A plugged-in reader reports (and we hadn’t):

Just an FYI (and you may have already covered this), the [San Francisco Association of Realtors] is scheduled to prohibit confidential sale prices in the MLS starting January 1st, 2010 – or face a $1000 fine. For our clients in this range, if they absolutely demand the confidentiality, we will likely just take the $1K hit.

However, I think in the majority of cases, it’s not the necessarily the clients really pushing for confidentiality, but the agent. Particularly here on the North Side, there’s a tremendous amount of self important bullshit, where agents will utilize any tool possible to make their client base seem “exclusive”. So in those cases, I [think] most agents would rather simply post the actual price, forget the whole idea of being exclusive, and save themselves the $1000.

No word on any new fines for simply withdrawing a listing from the MLS prior to close to avoid disclosing a sale price, a favorite trick of the new development crowd (and others).
UPDATE: Another plugged-in reader adds:

My husband and I just closed on a 2-unit. We got it for a very good price since we had no financial contingencies and offered a quick close. In fact, we wanted the price published to serve as a lower comp.

The sellers and selling agent, however, asked that it be kept confidential. They claim they’re worried about the reaction from other buyers whose offers were higher and rejected in favor or our lower, quick-to-close offer.

Well done and thanks for plugging in. Now about those housewarming invitations…
And After 47 Months 62 Days On The Market… [SocketSite]
3577 Pacific Recap: Withdrawn From MLS (But Sold Two Days Prior) [SocketSite]

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Comments from “Plugged-In” Readers

  1. Posted by sfrenegade

    The way this is structured is as payment for confidential listings, not as a policy change for MLS. If it was really a policy change, realtors absolutely wouldn’t be able to make sale prices confidential (which would be seemingly easy to enforce in an online database, one would think). What a scam — it’s a fake way to pretend to be more transparent.
    And in addition, it doesn’t seem like it would stop the trick that the editor mentions. These realtor organizations always want more data hidden.

  2. Posted by The Milkshake of Despair

    I was always confused why the seller might want a confidential price recorded on MLS. Surely they are not so stupid as to think that this will keep their sales price out of the public domain since it is eventually revealed by the county recorder’s office.
    But the “exclusivity” explanation makes more sense. High end sellers might not be stupid, but they could be vain.

  3. Posted by The Milkshake of Despair

    … but perhaps the real reason for *confidential is that it makes the comps in an already low volume market ever murkier.
    Who benefits when there are no reliable comps for a scarce commodity ?

  4. Posted by whatever

    You can still request that the recorder not print the transfer tax amount on the deed.
    However, the (approximate) transfer price can still be deduced eventually when the new assessed value in a year or two after the transfer.

  5. Posted by anonn

    Hopefully they will put an end to agents not entering the proper APN, so that the tax records hyperlink won’t load, too. That’s a pet peeve.

  6. Posted by eddy

    I see no reason why this information should be public domain; don’t get me wrong, it is incredibly helpful and valuable, but other than buyer/seller/bank/tax authority, I see no reason why this information should be public. Tax Payments should be public record, and if a purchase price can be deduced from that, than fine.

  7. Posted by Mole Man

    The good ship MLS is taking on water in rough seas.

  8. Posted by geekgrrl

    My husband and I just closed on a 2-unit. We got it for a very good price since we had no financial contingencies and offered a quick close. In fact, we wanted the price published to serve as a lower comp.
    The sellers and selling agent, however, asked that it be kept confidential. They claim they’re worried about the reaction from other buyers whose offers were higher and rejected in favor or our lower, quick-to-close offer.
    I don’t really see the point since the sale price will be shown in the online property tax system eventually and our realtor will definitely be using the lower sale price to entice other people to use them as their buyers agent.

  9. Posted by The Milkshake of Despair

    Wow, that is enlightening, geekgrrl. I always wondered whether the push to mark as confidential was driven by agents. However I do not buy the story that it is so that the other bidders will be peeved to see that a lower bid got the price. Surely agents know how to explain that a contingency free offer has higher value.
    I suspect that the real reason is that lower comps cause buyers to bid lower and makes closing a deal take more time.
    So DOM is well known to be a tainted metric. Now comps are tainted too. They are juiced to appear higher.
    Kinda makes one wish there were a person with expertise in RE who could deliver accurate information.

  10. Posted by Alan Morcos

    I am a member of MLS Committee of the San Francisco Board of Realtors and a licensed Real Estate Broker. The decision to stop the practice of confidential sales was made so that listing agents and appraisers would be provided with a better understanding of market dynamics so that listing agents can price and appraisers can value listed property at more realistic levels. The data is public information and can easily be obtained from the Tax Assessor’s office within a week of closing and can also be found on websites available to the public.

  11. Posted by anon

    ^^^ If this was really true, then why let people pay to get around it??

  12. Posted by Lorrief

    The fine is to deter the practice of posting non confidential sales- The fine goes up from there if the agent continues to do so. In order to compare property values accurately it was a necessary implementation. As agents and appraisers, you need ocmparable sales to price property in todays market – this is done by recent sales. If the true sales price is not disclosed – you cannot give an educated pricing or appraisal. Therefore, Sellers and Buyers are misled on current pricing and sales price.

  13. Posted by Michael

    “The decision to stop the practice of confidential sales was made so that listing agents and appraisers would be provided with a better understanding of market dynamics so that listing agents can price and appraisers can value listed property at more realistic levels.”
    “If the true sales price is not disclosed – you cannot give an educated pricing or appraisal. Therefore, Sellers and Buyers are misled on current pricing and sales price.”
    Good move but scary statements. Understanding market dynamics and being realistic and educated wasn’t a priority for SF realtors before?

  14. Posted by Sambo

    Woot! I got one of the “plugged-in” shouts-outs. Small victories people, small victories. In regards to the questions about agents simply withdrawing a listing from the MLS prior to close to avoid disclosing a sale price – I don’t see it happening. In fact, I’d be pretty surprised to see anyone outside of new construction do this.
    New construction sales teams are more or less anonymous in terms of personal name recognition. There business is about the project, not them. However for regular agents, it’s heavily based on name recognition and production. To withdraw a listing to avoid disclosing sales price is to withdraw your production figures from the general public. Everyone wants to show SOLD properties. For example, we keep very up to date on our rank order in the City – and we definitely want others to know our rank order in the City. We’re not sacrificing that to get around posting the actual sales data so we can seem exclusive, or high-end, or whatever…
    Hope this makes sense.

  15. Posted by Big V

    @sambo — how do I find out the rank ordering of agents in the city? I’m a regular joe looking to buy a house and would love to get some metrics on my own agent….

  16. Posted by Sambo

    @Big V -
    I do it through agent reports on the MLS (not entirely accurate, but pretty close). I don’t think public MLS access has that feature (though I’m not sure). Honestly, I wouldn’t judge your agent entirely on how they stack up on the rank order. Some of the biggest producers are not the smartest or best agents, just the best sales people. Just because your agent may not have a particularly high ranking, it doesn’t mean they won’t work hard you and/or know their stuff.

  17. Posted by Rincon Hill Billy

    We need to start a 1k, then add one more zero in a year. Way to go…free market economy is the best for all…even those concerned about their “pride” have to understand this.
    Read “Free to Choose”

  18. Posted by insidesfre

    I’ve never been a fan of confidential sales, as it mucks up all the sales averages & data in the MLS. I’m happy about this policy.

  19. Posted by sleepyinsf

    My clients (buyers) do not want their sale price published on the mls for their own reasons. They shouldn’t be forced to publish the price of a private transaction, especially if they have a confidentiality clause in their contract. We have to submit a letter signed by all agents, buyer, and sellers to the MLS board in order to get a confidential sales price in the MLS. Agents cannot input a confidential sale in the MLS at their own discretion.
    If agents or appraisers want that information, then they should go down to city hall and request it. I think the city recorder’s office maintains a record of who requests the info, which personally is fine by me if it is for a specific purpose like comps. The board voted on this rule without getting any input from agents. Expect a backlash from certain clients in this town.

  20. Posted by tom

    Does anyone have a link to the text of this new rule?

  21. Posted by curious observer

    I’ve always wondered what the rationale was behind real estate purchase prices being public information. It does provide voyeuristic entertainment, but I do wonder why should anyone know what someone paid someone else for something?
    When I purchase a car, or a TV, or those $500,000 diamonds I’m in the habit of buying, that doesn’t become public information, published down at the county.
    When do I get to see what everyone paid for their cars or TVs, so that I can get a better feel for the car or TV market?
    If it has something to do with the fact that property taxes are paid on real estate based on value, then when do I get to see what everyone’s income is, since they pay tax on that? Why isn’t that public information?

  22. Posted by corntrollio

    “I’ve always wondered what the rationale was behind real estate purchase prices being public information.”
    You have to look at the history of real estate and real property law in order to figure this out. To some extent, this is a function of having developed in an agrarian society. Farmers would have acres of land, and needed a system to keep things straight and needed a way to give people notice of those claims. Surveying then wasn’t an exact science, and you can tell this in old deeds, which are described by indicating landmarks, such as streams to denote boundaries. Prior claims were given priority, but people needed a way to know whether someone had a prior claim. Otherwise, anyone could come back years and years later and claim your land, and had you known they had a valid claim, you wouldn’t have made improvements (e.g. growing crops, putting up a building, putting up a fence, etc.) to that land.
    We have recording offices for the purpose of notice. Before recording offices, the only way you could have notice is if someone was making improvements on the property or you happened to see them there (“constructive notice”). The recording statutes work to protect all ownership claims to land, which includes security interests — liens and mortgages.
    The recording statutes also help to protect the priority of all claims in the chain of title. They help keep a second mortgage subordinate to a first mortgage. Otherwise, a second mortgage holder won’t know that their claims are subject to a more senior lienholder, or maybe someone buying a property wouldn’t know that the property is subject to a tax lien, which is senior in priority. Or maybe you would take a property subject to or assuming someone else’s mortgage.
    In addition, historically people transferred property through a variety of different types of deeds. Ever heard of a quitclaim deed? That means a person does not know what claim to the land he/she has, but he/she transfers all of that claim whatever it is. The standard deed nowadays is a warranty deed, which has 6 covenants (typically) that describe what kind of title you are passing to the transferee — in this case that you guarantee ownership and will fix any problems that crop up in the chain of ownership.
    In addition, people also transferred property in different types of estates. Usually people transfer a “fee simple” these days — that’s full title to the property, not subject to other estates. Rarely does anyone transfer a life estate anymore, but you would also need to know when someone is selling you property, if it’s subject to a life estate or other encumbrance. A life estate means that someone is permitted to possess the property until his/her death (or could be based on someone else’s death too).
    There are also other things to be indicated on land — easements, riparian (water) rights, mineral rights, air rights, etc. Again, all of these must be obvious to someone buying the property, and knowing the priority of claims is very important.
    As to your question about cars and TVs, you might note that personal property with security interests attached to them are public record because people need notice of security interests. In the case of non-real estate, that’s under Article IX of the UCC. If you have a loan on your car, the bank has secured your loan under Article IX, and should have filled out a UCC form and filed it in order to protect its interest. If you search the right database, you’ll find this.
    That’s a long Internet post, but a very short primer.

  23. Posted by curious observer

    Thanks, corntrollio, that’s an interesting history. I can certainly see how all the information about who owns what, and encumbrances and easements and so forth, is necessary. But I still don’t see why the price paid need be public. Seems like only the tax man needs to know for taxation purposes, just like the IRS needs to know my income, but that doesn’t mean my income also needs to be public information for all to know. (Although it might be fun if income was public information for everyone.)
    Continuing the car analogy, if I buy my car with cash, there’s no public information as to how much I paid for the car (although perhaps the DMV may know for taxing purposes, I don’t know if that’s public information). Yet if I buy real estate for cash, that price is still public information, even though there’s no mortgage. Seems strange that those two are different.

  24. Posted by Jabs

    excellent post Mr. Corntrollio. Long time lurker, first time poster. Real property, unlike most goods, endures forever — unless you live on the bluffs in Pacifica. Likewise the property interests, disputes, and interests associated with a piece of real property.

  25. Posted by formerly%whatever

    Curious observer, if you lived in Norway, anyone who cared to check on you could see how much you’re worth and how much you made. An annual income and tax list are published online. Google “Norway income and tax list” to find articles on this.

  26. Posted by JTSF

    Curious Observer… If everyone paid cash for real estate then the price would not need to be disclosed. However, since almost everyone borrows money to purchase real estate lenders need a relative valuation to know the value of the property. This is also true for any item you purchase with credit, in the case of cars lenders use the MSRP for new vehicles and the Blue Book value for used. From the buyers perspective if general prices were unknown how would you know what price to pay or borrow for a house? $100K, $500K, $1MM. From a lenders perspective how would you know how much money you should lend and secure? One thing is for sure…we need much more transparency into real estate pricing to get to relative fair value.

  27. Posted by curious observer

    JTSF,
    I can understand that many parties “need” or “want” to know the price that every piece of real estate sold for, and I can understand how it benefits many to know this information. However, there is lots of information that would benefit me that is, however, not legally public.
    This principle could be applied to every other market as well. Most any major purchase (be it cars, electronics, hotel rooms, or whatever) is rarely done at the public “list price”. Therefore, it would benefit me for it to be publicly recorded and available exactly what everyone paid for all of their major purchases, no matter what those purchases may be. So why don’t we publicly record the prices for all purchases everyone makes? We could do it at the time the sales tax is collected (or room tax, or whatever tax is involved) — it could go into a giant public database for all to see.
    I find it interesting that real estate purchases are legally public while most other purchases are not. I’m guessing that this must be because of one or more of the following reasons:
    (1) we as a society have decided that is the way it should be, or
    (2) the clout of lenders and/or other interested parties over lawmakers have caused it to be this way, or
    (3) it just kind of accidently evolved this way through the need to have recorded encumbrances, etc., or
    (4) real estate purchases are infrequent enough and small enough in number to make it practical to record them all
    Or perhaps a combination of all of the above.
    If we need more transparency into real estate pricing to get to relative fair value, that’s cool, but I’d like that for all my puchases, not just real estate. I want to know what people are paying for everything.

  28. Posted by Geo

    While controllio’s account is interesting, it really is not relevant to pricing. Public price discovery is important for lending (appraisal etc) purposes. similar to the public stock exchange where true price discovery is crucial to a functioning market. If there is no public pricing the market will come to a halt — would you ever buy a house without real comps? would you ever sell a house without real comps?

  29. Posted by corntrollio

    curious observer — generally, I think DMV records are fairly open, so I imagine someone actually would know what you paid for a car (or at least in CA, could derive it from the valuation). I think there has been some recent (i.e. last 10-15 years) in some states to make it slightly less public because of social security numbers, but for the most part I think it is still available.
    And I imagine the history of why price specifically is disclosed is probably a combination of the 4 factors you said plus the factor Geo mentioned about price discovery.
    I also think historically that income tax is considered to be more “private” for whatever reason. (these days, that would include thing like social security numbers, but also we have a different concept of privacy and personal information now)

  30. Posted by The Milkshake of Despair

    I think it is best to look at this sales price publication issue holistically. Yeah, it is annoying that your neighbors can look up how much you paid. But on the flipside you get to use that valuable aggregate market information when transacting.
    Access to good market stats is a lot more important to most people than confidentiality.
    I think that the only people who oppose keeping sales prices public are those who have access to that data via other channels and would prefer to retain their information edge over the unwashed masses.

  31. Posted by corntrollio

    “I think that the only people who oppose keeping sales prices public are those who have access to that data via other channels and would prefer to retain their information edge over the unwashed masses.”
    I would agree with this sentiment as well and I would also agree with the rationale that market stats generally trump confidentiality here. Sites like Redfin have done well to provide as much data as they are allowed under MLS rules.

  32. Posted by curious observer

    All I want to know is when I’ll be able to find out how much my neighbors paid for their TVs, their computers, their last vacation, and everything else they bought, since that would give me valuable aggregate market information when I want to make those same purchases myself.

  33. Posted by The Milkshake of Despair

    ^^^ You can get a pretty good idea of what those mass produced consumer items sell for by logging into eBay, creating a search, and then selecting “Completed listings”. As for vacation info, Tripadvisor and kayak.com are good sources.

  34. Posted by corntrollio

    You can determine local prices on cars at intellichoice if I remember correctly. It’ll tell you MSRP, invoice, and what people in your area are typically paying.
    As for the other stuff, we’re talking about fairly easy commodities to do research on.

  35. Posted by curious observer

    Hey, here’s a start to what I want:
    http://www.cnn.com/2010/TECH/01/21/blippy.philip.kaplan/index.html?hpt=T2
    http://www.blippy.com
    We just need to make it mandatory, as real estate is, and we’re on our way to seeing in real time how much everyone is paying for everything.

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