Ok, this is kinda tricky to explain, so bear with me.
I feel strongly that ultimately the seller should pay for all (actually “most”) closing costs. But not in the way that you might be thinking. And this type of post will lead to the 101 hyper technical “but what if” scenarios (more…)
I was reading The Washington Post on Sat November 24 and I came across their “Real Estate Trends” report for Fairfax County. They compared the first 6 months of 2006 to the first 6 months of 2007, excluded condos, and they used data gathered through the courthouse (ie. not the MLS).
Out of the 47 zip codes, they said the #1 fastest growing zip code was 20170, Herndon at +14.4%. (more…)
Frankly, builders are in a heap of trouble with excess inventory! (Just take a glance at Brian Brady’s mortgage blog for more details.)
So with this trouble comes questionable practices in order to unload properties. Get a Realtor (the price is built into the condo, you won’t get a better deal without one) to represent YOUR best interest.
I already called out one Arlington Condo builder (more…)
If you are putting in an offer to buy a house, and you aren’t using a FranklyRealty.com agent (God knows why you wouldn’t but lets just say you are stuck with your agent), make sure you have your agent look out for MLS fudging.
There are 2 levels of MLS fudging. One is a NVAR (Local Realtor association) violation and the other is borderline ethical. And there are 2 reasons agents fudge the MLS.
This low-fat fudge will:
So if a house drops from $600k to $550k after 100 days, and the plan is to drop again, but to $500k, the “borderline fudger” will do a normal delist (expire or withdraw) and relist.
80% of Realtors will see the DOMP at 101 and look back at the old listing to get more information before making an offer. I found one agent did this 17 times!
This fudge is harder to do. After delisting the property, the agent goes back to relist. The system by default will recognize the property by the address and ask you if you wish to pre-fill the Tax-ID and some other data from the tax records. And agent doing illegal fudging has to go out of their way to press NO and override the system by entering gibberish into a tax ID of 000000 and then another 40 minutes reentering data. (The MRIS claim that they have a system to protect against this, however I have seen it over a few dozen times.)
Maybe only 25% of Realtors will find this fudging. They know that when submitting an offer they should search for expires and withdrawn listings for that address (and variations like St vs Street and N vs North).
What a shame that we can’t trust our fellow Realtors to be honest.
In the graph above, that is not the default of what a Realtor sees after a search. I had to create a special search to put it in that form. It is much harder to find. Also note that in this case the first 4 light fudgings were from one agent and then a new agent took it on and did the Tax ID=0000 to reset everything. This is NOT as bad (still illegal) as one agent relisting multiple times using the 0000 trick.
NEW: Part 2:
Illegal MLS Fudging. 20% Chance You’ll See One
– Written by Frank Borges LL0SA- Broker/Owner FranklyRealty.com
703-827-4OO6
Videos at YouTube.FranklyRealty.com
Keywords: Housing bubble? Arlington, Alexandria, mls, homes, Real estate, Virginia, DC Realty, Realtor
This blog is an extension on the blog “MLS Data Fudged By Realtors. Watch out!” This new post might not make sense without reading it first.
One blog reader asked me, “How frequently does MLS fudging really occurred. Are we talking once in a blue moon, is it commonplace or even the default?”
Great question!
They wanted a breakdown of the frequency of both the Fat-Free MLS Fudge (technically allowed which is the same agent relisting a property to reset some data like the DOMM not DOMP and Starting Price), and the Full-o-Fat MLS Fudging that is a MRIS violation, which resets the DOMM and DOMP and makes the listing look brand new, with no trace of the old listing.
Quick DOMM vs DOMP recap.
Quick Full-o-Fudge MLS recap.
An agent can pull their listing and when given a 1 click option to restart it, bypass the default and put “00000” in the tax id box. This is an MRIS violation but done so that buyers and many agents won’t see how long it has been on the market, in hopes of getting a higher price.
My estimations:
I can’t get exact figures. There are probably over 10,000 active listings right now in this area. The system only allows us to pull up 500 at a time. While I was able to search for Tax ID 00* (* meaning anything after two zeros), and 999*, XX* and 123* I then had to manually look up EACH result to make sure it wasn’t a new construction or condo conversion (which don’t have Tax ID’s yet and putting in “000” is and acceptable and legit practice). Some of you might think I have too much time on my hand (maybe since I sometimes talk people OUT of buying), but I don’t have THAT much time.
So I pulled up one county and price range and did a sample analysis. 2400 active homes analyzed.
My search criteria:
Homes and condos in Fairfax County priced from $300,000 to $600,000 built before 2004.
The result was 2400. (Since the max search is 500 I had to do smaller $50k range searches and add them.)
Then I searched for tax ID of 00*,XX*, 999* and came up with about 40 results. Again, sometimes not having the Tax ID (which attaches a property to prior MLS listings) can be legit in cases of new construction, condo conversion and a couple other reasons.
So I took those 40 and opened another browser. I searched for that street address and included all Withdrawns, Temp off, and Expired to see if that property was previously listed and whether the Tax ID of 000 was used to reset the data.
I found 21 Full-o-Fat MLS Fudgings and 17 of those were from the same agent (vs a new agent taking on a listing and wanting to reset everything, which is also not allowed but not AS bad in my opinion).
So out of the sample of 2400 homes, I found 21. Which is just under 1%. This doesn’t seem like a lot and I do remember seeing it fairly frequently, so I started looking at that 1% another way.
Lets say an average buyer might go into about 7-10 homes, they probably have the agent look into about 20 homes online. That means there is a 20% (20, 1% chances) chance that you will come across a listing that has been fudged by the Realtor to deceive the public in order to get their listing sold faster.
Fat-Free MLS Fudge frequency?
So then I wanted to see how frequently a listing undergoes Fat-Free MLS Fudging, the act of relisting the property but not removing the Tax ID. This practice is allowed. Heck, one agent did it 17 times.
I couldn’t look at all 2400 homes, so I focused on 90. , the results from a price range search of $499,900 to $500,000 in Fairfax built before 2004.
25 of the 90 were relisted and had a different DOMM vs DOMP (defined above). This 25 is legit, and tells you that there is a ton of turnover of listings to a different agent. Sucks to be those that lose the listing agents losing those deals.
Conclusion:
About 12% of listings get relisted by the same agent
About 3% of the time they relist it multiple times, sometimes 4 times.
About 1% of the listings (in the example of 90 and 2400) are fudged.
So if you look at 20 properties, there is a almost certain chance that a few were using the Fat-Free Fudge technique and probably a 20% chance that you will encounter the illegal fudging technique.
Why does this matter?
When bidding on a property, you should have ALL the available information. If a place appears to have just hit the market 5 days ago, there might be a little rush to winsecure it. If you bought it to then find out that it was really on the market for 300 days, you wouldn’t be happy that you were duped. Also the amount you offer might be lower if it sat for the same price for 200 days.
Disclaimer: The data that I collected might not be statistically perfect, but it was the best that I could do. I would be happy to work with a research person to get more exact figures. Also the Fat-Free Fudge, which is allowed, is my opinion not kosher, many agents might debate this or say it is company policy. To each his own. I just wanted to bring up the debate.
Now talk amongst yourselves…
– Written by Frank Borges LL0SA- Broker/Owner FranklyRealty.com
703-827-4OO6
Update: a Part 2 link is at the bottom.
MRIS stands for Metropolitan Regional Information Systems. They are the company that provides the Washington DC area MLS system for all Realtors. They also provide data to consumers and the press to reveal how the market is doing. The only problem is that the data is limited and can easily be misinterpreted without giving proper clarification.
So I set out to recreate the numbers and I finally think that I understand how they came up with their data. I don’t question whether the data is correct, I just question how it is presented.
I believe now that the “% of Asking Price” means the “% of the last and lowest asking list price to the sold price, excluding seller subsidies.” So if a house was initially listed at:
Hypothetical example:
$600,000 Starting Price
$500,000 Lowered List Price
$495,000 Contract price
$10,000 Seller subsidy (about average for 22204)
________
$485,000 Net (counting the $10,000)
= a 1% drop using MRIS’s data
= a 20% drop from the top number.
So if you were to include the subsidy and the starting price, the price drop would be almost 20% lower, yet this hypothetical numbers would be reported by the MRIS as a 1% drop ($500k to $495k).
So back to recreating the actual numbers from MRIS. (My Excel document is available upon request.)
I took all homes for the period of 7/01/06 to 9/30/06. I found 72. This number is off from their their 128, I’m not sure why.
From this data I was able to come very close to recreating their numbers (option 1 below).
1) % of Final list price was 98.4% (vs their 98.6%, no big deal).
2) % of Final list price MINUS seller subsidy= 96.8%
3) % of Original list price MINUS seller subsidy= 94.25%
4) % of Highest price (prior Realtor or listing#) MINUS seller subsidy= 92.2%
Using the $600k example from earlier, #3 takes the starting price of $600k and counts the $10,000 seller to make a final closed price of $485,000. However #4 above takes into account if the listing had a prior agent with an even higher price. So with #4 I took the starting price of a house regardless of how many Realtors had tried to sell it, or how many times one Realtor relisted it to reset the Days on the Market.
So while the MRIS data is not necessarily incorrect, the public should know that it does NOT mean that the average house in that zip code only dropped 1.4% from what the seller started with. That number is probably closer to an 8% drop once you count the seller subsidy (which was near 0 a couple years ago) and the initial starting price.
Recalculated drop for 22204: 8% (92.2% of the starting list price, including subsidies)
Conclusion: Don’t assume information that is given to you is correct, question how the numbers are compiled.
Update: I have a Part 2 on this posting: Part 2: Illegal MLS Fudging. 20% Chance You’ll See 1.
And make sure you see the 22 other blogs on shady agent tricks and things that buyers should be aware of. Blog.FranklyRealty.com
– Written by Frank Borges LL0SA- Broker/Owner FranklyRealty.com
703-827-4006
Videos at YouTube.FranklyRealty.com
Keywords: DOM DOMM DOMP CDOM Days on the Market, Housing bubble? Arlington, Alexandria, MLS MRIS, search, Homes, Real estate, Virginia, Alexandria, 22201, 22314, Fairfax Va, DC Realty, Realtor
