Relisting - Ethical or Deceptive
From the Star Ledger (Print edition):
Practice hides the real deal on homes for sale in Jersey
By Sam Ali
Practice hides the real deal on homes for sale in Jersey
By Sam Ali
As the white-hot real estate market cools to a simmer and homes get harder to sell, some real estate agents are hiding from prospective buyers the number of days properties have been on the market and how far prices have fallen, a Star-Ledger analysis found.
These agents are canceling listings in databases known as Multiple Listing Services and creating new ones for the same homes. That resets the sales clock and masks price reductions, both important pieces of information for buyers.
The practice, legal but under fire in other states, can be helpful to sellers and their agents, who want properties to seem as attractive as possible. But critics say it is often misleading.
"It's deception," said Michael Lyon, president of Sacramento, Calif.-based Lyon Real Estate and a board member at MetroList Services, one of the largest MLS databases on the West Coast. "Anytime you reset something to make it look newer, better, you're trying to deceive someone."
The Star-Ledger, granted access to MLS data for North Jersey by agents who wanted to draw attention to relisting, found hundreds of examples in Morris, Essex and Union counties during the months of June and July.
It's hard to judge how widespread the practice of relisting is, because MLS data is closely guarded by the real estate industry. Most of the services are overseen by local Realtor associations and usually cover a large city, a county or multiple counties.
Although the public can view abbreviated home listings at Web sites such as Realtor.com, only licensed real estate agents with paid memberships to particular databases have full access to raw data.
The National Association of Realtors, the nation's largest real estate industry trade group, likens the MLS to the private stockroom at a department store. The public only gets to see what licensed agents put on the display racks.
While some brokers and agents frown on the practice, brokerage firms contacted said they didn't feel they were doing anything wrong.
"We believe that this is not a seller disclosure issue or a question of ethics," said Judy Reeves, the chief operating officer at NRT, a unit of the Realogy Corp. that owns and operates Coldwell Banker Residential Brokerage and Burgdorff ERA Realtors.
"The listing agent (the agent employed by the seller) does not represent the buyer in the sale," she said. "Buyers generally make their decisions by comparing a prospective property to the others that are currently on the market."
Similarly, a spokeswoman at RE/MAX said she did not believe anyone was being misled.
"It's a marketing strategy," said Rosali Daniels, a broker at RE/MAX Tri-County in Hamilton Square, speaking on behalf of the firm. "Most agents will watch new listings as they appear in the market place. By reintroducing a property, I am trying to ensure no one missed it the first time out. We do it to call attention to a property."
Both Reeves and Daniels said when homebuyers engage an agent to show them homes, that agent is responsible for retrieving a complete listing history for any property from the MLS database.
Lyons, who employs more than 1,000 agents at his northern California brokerage, said that doesn't always happen. Some systems don't maintain digital archives, he said, and many new agents drawn to the profession by the recent housing boom aren't properly trained.
"It's not some field on the computer screen that's right in front of you," he said. "You have to go digging for it."
The debate over what Realtors disclose to consumers and what they don't comes as Realtors are spending millions of dollars to promote their integrity. The NAR launched a public awareness campaign this year titled "Someone You Can Trust," which cites the group's strict code of ethics and the training its 1.2 million-plus members receive as major factors that distinguish Realtors from others in the business.
Critics argue that the practice of canceling and relisting properties runs afoul of the code, including a pledge to "treat all parties honestly" and provisions that prohibit Realtors from misrepresenting or concealing facts about a property.
"This is counter to what the brokerage community is striving for, which is public trust," said Jonathan Miller of Miller Samuel, a real estate appraisal firm in New York. "If this is a covert attempt to manipulate selling statistics then I don't see how it can be in the public interest that this is being done."
A spokesman for the New Jersey Real Estate Commission, the state agency that regulates the professional conduct of licensed brokers, said there is nothing on its books that addresses the practice in New Jersey.
"Mainly our regulations are aimed at preventing misrepresentation regarding the condition of the property or concealing relevant facts from a potential buyer," said spokesman Jim Gardner.
Those who oppose relisting say price reductions and length of time on the market are relevant facts that ought to be disclosed. And brokers agree these factors often influence the way buyers negotiate.
The seller of a home on the market for only one day, for instance, might not be willing to accept low offers — but the seller of a house unsold for a year might be more receptive.
"Time on the market, price — those pieces are part of the equation in terms of establishing value and motivation," said Lyon.
Realtors in other parts of the country have been trying to clamp down on relisting.
The Northwest Multiple Listing Service, which covers part of Washington State, recently warned its 1,277 brokerages after seeing a marked increase in the practice.
And in April, the largest multiple listing service in Massachusetts, MLS-PIN, changed the way properties are tracked from listing to sale, making it impossible for agents to change the "days on the market." Marietta Nelson, owner of Marietta Realty in Cape Cod, described relisting as "one of my pet peeves," and said she hopes other MLS databases will follow suit.
"In my local board, it is common practice to mask the true days on market for listings," she said. "A lot of people do it and a lot of people don't see anything wrong with it. But whatever shortsighted gain might accrue to the individual, the wider effect is to mislead other people and corrupt an important database."
MetroList Services, which covers greater Northern California, recently created a compliance department to flag rule violators and is trying to implement other ways to stop what it calls "serial polluters."
"Good brokers work very hard for their reputations and it takes a lot of time to earn a good reputation, and a few bad apples like this can sour the whole tree," said Lyon. "In the long run, it's not good for our industry."