I had an interesting debate with another Realtor this week about “gaming the MLS.” This Realtor wanted to be able to withdraw a listing and put it back on so that it both got a new MLS number (to appear “new”) and so that the Days on Market number would reset – ostensibly because that’s what the clients wanted. MLS rules prevent this, but there is always “another way.”
When I questioned why – she said that other agents do it, and while she agrees it’s not right, if they’re going to do it, she wants to as well. Rather than report the offenders to the MLS so that the data could be accurate, she would rather game the system.
Does this type of gaming the system work? … Only on those who don’t have competent buyers’ agents who will track the history of the listing.
Now – contrast this attitude with that of previously-mentioned Roost:
“The MLS is really the definitive hub … (its) core mission is the integrity of the data,” he said, which is why Roost decided to operate via these relationships in each market rather than rely on brokers to send listings feeds to the site.
“They” value the data (Zillow, Trulia, Roost, etc) – why shouldn’t the Realtors?
Buyers, Sellers – What do you think? Is a “fresh” MLS number really that appealing?
Update 1 February 2008: Kevin had a great post yesterday on this topic
I look at resetting the DOM figure as akin to a grocer scratching out the sell-by date on a can of tuna and replacing it with a later date: it smells funny.
This is a post I wrote in February 2007 about Days on Market penalties, and one from April 2007.
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Days on Market should be eliminated completely. It should only be used for things like milk and eggs and other perishable items. It is not used for cars or boats or refrigerators or clothes or anything else. There has never been a viable argument for having a days on market. It is a relic from days gone by and should be eliminated immediately.
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.
Tony-
Days on market is not visible to the consumer itethrough MyCAAR (the predominant local MLS st), and as a consumer I wish it were. My agent is going to tell me, or if I check the listings every day like Amanda, I’ll know as well (I have checked about every day for six months).
If a house has been on the market for more than six months, you can make the time-saving assumption that it is not worth touring or pursuing. It’s either 1. priced too high, 2. in an undesirable neighborhood, or 3. has some problems with the home itself.
DOM is very relevant to me the buyer. You seem to advocate eliminating it entirely, even for agents. How can agents give their clients the best advice without DOM?
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.
Mark, days on market does not tell you about a neighborhood, it does not tell you if a house has a problem, it does not tell you if the house is priced correctly. What will more than likely happen is a home that could be perfect for you that has had a recent price adjustment or had updates made or had a better listing agent take over the listing, you will overlook and instead pay too much for a new listing that is a worse home. When you go to the store to buy a pair of shoes, do you ask the clerk how long the box has been in the store? Or do you ask the clerk to only show you shoe boxes delivered to the store that week? No, because that would be ridiculous. Which is why using days on market to make a home buying decision is just as ridiculous.
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 have to say that I agree with Mark and Athol. Sorry, Tony.
DOM is very relevant, as it shows (partially) a seller’s motivation to sell. For example –
If one house is on the market for $200k and sells in three days, it was most likely priced well.
If a house sits on the market for 300 days, priced at $200k – it’s likely overpriced.
DOM is highly relevant also when looking at how long it took for a property to go under contract and close – those that go faster tend to have been priced well. Those that took longer – weren’t priced as aggressively.
On the shoe analogy – while I don’t share Mark’s vehemence 🙂 I don’t think it’s an apples-to-apples comparison. To use your analogy though, if there were two gallons of milk on the shelf, one priced at $10 and one at $5, which one would sell faster?
Houses aren’t perishable, but they do get stagnant.
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.
So, let me weigh in (respectfully) w/Jim and Mark and on the other side of Tony. DOM is clearly relevant info for a buyer. That isn’t to deny — as Tony points out — that some buyers might misuse the data. But that is, of course, true of all data! A smart buyer will use DOM data, as well as information re: price reductions on a property, to measure how much competition he is likely to have in bidding for the property. Longer DOM, less apparent competition, lower buyer willingness to pay. Pretty linear and, I would think, uncontroversial.
Again, there is no set formula. Every deal is different. But the DOM data is clearly relevant, and realtor attempts to game it are a problem.
I would like to expand the point. I think that realtors should formulate, and then enforce, a code defining conduct that amounts to MLS *and* transaction reporting abuse. “Re-listing” to re-set DOM should be out. And realtors should work with local governments to ensure that *real* prices paid for houses are recorded in municipal records. So if a buyer pays 500k for a house, but gets 50k worth of “inducements”, then the price recorded should be 450k. By inducements, I mean pay-backs (like agreements to subsidize points on a mortgage) or payments in goods (e.g., promised renovations). The problem with the way things are done now is the price data is not transparent, and so we get a BS set of prices that savvy buyers discount by some imprecise percentage. A more efficient market — which in the long run would be better for everyone — depends on more transparent pricing.
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 apologize for my crabby tone earlier. I may have misread your intentions.
First off, all information available should be in the listing, whether it’s DOM, original list price, annual taxes, etc. There is no harm in having max info…the smart buyer or agent is going to find it all out anyway.
Tony, if you’re saying that DOM is a bad thing to look at by itself–independent of the other information–I agree with you 100%. It could be the seller got real and dropped the price (but won’t that show in the agent’s view?).
With the homes I’m thinking of, DOM is one red flag and there are usually others. That said, if DOM is high, I will be suspicious. If it turns out the price just dropped $50k, I’ll know that and I’ll lower the red flag.
BTW, it’s stupid to make some info only available to agents. Hoarding of information is wrong, ad it’s bad business. My (good) agent is going to tell me everything I need to know anyway. Putting more information in the hands of the consumer is only going to hurt lazy and dumb Realtors, who should be out of business anyway because they only function as gatekeepers of information and add no value to the process. They’re just there for their 3%.
The future is in consulting, something my last seller’s agent Merv Forney practices and is using to transform your industry. I pay you for your time, because you are skilled at telling me which furniture to put in the basement, which walls to repaint, taking the right photos, marketing on the web, you contact every showing agent for feedback, and you’ve got my back during the negotiations, inspections, and closing. Good Realtors add value to the process and deserve to be paid for it.
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.
DOM has a place within the real estate analysis equation. It’s a crucial factor that I use to help determine the specific sellers’ motivation to sell and general market conditions.
Realtors who attempt to “game the system” are harming their credibility, the integrity of the MLS, and are fooling their clients.
Just like any other dataset, DOM is subject to the quality of the data – garbage in, garbage out.
AC – To your point about getting accurate prices – wow – your comment couldn’t have come at a better time. I have been thinking about this for some time, and it came to a head today when I saw one closing entered (and I’m making these numbers up, but the discrepancy is accurate) – Asking price for the new construction property – $200k. Closing price – $275k. My assumption, and I believe it to be accurate, is that they cajoled the buyer into using their lender and then “threw in” a bunch of upgrades, bonus rooms, etc. That skews the data more than almost anything else in the MLS right now, IMHO. (You can probably figure out which builder)
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.
First off, I’m not in the business. Here’s what I’m fixated by on this one; “Rather than report the offenders to the MLS so that the data could be accurate…”
I read ALOT about how realtors are held to the highest standards, but this appears to be pretty clearly an example of some level of unethical, immoral, or maybe a violation of some realtor code of ethics. If this is true, why isn’t this reported to the MLS or CAAR by all the ethical realtors that aren’t doing this?
I think DOM is relevant for a buyers negotiating position.
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.
The history is still there and a savvy realtor will indeed find it. Coming from the high-tech world, I can tell you it is the holy grail to have clean, pure data that is not skewed by the users.
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?
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I know I am a month late to this party, but I had to chime in and agree completely with Tony. After reading this issue discussed here and on several other blogs, I wrote a post titled “Days on market is irrelevant”.
If a house is overpriced, it is overpriced on day one of the listing agreement. On what day does it become overpriced? Day sixty? 120?
I don’t think it is an accurate measure of seller motivation either. Every seller’s circumstances are different.
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.
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