Realtors gaming the MLS

Jim,
As someone who has been watching the market everyday for the last 2 years, I can tell you it’s entirely possible to memorize the listings in a certain price range. Giving a house a new agent or a new MLS number doesn’t really fool anyone. Do some sneak through the process? Certainly. But if you are someone like me who is scoping only certain neighborhoods and price ranges, it’s very easy to recognize a home that has been re-listed.

I’ve seen the “new MLS number” work like a dream for some properties for getting it sold.

From a buyers point of view I defintely want to know how long something has been on the market to decide which order to see homes in.

The only people complaining that DOM shouldn’t exist are people failing to sell in a timely manner.

Tony,
Your post is pure BS. If a house is nice and it’s priced correctly, it won’t sit on the market for six months, even in today’s slump. DOM is highly relevant.
Houses are not shoes, in case you didn’t know. Maybe you’d be more successful selling shoes. That is the worst analogy I have seen in a long time.
Athol, you’re onto something when you say:
“The only people complaining that DOM shouldn’t exist are people failing to sell in a timely manner.”

I guess I am not making myself clear and I am sorry that you didn’t like my analogy. There is no need to make personal attacks on a forum such as this. I will remain professional in trying to explain what I have experience after selling over 240 homes in the last 4 years. Maybe you will understand this: A house on the market for 300 days that is worth $250,000 but is priced at $240,000 will be overlooked by people who discrimate against days on market. This $240,000 price tag was put on the house just recently after several other price adjustments because the homeowners were given poor advice when they first listed their home and have subsequently been chasing the market down. A buyer fixated on days on market will be unable to see the value in this property. They will probably buy a house worth $230,000 that just went on the market at $250,000. I have seen it happen time and time again and I can show you examples of seemingly intelligent people overpaying for homes because the home was just listed. You can disagree with me all you want but it is a fact. The only thing that days on market does is discriminate and nothing good can come from that. If DOM was eliminated nothing bad would happen except that people would look at all the available properties in a price range and pick the one that fit them the best without regard for how long the sellers had been trying to sell it.

Coward, The problem with your analysis is that when a price change of lets say $50,000 is made after a house has been on the market 180 days your theory of less competition does not hold water. Trying to make any analysis or assumptions with regard to days on market just do not work in real life. What you and others perceives as linear and non-controversial are in fact just the opposite because a completely distracting factor such as days on market, is thrown into the equation. Days on market is used as a crutch because so much important information is unavailable or so difficult to determine that we become lazy and fall back on what we think is a reliable number. Days on market has become that unreliable, lazy number. In lieu of true analysis and information, just use days on market. I wish I could take you through the dozens of examples in which it has hurt both buyers and sellers.

Tony, I agree with you that DOM *alone* is likely to be misleading if there has been a price reduction. The point is to understand the history of the listing. Understanding DOM, *and* the occurrence/non-occurrence of a price reduction, helps any reasonably smart buyer to understand the market for the particular property. I agree with you that DOM *alone* can be misleading, but I don’t think anyone’s arguing for use of DOM standing alone — I’m certainly not. The question is whether DOM data — uncorrupted by realtors’ “re-listing” — can be useful. And the answer is yes, in at least two ways. The first is how I’ve described — as a factor in a buyer’s analysis of his price, along with other relevant data. And second — and this is important — as a way of understanding the overall market. In the aggregate, if the DOM figure for all properties in an area is increasing, than that suggests that current listing prices may be optimistic and there is room to negotiate down.

Now, this seems to me Econ 101. But please don’t take me to say that everyone uses this data intelligently — I wouldn’t try to claim that. I once visited Vegas with a friend of mine, a math geek who works as an accountant for several casinos. He explained to me the ideal odds on a number of blackjack strategies. And then he explained to me the odds *as the ordinary person in Vegas actually plays blackjack*. Sheesh — the casinos are making a killing. So I understand that there’s plenty of irrationality out there in how people use data — whether the cards in their hand or the DOM data in a current real estate listing. But we shouldn’t base our decisions re: the availability of data on the dummies. That hurts the rest of us.

Interesting story:

The house I’m currently renting was on the market before I signed my lease.

It was listed for a few months by Realtor A last year and didn’t sell. According to my neighbor, here’s what happened next: another guy, let’s call him Realtor B, trolls the MLS for listings about the expire, contacts the seller and convinces him to list with him for 30 days or 60 days, cuts the price a little, and gives it a whirl. It didn’t work with this place but he probably does it enough to get by.

With the home in question, he took one photo of the outside (which might have even been the last agent’s photo). So obviously he’s piggybacking off of the prior agent’s work and prior showings, hoping the price cut or new MLS # is going to convince a buyer to go for it.

Not totally related to the story, but there’s one guy who uses DOM!

As a buyer I think gaming the system is slimy. As long as you guys police your own, this behavior will be kept to a minimum. Like any business, something unethical done for the short term will prove harmful in the long term.

I agree with everyones opinion that used in conjunction with other data, days on market can be a useful piece of information. The problem is there are so many agents in the business that are part time, substandard, and in my opinion lazy. They will not take the time to do the necessary investigation to determine the other factors involved with a listing. If the date of the listing was the only piece of information these lazy agents were given and they were required to do just one simple calculation, they would discontinue using the number to misdirect buyers. I also agree 100% about the transparency of data. The public should be given all the information possible. Agents should no longer use “gatekeeper of data” as a value proposition. But as long as NAR has its power, that will not occur. Hopefully, one day consumers will be able to trust the competancy and professionalism to rely on the advice they get from every agent because the standards for becoming an agent and maintaining a license become substantial enough to weed out the poor and lazy. Now I will get off my soapbox.

If the MLS policy is that this is prohibited, and yet it is possible to do it, then the MLS has some work to do. If it is not prohibited, then no problem.

Personally I do not see any reason agents should not do this. Is it deceptive? Not in any material way—it does not deceive a buyer prospect about the property in any way. The property stays the same no matter how long it’s been on the market (ceteris paribus); its time on the market does not affect the property.

Do buyers have some right to know how long a seller has had their home on the market? Not that I know of. Not telling them is not a deception either.

The most common question I hear at properties (including at open houses that I’m hosting) from buyers is: “How long has it been on the market?” Buyers believe that the longer it’s on the market, the more they have the seller over a barrel. Not necessarily true; it’s just a function of overpricing, and frankly, we know the listing is overpriced without reference to DOM. But if buyers can ask that question, it’s fair for sellers to ask, “How long have they been looking for a home?” and “How much do they have to spend?”

In addition, the biggest advantage of removing and relisting a property is not to confuzzle the DOM number, but to get the listing to pop up on new searches or searches that, as in my MLS, have a “New” category for listings less than 15 days old, and which agents often use to the exclusion of “Active” listings. That “New” status is PROVEN by experience in my market to increase showings when it is done. And that is a service to my client. I used to object to doing it, on fuzzy ethical grounds; then I looked at what successful agents in my office do: When they lower the price, they list the home as new. (My MLS totals DOM for a property’s serial listings, so it doesn’t fool agents or anyone else.) And it brings in new showings–and helps sell.

So the buyers and their agents may consider it useful information to have knowledge that a property has been on the market longer than since the last list date. So what? I work for the seller, and if that includes possibly not letting buyers know how long it’s been on the market, I don’t see any ethical issue with it. If it’s advantageous to one party to find it, and it’s advantageous to the other party to not make it obvious, why is the party demanding to know right? What right do they have to that (perceived) advantage?

Let’s get real. Lenders across the country are issuing lists of “declining markets”– zip codes in which they are tightening up loan terms– e.g.,no longer offering any $0 down loans. One of the ways lenders decide which areas get on this “bad” list is by DOM. They use that 180 day benchmark– if a home’s been marketed for 180 days & still hasn’t sold (whether it’s been priced fairly or not), it’s a black mark on that area because it indicates a “declining market”.

Obviously no realtors want their area to be officially tagged as a declining market, as this scares off buyers. So they will continue to fudge the DOM data– the Washington DC MLS just did this via a convenient “rule change” wherein a home can get a new MLS list number every 90 days.

Thus, the same house can be listed twice, for 180 days total, but will not appear that way when lenders & appraisers check its DOM to see if its in a declining market.