Want Full MLS Access in the Phoenix Real Estate Market? Are You Sure?
Posted on November 3rd, 2007 by Jonathan Dalton
Back in my life as a stockbroker I often received questions about equity options that just looked too good to be true. (Five-second primer: one option contract represents 100 shares of stock. One call allows someone to purchase 100 shares at a given price, one put allows someone to sell 100 shares at a given price.)
Inevitably the needle in the haystack discoveries were centered around adjusted options, often caused by stock splits or corporate mergers or some other oddity. Rather than just representing 100 shares of stock the option could represent 150, or 82 shares of stock for one company and 12 shares for another and some cash. Short story - they were nasty little buggers.
We’re now seeing the equivalent of these adjusted stock options in the Phoenix real estate market’s MLS on a fairly regular basis - list prices that seem too good to be true and, on further examination, really aren’t true. Short sales, auctions and the pointlessness that is a timeshare are the prime culprits and explanations usually are given in the public remarks.
But like the footnote warning buyers of an adjusted option that they aren’t buying what they think they’re buying, public remarks are given little heed by most real estate buyers.
Let’s take the subdivision one of my buyers was investigating, Stonebridge Lakes Manor. There’s currently a 1,700 square foot home on the lake listed for $199,000. But while that is the list price, that’s not what the sellers are willing to accept (at least most likely not.) Rather, the sellers are holding the home open this weekend and conducting an auction - highest bid wins not the home but the right to negotiate to purchase the home.
And what if the seller doesn’t want to sell for the amount given as the highest bid? They don’t sell the home. The $199,000 figure is little more than myth.
There’s an identical home off the water listed at $221,000 in the same subdivision. Will $221,000 get you the home? Maybe. Maybe not. This one’s a short sale - the seller owes more than the amount of their mortgage. A rare few are negotiated with the bank before they are placed on the market. The vast majority are subject to lender approval. In this case, the listing doesn’t say which type of short sale listing we have.
One of buyers placed an offer on a short sale in Westbrook Village this week. List price is $239,000. But will a full-price offer result in a sale? Maybe. Maybe not. Seller acceptance is subject to lender approval. So the seller can say they’ll take $239,000 but if the lender doesn’t approve the deal then there’s no sale.
I received an e-mail from a homeowner in Laveen debating whether to put her home on the market as a short sale. The four lowest-price listings are have mythical list prices “subject to lender approval.”
Get the point? If not, e-mail me and I can give you 1,000 more examples.
Should auctions be included in the MLS? You tell me …
8.9: Listing Price Specified. The full gross listing price stated in the listing contract will be included in the information published in the MLS compilation of current listings unless the property is subject to auction.
Oddly enough I can’t find a rule that says the information entered into the Arizona Regional MLS must be accurate. All ARMLS sheets come with the disclaimer that the information is deemed reliable but not guaranteed.
But can you tell me there’s no difference between mistakenly saying there’s a microwave on a property and intentionally providing a fanciful list price?
As it stands now, real estate agents are the only ones trying to sift through the dreck to find out what’s really happening in the market. But take this one step further and turn the information over to the public without some serious controls being added?
Think agents get unhappy when they realize the list price was pulled out of a hat?
Tell me how the public feels if they finally receive full access to MLS data and discover that it really is little more than marketing fluff and not as dictated to Moses on Mount Sinai.
Even the Arizona Republic might get that story right.
Maybe.
Maybe not.
Technorati Tags: MLS, real estate pricing, real estate marketing
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Jonathan-
Funny you mention that home on the lake for $199,000. I have a client that’s interested in it too, and she asked me, “This seems like a very good price, why is it so low?” Checking MLS history, before the low-ball auction price it was ~$350,000. Too high for sure, but I expect anyone putting in an offer anywhere near $199,000 is just wasting time. Which is the point of your post. Why do listing agents bother with this stuff, when it clearly ends up just wasting a lot of people’s time?
Steve,
The reason listing agents do this, is because it wastes a lot of time. But it produces results. People love the idea of an “auction.” They think “bargain” and it gets everyone bidding up versus others.
I wrote a blog about an auction that started at $225,000 for 30 units. Former list was $340,000. They all got bid up to around $300,000. They sold 30 in an hour!
I’ve also of value range pricing. If the house’s true list price is $515,000 they can put it on the MLS as a range from $499,000-$550,000 and flat out reject offers at $500,000.
I guess the idea is for your house to come up when people are doing searches up to $500k.
Part of me wants more rules for keeping the MLS clean and part of me wants it to be more open source.
Maybe there can be a “*” placed after prices that aren’t “real”
Frank Borges LL0SA- Virginia Broker
www.FranklyRealty.com
If only, Frank …
I’m not a big fan of range pricing only because the assumption is the low end is full price on the buyers’ part. But at least it’s slightly more honest than the out-and-out bogus prices.
Steve - now if I can get the client to believe that. What often seems to happen is the client thinks the auction starting price is the list price and makes the bid there. Big surprise when they don’t get the chance to negotiate and bigger surprise when they learn that price isn’t going to get them the house.
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