their investor clients plan to buy at the auction. They don’t know what they will sell them for until they know what they get them for. Usually they are fishing for the buyer in advance, so they know what to bid at the auction.”

    I am not going to get in to what is or isn’t a listing or “pocket listing” but this really does appear that someone is using a pre-foreclosure list and is misrepresenting reality to an unsuspecting audience by pretending that they are part of a transaction when they clearly need suckers first to become part of a transaction involving any homes on the list. They are merely fishing for suckers first so that they can flip a property to them making themselves a nice commission and a nice tidy profit for their investors with little risk off the backs of unsuspecting fools.

  51. 51
    David Losh says:

    RE: ARDELL @ 46

    I’m very hard pressed to agree with Kary about anything, but yes a pocket listing is a signed agreement. The seller can limit who to show a property to. Some sellers only want an agent to deal with one buyer. There are hundreds of examples that I could use here.

  52. 52

    RE: David Losh @ 51 – Of course some agents have potential sellers they are working with in the future. One of my often told war stories of is a listing which almost was foreclosed out a week before sale because the deed of trust trustee was incompetent and hadn’t continued the sale date as instructed by the bank.

    On that particular sale we were working with the seller three months before the listing, because the timing of her sale was influenced by her children’s school schedule. During that three months she was delinquent and had negotiated a work out arrangement. At best our involvement with her was a business expectation prior to her actually signing the listing.

    To value such situations more highly reminds me of sellers who say: “I know this one person who wants to buy my property . . ..” I’ve yet to see one of those situations actually turn into a sale.

  53. 53
    ARDELL says:

    RE: Pegasus @ 50

    “They are merely fishing for suckers first so that they can flip a property to them making themselves a nice commission and a nice tidy profit for their investors with little risk off the backs of unsuspecting fools.”

    They could be homes their investors already purchased and are in the process of deciding how much to put into the homes before selling them. Often the profit margins are thin and they are trying to avoid some of the cost of selling.

    As to “unsuspecting fools”, buyers of these homes are no more “fools” to buy these than some other homes listed in the mls. The investors serve a function, as there are not many people who want to buy a home at auction without a home inspection and thorough due diligence process. When the buyer buys it from the investor they have the advantage of a normal process and less risk.

    I’d like to know what you think a “nice tidy profit” is. There are two of these homes on market that I am interested in for two of my clients. One is in Kenmore and one is in Kirkland. The add on to the price paid at auction is $150,000. Odd they both added the same amount.

    What burns my butt is one of them says the home was totally remodeled, but the Seller Disclosure Statement says “don’t know” to just about everything. Yes…when the owner never lived in the house it’s understandable that they know less. But if they “did a total remodel” one would think they would have learned a few things about the house in the process.

    I’m adding up the improvements and neither is deserving of a $150,000 jack up in price from what was paid at auction. The only reason they are often able to nab an “unsuspecting fool” is that they make them look pretty. There are many people willing to pay the price if it “looks pretty” and not trained in determining the extent or lack thereof of the improvements.

    One says “new roof, new furnace…etc.”, but if you read the listing from before it went to auction, the home had those “new” things before it went to auction. That leaves some paint and cheap carpet being new as paid for by the person who is adding $150,000 to the price. Sadly the comps would support this jacked up price and they would likely appraise. So far no one’s buying the idea that the investor should get away with $150,000 more than we can see he just paid. Will be interesting to see what happens.

    A tidy profit is one thing…$150,000 for some paint and carpet is just nuts.

  54. 54
    ARDELL says:

    RE: Kary L. Krismer @ 49

    That would normally be potentially correct…except for our rule that listings must be entered in the mls within 24 hours of being signed. I don’t think Wikipedia is aware of our local constraints in that regard.

  55. 55
    Nick says:

    RE: The Tim @ 45 – Thanks Tim; I’ve had this option enabled for a while, and haven’t noticed much, but perhaps that had to do with the data switch mentioned in the blog post. I was mainly basing my perspective of shadow inventory on the listings in RealtyTrac, which has shown considerably more properties in the past. I still see very few foreclosure listings in redfin, but perhaps this is due to looking in the LA area (maybe redfin has less data for this area)?

    Anyway, great to see redfin doing more features to give users the most informed perspective possible. :)

  56. 56
    The Tim says:

    RE: Nick @ 55 – Hmm, I see many thousands of foreclosures on Redfin in the LA area.

    Also, it is important to know that when RealtyTrac reports “foreclosures,” they’re including everything from notice of default to notice of trustee sale to auction scheduled to actual repossession. Many of the “foreclosures” they are counting have not actually occurred yet. On Redfin we’re only showing the ones that the banks have actually repossessed.

  57. 57
    ChrisM says:

    RE: The Tim @ 56 – Would be fascinating to find out

    a) how much property taxes the banks are paying on their foreclosed properties
    b) what they do with the high-end properties that are vacant – rent them out, hold team-building events in them, etc.?

    http://www.redfin.com/CA/Malibu/26944-Malibu-Cove-Colony-Dr-90265/home/6855590

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