The Macomb County Michigan Real Estate Blog

I think the MLSs have too much time on their hands!   I'm not sure of the value of hiding DOM and I only see DOM being relevant after it solds.  Buyers are going to find out anyway one way or the other.  How acurate is DOM on the sheet - in ours if it's been relisted, the date goes back to 0.  Many agents "refresh" older listings. Of course I work in a market were DOM isn't as relevant as in other areas.  

Judi,

Thanks for writing. The DOM issue is a big deal. And it's not just because the market in Michigan is slow. It's about the basic principles of being a listing broker. Who does our fiduciary duty belong to? Of course our client the seller. But since the dirt was created, the MLS's have freely given away the sellers DOM without regard to the harm they are doing to the seller. it's hard to change the color of dirt, but I am trying!

Dave Elya

Perhaps one of the issues for consideration is that many MLS portals do not offer live data but instead to screen scrapings once or twice weekly.  If true the DOM would almost always be understated so perhaps they prefer to leave it off?

Greg Z @ www.MortgageAdvisor.info

 

David, I just stumbled across this post.  I think you and I have similar views on the subject.  I wrote a comparable piece awhile back that might interest you.  http://activerain.com/blogsview/168257/Days-on-Market-Objective

David,

This is a great post as it raises a big issue to me as an appraiser. 

In fact I would say that it is second only to concessions.  I see it as fair market disclosure.  I have never agreed with the MLS and the efforts to control the market, pricing or dare I go there, a set commission (of course it is not actually set just very similar).

It is also one of the reason that I am in favor of a Free and Open MLS system. 

As an appraiser we are required to report to the best of our ability true and accurate.  Our ethics require it as so that we are not misleading.  I can not think what would happen if a lender, or buyer or seller learned that I as an appraiser failed to report information just so that the report looked good. 

The brokers, MLS and agents that relist to hid that they can not sell a property in an amount of time do not take into account the effect that trickles down through the lending and so on by both the BPO and appraisal.  I wonder if they should be required to be true and accurate as so not to be misleading?  I am sorry if DOM indicates that the market price needs to lower and therefore the amount of commision take home may be less. 

These moves and those like them to remove transparency hurts the consumer as a whole and hurts their view of the real estate industry.  There are bigger pictures to this issue, such as if the consumer learns of these things would they just buy a house on E-bay because they hold no trust in the real estate sales profession?

I say for the good of all, just keep it disclosed.

 

Thanks for the comments Shane,

Can I ask you? How you do an appraisal on a FSBO? Do you know the true DOM of the FSBO? Does it matter? If asked, would the FSBO tell you the truth? Would you believe them? When you do a FSBO appraisal, do you reference the local MLS? If so, why? What if there was no MLS anywhere? Do buyers know how long an item has been listed on EBAY?

The active listings belong to the listing broker. The listing broker should have the choice to display the active DOM or not. I have no quarrel displaying the DOM after the property is sold and closed. My beef is that the clock is ticking for the seller the minute they list their property on the MLS. Do buyers inform us how long they have been looking? Do buyers let us know how many offers they have made on other properties? Do buyers of any other product, merchandise or service know how long that product has been on the shelf? When you bought your last car, did you ask the dealer "How long has this car been in your inventory?" Did they tell you? Did you believe them? Did it really matter?

To be honest, our local current DOM is over 400 days for most listings. Does this mean they are all over priced? Or does it reflect the economic realities in Southeast Michigan. I believe that buyers may be more interested in making an offer if the seller wasn't handicapped with the active DOM hanging over their neck.

Just my two cents worth.

David,

I see your point completely.  I hope you see my position as an appraiser and I will try to answer your questions in my opinion.  Many of the areas of the report depend on who we work for in the transaction.  If for a lender who is loaning on a FSBO they will require us to report on DOM of current market conditions (for sold and currently listed).  It is one tool that they use to gage their risk should they have to foreclose on the property on most transactions FSBO or Broker.  The source for that information is most of the times the MLS and they may base part of their decisions on the MLS data.  Should appraisers ask the FSBO the amount of days on the market we are required to disclose that the information was supplied by what source just as we are the when we use the MLS.  The lender may look at that data and read into it as they may, such as why did this house sell so quickly or take this long and what would we have to do if we need to sell the property or does this house hold more equity.  If we are working for the FSBO to price the property then they will require the market DOM as to know how to market the property competitively or to know their holding cost.  If no MLS covers the area we are required to do our own research and document that per our records.  In this way the MLS helps us stay economical.   I know that EBay requires only a limited time for most items listed for sale similar to a listing agreement. 

I agree with you that the broker is the owner of the listing information.  They are also licensed in the public's interest.  This seems very similar to the stock market where a licensed entity may hold information but is required to disclose the information for the good of the market i.e. rating companies etc. 

I think that the choice is up to the broker as there is no law that I know of on it, but I think that they run the risk of setting a standard(s) that may not be well perceived.  If that is the case then buyers would find it easy to ask if EBay may not disclose and the broker may not disclose so what is the economical plus for me... as a broker I would not want them to get to that point.  In my opinion it just seems like a slippery slope.  Because this is information that can be used by the seller (listing Broker Price Opinions/CMA's and appraisals) or lenders (risk assessment) both who make up important pieces to the real estate transaction I think that it is information vital to the good of the public/market.    

You are right that most consumers do not hold an interest in shelf life unless it is a perishable or medical product (consumer safety).  If a product sits on the shelf long enough then the market will cure the problem by offering a discount or a newer and/or better product to be bought by the more educated consumer anyway. 

Many consumers do not know that when asked a car dealer has to produce an inventory purchase sheet showing the shelf life and price the car was purchased for by the dealer, I always ask for that information but many do not.  You are right.  With all of these, the buyer most of the times does not care and also are not hiring a buyer rep that is educated to the business that is held to work for the best interest of their principle.  Are brokers then hampering the other side of their business by taking away the buyer rep's ability to gage days on market?  I don't know that is a whole other thing. 

I am sure that buyers do not disclose how many offers have been made or how long they have been looking.  I would think that the rule of supply and demand would hold merit and I could see it as a credit issue but right now I am trying to see how amount of offers or shopping time effects the chain being lenders, buyer reps, appraisers, mortgage rating companies, federally related departments that may back loans and so on.  If you see where buyer offers or shopping time holds that effect please let me know and I will start to apply it promptly.  Depending on the buyer I think that you are right in their interest in making offers on properties with out listed days on market as there are many kinds of buyers.              

David,

I commented on your other DOM blog but wanted to put my .02 worth in here as well.

"To be honest, our local current DOM is over 400 days for most listings. Does this mean they are all over priced? Or does it reflect the economic realities in Southeast Michigan..."  A home that was worth $400,000 last year may not be worth $400,000 this year... it may very well be worth $250,000.  The economic reality is that "market value" is determined by what a ready, willing and able buyer will pay for a particular commodity today... not what it was worth a year ago or what it might be worth in a year.

The statement the 'top producer' "DOM information is the one last thing that we have that the public still needs us for" is simply unbelievable.  If the DOM stats are all that or any other agent brings to the table, they should retire. 

I don't consider DOM to be public info. If I represent the seller & am asked how many DOM, I refuse to answer. The buyer's agent (if he belongs to our MLS) can see this info online & give to his buyer. But I do not disclose it at all, even when I'm a dual agent. 

Erica,

Thanks for your thoughts.

David, in our MLS (North Texas) they changed the rule recently on days on market. We have DOM and CDOM (cumulative). If a property gets re-listed under 30 days the numbers keep counting. Oftentimes the CDOM can be quite high and more accurately reflects how long the property is on the market. Our DOM once was public info, now it is not. Everything keeps changing.

Days On Market (DOM) are basically overrated as a tool for the buyer and here are some reasons why.

In our market, Asheville NC area (Have You Seen Lester Lately??), our MLS (WNCRMLS) has recently encountered several agents that are withdrawing their listings every time they make a price change and putting them back in as new, without a new listing agreement. That, of course, is a violation of the MLS Rules & Regs. but that action makes the listing look fresh and it also makes the listing agent look good at the end of the month when the company is counting new listings etc. Those agents are clearly not interested in telling the whole truth about their listings! We are now fining those people, if we can catch them, $100.

There are other reasons this practice is misleading. It is a MISREPRESENTATION of a material fact to withdraw and put back in as new without the seller's knowledge, approval and some form of written agreement. For those of us that do statistical research, it is misleading when it comes to determining how many listings were placed in the system each month, etc.

The best way to catch them, if anyone is really interested, is to compare the new listings and the withdrawn listings on the same day. If you see the same address, agent and the DOM seems low on the Withdrawn sheet, you may have an agent that is truly only looking out for themselves. Report them to the MLS, and hope someone cares.

The DOM is rarely beyond the number of days most agents take listings for and only a few just keep renewing the listing. Some agents are able to get listings for up to a year, but that is not common.

So, for those that are hoping to get a "good deal" because of the DOM numbers, it may not be all that helpful.

Most agents would never know if it was listed prior to the current listing cycle and some buyers, and some agents, just don't know what other more useful questions to ask about a property.

 

Don,

Thanks for your comments. But why even bother "catching them"? The DOM is a number that does not benefit the seller. It always benefits the buyer. The active DOM should not be collected, displayed or available. Only the sold DOM is valuable to the seller(s). Stop fining the listing broker from doing their fiduciary duty to their client the seller. The listing belongs to the listing broker. The MLS should not have rules that discriminate against the point of entry, the listing broker.

David,

My bet is that you will NEVER practice Exclusive Buyer Agency.

Our business is adversarial. Buyers and Sellers NEVER have the same goals. Information is what our business is about. Whether we represent a Buyer or a Seller, information is what they want....AND deserve.

Our business is no longer just about the Seller. There are probably lots of things we would like to hide from the Buyer, when we are the listing agent, but that is not how our business works best.

A long time ago we got rid of the Buyer Beware attitude. Only the commission driven don't believe it.

Just as you have a "right" to protect your Seller. I have a "right" to inform my Buyer.

Keep the DOM alive and well, and clean up the cheaters in your MLS. We'll all be better off.

By the way, if you had a son or daughter getting ready to buy a home in a town far away from you, would you still insist that the Seller's agent not disclose the DOM to your family?

Hello Don,

I do have a son. And if he was buying a home in another town, the main concern I would have, is what homes are available, what price are the homes selling for and what is the average SOLD days on market. Period. I wouldn't expect the sellers agent to spill the beans. Remember the sellers agent works for the seller.

I also do practice Exclusive Buyer Agency when representing buyers. (Here in Michigan there are very few buyers.) The main reason buyers decide to buy a house is that it is price fair compared to the others they have previewed. They then ask me silly questions, like how long it's been on the market, will the taxes increase, etc. They never have said "45 days on the market, sounds just about right!" They only ask because they think it means something. Does it? You have admitted that the DOM is manipulated by many "listing brokers working for their client". So really, does active DOM really assist the buyer? Does the buyer really need this artificial number to determine if they should make an offer? Or do they really make an offer based on important facts like square footage, age, bedrooms, improvements, neighborhoods, schools, shopping, transportation, improvements, price. I could go on & on.

My business is not adversarial. When I list a property, I work for my client the seller.

David,

As I said in my first reply to you:

"So, for those that are hoping to get a "good deal" because of the DOM numbers, it may not be all that helpful."

"Most agents would never know if it was listed prior to the current listing cycle and some buyers, and some agents, just don't know what other more useful questions to ask about a property."

And, when I list a buyer, I work for the buyer, not the seller. Therefore, we are adversaries. 

Whatever question, no matter how foolish, they ask, I will attempt to get them the answer. Then I teach them better questions to ask.