Wednesday, July 2, 2008

Why Does 1705 Rugby Circle Have a New MLS #?

"New Listing" Today
MLS #455062
1705 Rugby Circle


Old MLS #448010

1705 Rugby Circle is part of the Fire Sale on Rugby Road. There's no price change. And 1705 Rugby Circle has been on the market for how long?

Why does 1705 Rugby Circle have a new MLS # today?


Jim Duncan said...

It came on the market in January of this year, expired and has now been re-listed by a different Realtor.

george h said...

as a buyer, i'd be irritated if i thought this was a "new listing" and then found out it had been on market so long.

properties on the market for so long, even in a slow market, are "suspect"--something wrong, price too high, seller not willing to make concessions ETC

and i'm surprised the price hasn't changed (probably everybody is)

Montpellier said...

Well, the data in the MLS is gamed like this precisely to mislead potential buyers. The whole RE industry relies on a degree of Information Asymmetry (ie, buyer cluelessness) for a portion of it's 'value added'.

Long before the popping bubble revealed so much (kind of like lifting rocks and seeing what's crawling around under there in the dark), the Freakonomics Blog guys did a classic study showing that houses sold by Owner-Agents versus Broker-Agents routinely went for a bit more - something like a 5% difference.

In this case, the general interest is in keeping buyers from knowing that the property is languishing or distressed, and pressuring on price. In fact, this kind of spin is often writ-large across the whole RE community - not just a few iffy agents and slimy or desperate sellers - see Dave Phillips' recent CAARBLOG post about how houses aren't selling for much below asking. The goal of all this happy-talk is: all you buyers, just get off the sidelines, there will be no firesale, you might as well buy now! A great deal of effort goes into this.

Who knows what the real reasons are - who can read minds? Perhaps the seller is just frustrated with their old REALTOR and their inability to move the property (of course, to me, this begs the question: what exactly does a REALTOR really do for you?); so frustrated, that they've retained another 'professional', after - just coincidentally - a long enough lapse time that it doesn't count towards CDOM in the MLS.

What was Claude Raines' famous line from Casablanca..."I'm shocked, shocked I tell you!"

Jim Duncan said...

George -

Most buyers are smart enough and watch the market closely enough to not be fooled by new MLS numbers. Seriously.

A good Buyer's Agent will track the property and determine just how long it's been on the market; the MLS in this case resets the Continuous Days on Market (CDOM) to zero because it has changed Realtors/Companies.

Montpellier -

The "whole industry" is a pretty broad statement. More Realtors are coming to the opinion/realization that the data is but a part of the equation - the value is in representation.

Give buyers more respect; few are "clueless" anymore.

I'm curious as well, montpellier - why do you write Realtor in all caps and refer to CDOM?

I'd love to give my opinion and (probably accurate) speculation about this specific property, but will refrain from doing so for a variety of reasons.

Great discussion at a post I wrote in January - Realtors Gaming the MLS that is very relevant to this discussion.

Montpellier said...

Jim - your comments in italics:

Most buyers are smart enough and watch the market closely enough to not be fooled by new MLS numbers. Seriously.

That presumes they have been watching the market first hand for some time; clearly, some buyers do this. I'm skeptical that a majority do.

Beyond your personal experience (which I'd be inclined to believe is in line with your statements - your demographic sample, as the blogging agent, is likely skewed), on what basis do you make this assertion that people aren't "fooled"? If there is nothing negative about a high DOM, why on earth do people go to such lengths to avoid it? High DOM conveys a great deal of information to a buyer - none of it favorable to a seller.

The "whole industry" is a pretty broad statement.

I did add "often writ-large" as a qualifier - I'll stand by my generalization, but I could have been clearer in my choice of qualifiers. There are certainly a significant minority of highly ethical folks. Sorry if you felt tarred by this brush.

I'm curious as well, montpellier - why do you write Realtor in all caps...

I wasn't an English major, but I do believe in the gospel of Strunk & White.

...and refer to CDOM?

Largely for the same reasons you have pointed out on your blog - the need for 'honest' data. In fact, the CDOM was purported to be a fix for exactly the kinds of gaming you complained about.

From your own comments on your "gaming" entry, you more or less appear to subscribe to the same side of the whole DOM debate. Just about everything I have to say on the subject was very well covered by you and others in that posting and the comments.

I am not professionally involved in Real Estate, if that's what you're wondering.

Jim Duncan said...

Darn scrolling up and down to respond ...

I'd concede that my demographics trend towards the more technically-aware, but I think that that encompasses the great majority of today's buyers. (allegedly ~85% of buyers start online)

If there is nothing negative about a high DOM, why on earth do people go to such lengths to avoid it?

Because a lot of agents still operate under the presumption that buyers won't find this information out. (they do find out - it's one of the very first questions they ask me, and I'd love to see it released online with the rest of the data, including sold data)

Thanks for the conversation.

*I really wish blogger accepted blockquote html!

Dave Phillips said...

Do you consider it unethical for one of your law students to represent their clients best interest in court as long as they follow the rules set forth by the state Bar? I'm talking about Perry Mason, Boston Legal "tricks" that are clearly in their clients best interest, but are not completely transparent to the jury.

There is a significant difference between unethical and sneaky. Your statement "There are certainly a significant minority of highly ethical folks" only rings true if you also consider almost every marketing campaign in America to also be unethical. (E.G., MacDonalds does not tell folks the Big Mac is a Heart attack waiting to happen.)

Is it unethical to use meta tags, key words and other tricks to game search engines? Or is that just sneaky? Did you consider it unethical when OJ's lawyer coached him on how to make the glove look like it did not fit?

Just curious to hear your definition of unethical since you seem to toss it around rather easily.

Montpellier said...

Jim -

taking some liberties in re-ordering:

Darn scrolling up and down to
respond ...

*I really wish blogger accepted blockquote html! the meantime, italics will have to do.

technically-aware, but I think that that encompasses the great majority of today's buyers.

Perhaps - you are in a seat to judge and I am not. I will only point out that the kind of saavy I'm talking about - Caveat Emptor - relies on the ability to make critical judgments and analysis of the data, once you actually stumble across it. Based on the magnitude of the 'subprime' problem - the alphabet soup of complex finance products pushed on 'unsophisticated' buyers - I think there's ample evidence that many, many buyers aren't capable of applying the data, even if it is there for them.

(allegedly ~85% of buyers start online)

Which brings us back around to the real source of much of my vitriol - what exactly is the value-added contribution of a salesperson? Historically, REALTORs have been able to help themselves to a rather large slice of the pie - because they had a monopoly on market-making - in short, the MLS.

The only way to buy or sell was to be able to participate in the "market" and all access to the market was controlled by a REALTOR, who required a rather hefty cut of the action - a cut pretty far out of line with the real costs of operating an MLS. You've also commented on the NAR REALTOR monopoly.

Most Americans who believe in the ideal (fiction?) of 'Free Market Competition' find monopolists to be...distateful (Dave, I'm picking my words carefully for you) extortionists...pretty un-American by most measures. I have to admit: I'm a romantic, a real Horatio Alger dreamer.

Nowadays, of course, we've got the inter-tubes, and suddenly all the old extortionist (sorry, the term is rent-capture) business models are threatened. As you have clearly recognized, this is coming, one way or the other, and the MLS is being circumvented.

Monty: If there is nothing negative about a high DOM, why on earth do people go to such lengths to avoid it?

Jim: Because a lot of agents still operate under the presumption that buyers won't find this information out.

Well...that kind of makes my point: they believe they are concealing something undesirable about the property they are marketing.

Thanks for the conversation.

Likewise! I enjoy your blog and open presentation of information.

Dave -

I'm cutting and pasting my responses to you as well:

Do you consider it unethical for one of your law students...

I am not going to disclose who I am, for a variety of reasons, and I believe my arguments are supported by facts and can stand or fall on their own merit - I make no 'appeal to authority' in arguing my case. That said: I am not a lawyer, have no formal legal training and most certainly am not on the Law School Faculty. I had a couple of neighbors once who were...and it kind of killed the fantasy for me. Darden...just ewww. represent their clients best interest in court as long as they follow the rules set forth by the state Bar?

I would - but there is a very clear and important difference - they clearly disclose the entirely adversarial nature of their relationship.

On top of all that, any comparison of the 'rules' put down by the legal Bar - in VA certainly, and in most states - versus the state Realtor's Associations, is huge. The difference alone in the barriers to access from a career standpoint - beginning with three years of real academic training - go a long, long way to ensuring a much higher set of professional standards. Are there corrupt lawyers? Well, a pretty good lawyer, and a pretty good guy, Dickie Scruggs, just went to jail for five years for attempted bribery - and he seems to have deserved every bit of it and more.

All that said - to answer your question about ethics - REALTORs advertise and purport, endlessly, to provide ethical (with an implication of moral and fair) and professionally competent expertise to their clients. The essence of this amounts to providing the 'sophistication' absent in the borrowers I referenced above in exchange for a cut of the deal. The implicit promise is to use that information advantage to the client's benefit - first and foremost - in exchange for a cut of the clients money.

I leave it to other readers to decide for themselves whether or not the kinds of actions, legal tricks or not, that we've been discussing, are in keeping with that implicit promise.

brooklyn bob said...

as a as a regular reader and fairly frequent commenter, i've been wondering where dave p got the idea that montpellier is a lawyer/on the law faculty? (i've been thinking it was something i missed here or on the caarblog or realcentralva)

Anonymous said...

Recent buyer here.

I walked away from a property at a similar price point a year ago.

It had been on and off the market for almost a year. Though I was doing a lot of research on the internet, I had no access to info that only agents have access to.

I learned the details from a friendly neighbor. The house was priced too high for a variety of reasons. But because the seller's agent wasn't upfront, and because I thought the seller himself was being shady, I had a bad feeling in my gut. I didn't want to be involved with them.

That's the issue with houses. If you get a bad feeling about a deal, many buyers are willing to walk away.

Not being upfront about how many days a property is on the market is something that would make me walk.

Merely switchcing agents/copanies but calling it a "new listing" is not being upfront.

and re george h comment, why hasn't the price changed in this market?

Pavel said...

So put yourself in Seller's shoes... all he is trying to do is sell the house. He obviously does not want to or have time to sell the property himself - so he hired one agent to sell the property. It didn't work out - he hired another agent. In my opinion no one is manipulating anything. It's buyer's responsibility to research the data (a good buyer's agent can help). I've seen too many cases where a property sits on the market for a few months and all of the sudden there are multiple offers on the table. Or another agent re-lists the property and it goes under contract shortly after the fact. Timing, among other things, plays a crucial role in real estate transaction. A new listing agent may offer additional marketing ideas, or make suggestions for improving the property, etc.

On another note, no one is mentioning the few homes that have sold this year in the Rugby neighborhood. Some of them went very quickly. And others commanded very substantial price tags.

Real C'ville - The Bubble Blog said...

While there still may be more commenters weighing in, we'll add a note here:

We thought that by asking a "simple question" we'd get answers from the perspectives of buyers, homeowners, buyers' agents, and sellers' agents--which is what happened.

Much to consider here.

Be sure to click over to the links provided, which make for compelling reading.

Daniel, The Real Estate Zebra said...

All of this discussion is good, and much of it highlights what need fixing in the real estate industry.

Representation is important, particularly buyer representation. Why? Well, look at what Jim did. A question about a listing was asked, and Jim was able to provide an unbiased, transparent answer. Why? Because Jim isn't representing the seller. His interests are not aligned with the seller's.

I see people all the time who have questions about a listing, and they go to the listing agent to get them answered. Not the best idea. Simply enlisting another agent to work on YOUR behalf as a buyer goes a long way to getting the answers you want and need.

I agree with Monty that the value of a salesperson in a real estate transaction is little to nothing from a buyer's perspective. The value of true ethical representation in a transaction is very high, however.

One example:

Let's say you see a property, and want to know about the vacant lot next door. You ask the listing agent about the lot. The listing agent tells you nothing, as that is exactly what the law requires, even demands, of the listing agent. You are miffed.

Conversely, if you enlist the help of a buyer's agent, that agent is charged with the responsibility of finding out whatever he or she can about that lot next door. Obviously, such information is valuable, or else you wouldn't want to know it in the first place. Being able not only to supply that information, but help you determine what to do with it is even more valuable.

Look, the world is changing. Good REALTORS get that. Data should be, and is becoming, free and accessible. As that happens, the value of a REALTOR will cease to be that of gatekeeper, and will become that of counselor and representative. That is as it should be.