We have a funny feeling that “meanboy” was aiming for sarcasm with his “Quite a reduction” remark (and three comments) over on our “The Cost Coming Down?” post. Regardless, he illustrates one of our points from yesterday quite well.
965 Elizabeth was on the market for 74 days at $1,395,000 before being reduced to $1,195,000. According to “meanboy” it sold for $1,220,000. MLS statistics will record this property as having sold for 102% of list. More accurately, it sold for 87.5% of the original list price.
893 Elizabeth was on the market for 100 days at $1,495,000 before being reduced to $1,395,000. At some point it was reduced to $1,349,000 and then finally sold for $1,350,000. MLS statistics will record this property as having sold for 100% of list. More accurately, it sold for 90.3% of the original list price.
3777 22nd Street was on the market for 33 days at $1,650,000 before being reduced to $1,545,000. According to “meanboy” it sold for $1,550,000. MLS statistics will record this property as having sold for 100% of list. More accurately, it sold for 94% of the original list price.
We have no doubt that all three of these properties provided fantastic returns for their most recent sellers. But that’s not our point. According to the MLS, and any marketing materials, these three Noe Valley properties sold for an average of 1% OVER ASKING! More accurately, they sold for an average of 9.4% under their original asking prices.
It’s tough to set expectations for sellers, inform purchase decisions for buyers, and paint “a true picture” of the market without accurate data. At least that’s our philosophy. And that’s our point.
∙ The Cost Coming Down? [SocketSite]
∙ Sorry NAR, But No [SocketSite]
Socketsite,
As a Realtor in the city, I couldn’t agree with you more that the MLS has issues, especially the list/re-list, over/at/under asking problem. However, there is no point dwelling on it. Pick up the phone and call any Realtor about any property and they’d be happy to give you the skinny on it. The MLS fix for that problem is actually pretty easy, it’s just a matter of changing their back end code/calculations to base the sales price off the actual ORIGINAL price that is entered into MLS. It’s not an issue of Realtors getting tricky with marketing. It’s simply changing code and the problem is fixed. Keep up the good writing.
If the current list price of a property is 1,349,000 at the time it goes into contract and closes for 1,350,000 then it sold for 100% plus of its list price.
The pricing history and withdrawn/relists are not secrets, and any good Selling agent would over the sellers marketing efforts and their current motivation to assist their buying clients in constructing a win-win purchase offer.
Kathleen, the point is not whether or not the data is discoverable. The point is that it skews the stats. The reports suggest that Noe saw sales go for 1% over listing when in reality they went for 9% under listing. Sheesh.
Curbed is also a Noe fan:
http://sf.curbed.com/archives/2006/09/21/noe_valley_alternative_in_oakland.php
[Editor’s Note: Just to be clear, the “up 1%” versus “down 9%” is meant to be illustrative and is based solely on these three listings.]
I agree that there is no secrets when looking to see if a property sold above or below the asking price, however, what’s truly misleading about the MLS data is not so much what one property is doing but what a sector of the market is doing. If you were to look up what the average asking vs. selling prices, say, since March of ’06 in South Beach you would find grossly innacurate data.
Realtors rely on this data to inform clients about the tenor of the market and we might as well just be making numbers up.
What’s worse, none of the new homes sales data is available. In South Beach and other developing areas of the city, hundreds, even thousands, of sales go unreported in the MLS, DataQuick and even in the public records at the county assessors office. Anyone who feels by looking up sales data for these areas that they are getting a clear picture of what the market is doing is sadly mistaken.
a wrote (see first post above) “The MLS fix for that problem is actually pretty easy, it’s just a matter of changing their back end code/calculations to base the sales price off the actual ORIGINAL price that is entered into MLS.”
Yes, but owns and controls the MLS? The realtors do; so if they are all for increased transparency (and honesty) in the marketplace, why not go ahead and make that change?
And for the many realtors who have written in to claim that the list/re-list history can be easily accessed by the realtors (and hence, indirectly by the public), the subsequent discovery is moot. The real damage is done when buyers and sellers alike have to rely on the “% over asking” statistic in determining comparable values when determining the offer price of a property. A prospective purchaser may well offer a different price if he knew that the comps were all actually 87% of the asking and not 103% over asking as portrayed by the MLS / agents.
Hence the system is dishonest and realtors have every interest in keeping the system crooked since it helps them to collect fatter commissions!
Again, Socketsite may not like this – but that is a fact!
If realtors didn’t perceive that there was a benefit in relisting a “stale” property, then the practice surely wouldn’t occur as frequently as it does? So the defence that a decent agent can find out the listing history really isn’t a defence imo. The listing/pricing history should be readily accessible from MLS to all – not just realtors – and there should be strict enforced rules as to under what circumstances a new listing can be created.
Well, it’s a bit tricky. If these properties had been priced properly from the first they would have sold at or over asking price and nobody would be complaining.
Furthermore, if the sellers had artificially lowered their original asking price to deliberately produce multiple offers (a not unheard of practice) these properties would probably sold at considerably over asking price.
The truth is the asking price is just some made up number and whether the property sells above or below it is not particularly useful information – except that it does indicate that the market is strong enough to generate multiple offers (or the threat of multiple offers).
Once upon a time no one, and I mean no one, ever bought property in San Francisco at more than at least 5 to 10 per cent below the asking price and multiple offers were unheard of. We may be going back to that. But we’re not there yet.
Why is it that if a property has been reduced, the first explanation is that it wasn’t “properly” priced in the first place? Could it be that it was properly priced, but that the market has since changed?
Why not just ignore these “sold x.x% over orignial list price” stats and only focus on median prices and other figures to “paint a true picture” of the market?
Unless of course you’re not really interested in market data and are just looking for things about Realtors to complain about.
You’re more than welcome to continue to complain about Realtors, but I’d rather hear about interesting listings, current events, and the other informative information on this site.
And please save the “if you don’t like it then don’t read it” comments…
Why should the listing price and history be readily available to everyone? It is wickedly expensive to belong and upkeep the MLS system and there are very strict rules for using and inputing information there which they regularly monitor and fine agents for abusing. New York just recently started a MLS system, for years they didn’t even use one.
There is a free forum for listing properties, it’s called Craig’s List. Why aren’t you asking for strict enforcement for rules for listing new properties there?
Besides I think anyone who is solely relying on stats to determine their offer price is insane.
Regardless of the numerous variables that are going to skew the numbers, a person should still be able to get a general picture of the overall market from over/under list price numbers – which is all those numbers are good for – looking at trends. It is one of many pieces that goes into the puzzle of what to offer on a property.
BTW thanks for keeping the dialogue civil.
“Why should the listing price and history be readily available to everyone? It is wickedly expensive to belong and upkeep the MLS system…”
No one would find it objectionable if the cost of maintaining the MLS database (which ought to be negligible in terms of the technology as well as the cost of policing it) is shared amongst all users, whether they be realtors or those members of the public who wish to access the information. The only reason why it may be “wickedly expensive” is because it is a system of taxing realtors to pay for lobbyists in Washington DC.
BTW, imagine what would happen if stockbrokers refused to make available all the market data to the public or courts did not make available all judgments to the public or the NFL did not make game scores available to the public … you get the picture.
Realtors’ attempt to monopolize transaction data just goes to show their own Achilles heel!
you hit it right on! mls is a farce
TrailerTrash —
Just for the record, while court judgements may be immediately available to the public, the trial transcripts go to Westlaw, and you have to pay to get them.
I am curious about something said earlier, about how certain condo sales events are not reported to the county recorder–how on earth could that be?
No one is monopolizing transaction data. This data is reported all over the place. The issue here is one misleading statistic, not the monopolization of data.
FullDisclosure, just look at the comment from a fellow realtor above (9/22 4.59pm) where he voices an opinion shared by many realtors of not sharing MLS info with the public. I remember the days when the SF MLS was published fortnighly in two thick telephone directory size books. That was very useful to realtors to restrict access to their data (of course there were always kind souls who would lend out their MLS directories to non realtors like yours truly) – now that the Internet has arrived, the realtors are up to other tricks!
Occam – presumably Westlaw is available to anyone who pays the subscription and is not restricted to attorneys only? But you see, realtors want to restrict access to information – therein lies the crux of the problem.
TT, I think FullDisclosure is correct. The data is reported all over the place in many different forms. (all of which is susceptible to error including the MLS – see Kevin’s comment on S.Beach new homes data which isn’t even in the MLS).
The MLS didn’t even exist in NY city until a few years ago, a skeleton version existed but reportedly it was rarely used. No one was yelling there was an information hoarding conspiracy because there simply was no central realtor database.
Occam – any sales price can be requested to be withheld from the public. It is most commonly used in the high end sales but it can be done anywhere – including the MLS. But in terms of the new condo sales I think it’s just an information lag for the most part. It takes the county assessors office a while to re assess a new development with a couple hundred units on it so the sale prices are often a year or more delayed from public access.
All of you are correct. As a member of the SFAR MLS for over 30 years, it has been their posture, as well as most MLS services throughout the USA to report sales data as compared to the most recent listed asking price. When markets are in balance (60-90 day supply of inventory) the selling price is usually within 2 to 5% of the most recent asking price. When the markets are out of balance (minimal inventory) the selling prices can be 2% to 25% over the asking price.
The problem with this data is that often sellers are more optimistic than the market they presently are in and agents try to accommodate sellers in order to get the listing. This is very common in area’s that allow lock boxes for realtor’s access to listings for sale. This type of access does not require agents to appear in person to show their listings and they can wait to see what the market does.
In San Francisco, the vast majority of listings are represented by agents that show their listings in person for every showing. This causes those agents to encourage Seller’s to be more realistic when they price their properties.
Trying to correctly price residential real estate is very difficult, as the components that Buyers & Sellers use to make their decisions are complex. It isn’t just the most recent sale of a similar property, although most appraisers will use that data.
The best appraisers are usually the buyers, as the average purchase for $1,000,000 requires $200K for a down payment and an annual income of $250K. You do not usually earn that level of income unless you have spent 20+ years in school, plus another 5 to 20 years producing that level of income. You are not un-informed. Plus your network of friends and business associates consider real estate as a very important component of their lives and investment portfolios. They are fantastic appraisers.
The net of this rant is the market is always changing (interest rates are actually coming down, as well as the cost of gasoline).
If you want to really find out what is happening in the market contact a realtor that is working in that market. They will tell you all the most recent sales and the actual terms of those sales (last 30 days), all the properties that have gone into contract recently and how many offers where presented on each property, how many listings there are presently for sale and how their fellow agents have appraised those asking prices. They know what is happening right now. Call them. That’s why they get paid 50 cents per hour for all the hours they work!!!
Frederick