You may have read an article in today’s Plain Dealer, written by Michelle Jarboe McFee (who has gotten married since I last linked to her, congrats Michelle). If you haven’t read it, please do: Some Realtors Say Hidden Home Sale Stats Hurt Cleveland Area Sellers and Buyers. Since I’m doing this for a living and since you read my blog (or use my services, thank you for that), you might wonder where I stand on this issue. Thus, this post.
The discussion centers around the fact that appraisers who go to homes under contract with buyers getting home loans, get their stats from our Multiple Listing Service (MLS). They call on us periodically to ask questions about past sales. For example, I have a four family in Ohio City that sold about a year ago. Multi-families can be quirky (this one was too) and appraisers call to ask questions about updates, features not showing up in the stats, etc. Appraisers are required to decide on the quality of the agreed upon sale price, the price that the lender will be using to base a loan for the buyer.
People in the industry are lamenting the fact, to the MLS, that some home sales are occurring before a home actually shows up for sale because some agents are ‘holding them back’ for a bit of time. Our MLS has informed us that we can’t post closed sales stats in MLS if in fact the sale ocurred before it was ‘allowed’ to be posted into MLS. The debate centers around a few things, most importantly, does the practice help or hurt sellers who are withheld, sellers who try to get their agreed upon sale price later based on prior sales, and buyers trying to buy any of these homes.
In my case, I’ve never sold a home prior to it going into MLS. And I’ve never kept any other office, or realty brokerage from knowing about a listing on purpose, in order to bring in my own buyers or make sure the sale happens in house (in my case, in Howard Hanna). I have held listings back after signing contracts and here is the major reason why: sometimes you sign up a listing and you and the sellers know there are things that should be done prior to anyone actually seeing the home because you (and the sellers) want to present the best possible home to all the buyers. Sometimes this means I’ve suggested a seller paint a room a teen was using with black walls. Good for the teen while he was growing up. Not so good for buyers coming in and seeing the black walls ! You get the idea. If a seller has too much ‘stuff’ in the house and has the ability to weed out and / or store things, I suggest we do that. Spatially, it’s a lot easier for buyers viewing a home to get an idea about square footage, available wall space, etc, if they can get a clear view of each room. This could take a few weeks to complete. We sign the listing agreement and then we fill out a form saying we are holding the listing out of MLS until such and such a date. It gives sellers a date upon which they know they need and want to have the work completed. It allows me to go back in and take photos once all the rooms are ready for showing.
In other words, I do what most agents do: I help a seller prepare their home for sale. Do I ever go back to the office and see someone and realize they have buyers who are looking in the neighborhood of this home? Yes. Do I tell the agent? Probably, why wouldn’t I? Every now and then there are agents from other brokerages who have shown one of my listings and wanted to write an offer on it but alas someone else has written already. If not too much time has passed, I’ve been known to call agents and tell them I have another one coming up (this happened with me on a street in Kamm’s Corner’s this past Summer, for example).
I think most people practice real estate this way. I also know that many times a listing goes into MLS and for some reason the house can’t be shown for a few days or even a few weeks or a month, but it’s on the MLS anyway and it states in the public remarks that it can’t be shown until x date. Both practices are not uncommon. The second scenario does not affect appraisers, however. Because the house is IN the MLS even though it can’t be shown.
I also want to bring up another point, and it can get a bit touchy. There are times when agents have been known to not return calls on listings IN the MLS when you have a buyer who wants to see it, because they have a buyer and they want to sell it themselves. I’m sure you’ve all heard of this, it adds to the negative stereotype of those of us in real estate. Truth? I will be doing this for ten years as of December 2012. It’s happened, that I know of, only twice. Most agents are completely professional in the handling of their responsibilities to the sellers.
You might be surprised to know that sellers often want time out of the computer because it’s stressful getting a home ready for sale. Sometimes they don’t even live in the area anymore but want to sign up and get the ball rolling, set in stone, so to speak, just because they are here for a weekend. Then they can make plans to get the house ready after that.
It would make more sense to me if appraisers could use the county auditor site instead and glean sales from there. The problem is, there is no way to go in and search for sales within the last ‘x’ amount of time. And no appraiser has 20 hrs to spend just trying to find all the sales that have occurred that qualify as comps for a home sale they are working on. So MLS is the choice left to them.
So this is the dilemma. A house sells for 140k and it’s not listed as a sale in MLS and the prior sales are all much lower than that. (Maybe someone paid cash for that 140k home, so the price difference wasn’t reviewed by an appraiser). Another seller comes along and gets an offer for 140k on a similar home, and the appraiser says nope, no comps to match. No loan, no sale (unless the buyers or sellers have lots of money to make up the difference in price, because the lender will only take on the loan if appraised value meets accepted price.
By the way, if someone sells their home on their own (For Sale By Owner), more often than not now, a home IS on MLS because they have paid a low fee to have some For Sale By Owner Co put it into the MLS. BUT, not all for sale by owner homes show up in MLS.
How about this scenario: You have a home to sell, your cousin wants to buy it and has the cash. You know you paid 90k for it in 2002 and are willing to sell it to your cousin at a discount for $80k because it’s a relative. You aren’t making any money but you feel good. Well, the other homes in your neck of the woods have been selling for $55k to $60k. Your home sale does not show up in the MLS because it was a private sale. Your neighbor knows what you got for the house, they try to sell it and when an offer comes in at 80k, they can’t get it if a loan is involved because there is about a 10k difference. Make sense?
The bottom line is, no system is perfect, but making sure the home is available for showings to buyers from all brokerages and offices and all buyers who can buy a house, is written into our contract system at Howard Hanna, is how I practice real estate, and luckily, is how most agents practice their profession.
I think you have the right to know my thoughts and practice I’m lucky enough to have a blog so you can hear them. Hopefully this long post was clear enough to understand just that!