Without any gain in accuracy, Zestimates just became more valuable. REIL smart…

That seems utterly pointless. The data is still available through the county recorders, as you just said. I don’t see where there’s any tangible benefit; rather, the MLS and Realtors once again look like buffoons trying to obfuscate even as more and more information becomes available.

Since the information is still available, though a pain to get to, the only thing that I can see it doing is downgrading the integrity of the MLS. If that is the case, Trulia looks better, don’t you think? I don’t even have to pay a fee, yet, to belong to that.

Chris, I tend to agree. Our board allows the price to be squelched, but it is a long, expensive process to receive approval, and the result is a sale price of “0″ being shown. These are extremely rare, so it doesn’t mess up the data too much. At least, it is a flag that something happened, and avoids misleading those that see the list price and assume a home sold at full price.

Hi Kris,

Here’s some additional background on withholding sales price that you may find helpful…

REIL’s goal is to provide accurate information to agents and brokers regarding real estate transactions within its service area. In fact, REIL resisted providing an opportunity to withhold sales price long after most MLS’s allowed it. However, real estate buyers and sellers have increasingly requested that the sales price of their property be withheld.

Government entities have also historically tried to be responsive to these customer preferences. All five of the counties in which REIL operates (Monterey, San Benito, San Mateo, Santa Clara, and Santa Cruz) will withhold sales price from the public county records if requested.

Agents Caught in the Middle
Caught between their clients’ insistence and REIL’s rules which, for years, did not allow withholding the sales price, some agents found that they had to withdraw the listing from the MLS entirely to meet their customers’ demands. This would eliminate any evidence of a sale at all within the MLS, further thwarting REIL’s goal of providing full information to agents and brokers regarding property sales in a given area.

Helping the Consumer
Given all of these considerations, REIL’s policy allows agents to accommodate a consumer request but also includes a disincentive to the agent. This disincentive takes the form of an escalating fee for every withholding of sales price that they facilitate. This helps to assure that the individual consumer is driving the request, and not the agent.

Policy of Openness
Further, REIL is doing its best to be open about its policies and their impact on real estate sales data. Such policies are announced on REIL.com and comments are welcomed.

Jim,

Thank you for the comments and clarification of REIL’s policy. As I said in the post, I do see the merit in certain circumstances of withholding price. As long as the practice doesn’t become viral, it has a place, no doubt.

While I have personally never jumped through the hoops in San Diego of getting approval for exclusion of the final sale price from the MLS records at closing, it is my understanding that the sale price in these circumstances is shown as “$0″, which is a big billboard indicator that the data is incomplete for a particular listing. I am curious – Why the decision to use list price?

Also, just a curiousity, are both sides of the transaction required to agree to the price being withheld? In the few circumstances I have personally encountered where it would have made sense, one party or the other had no stake in withholding the price and, therefore, wasn’t inclined to authorize it.

I do see your conundrum and in the context for helping the consumer, I see your point. Plus, the escalating fee concept for repeat offenders is brilliant.

Not related to post but; with the Jumbo loan market almost completely dried up will there be a dramatic lowering of prices for homes greater than 417K? Especially the in the 500K to 600K market? Looking at SDCE primarily right now with 40-50K down, stated gross income at 115K-120K. Will sellers realize the change in monthly payment as rates are now in the high 7′s and 8%? Is really offering 100K lower than asking price doable right now? Would you guys offer 100K below asking or is that a non-starter?

Looking for your perspective,
Thanks

Hmmm… I probably have enough thoughts on this to write the hardback version, but will try to summarize. Of course I have no crystal ball, so I do not profess to know with certainty to what extent prices may decline over the next year. The bigger question is how soon will the lending environment settle down, and my indications (from those who know much more about home loans than I) are that this will be sorted out sooner rather than later.

You ask if we will see dramatic lowering of prices for homes greater than $417k. First, $417k is the conforming loan limit. With 20% or more down, you are talking about properties in the mid-$500,000′s. (And, as an aside, we still don’t have a boatload of those animals in San Diego).

Homes prices in general (very general) have declined anywhere from 8% to 15% or more since our approximate peak of Summer, 2005. What you are talking about is another 20% price decline in the near-term, and I simply don’t see it.

Is offering $100k less than asking doable? It depends. (Not the answer you were looking for, I’m sure). It depends on the price point and many other factors, such as seller motivation, reasonableness of their current list price, and seller’s debt on the property, to name a few. For a $500,000 home, I can safely say that offering so much less would most often be unrealistic and futile, and would serve only to offend the seller and waste your time. Better to have your agent in touch with the listing agent and “on call” should motivations change, and/or sitting on the Hot Sheet in the meantime waiting for that first sign of the seller weakening (price reduction).

Would we do it? If you are asking if we would assist our client with such an offer, the answer is that we have an obligation to act as our client’s fiduciary. If we have agreed to work together, and if after presentation of the facts and careful consideration by the client, our client wishes to proceed in this way, we are in fact obligated to assist, although we may advise otherwise. And once written, it will be presented to the seller as the greatest offer to ever be written by the greatest buyers to ever live!

By the way, good luck in Ramona. I know a great agent if you need one.

Glad to hear you are against this Kris. I see it as another nail in the eventual coffin for the MLS.

Sven – This was not intended to be anit-MLS, and it is certainly not the death nell of the same. I really do understand why they have enacted these rules, and the message is really a global “understand the stats you are given” one. The future of the MLS is really another topic entirely.

Welcome back, by the way.

Sorry, but MLS trying to prop up prices by hiding information is not “protecting” anybody (and won’t work). At most, it will harm harm less sophisticated buyers who may not know how to get to real information and get sucked into what some agent says.

Anyone who takes their daughter backpacking in the high sierra is a quality person (a great experience no video game can match), so I do not mean to insult, but if you want readers of your blog to take you seriously (a great Realtor blog is http://www.bubbleinfo.com), please do not try to justify MLS shennanigans with a “you can’t handle the truth” excuse. Feel free to put an asterisk * (ala Barry Bonds) with big capital letters anytime you want to say “this price does not reflect market, we swear”, but leave the numbers alone.

Like other old-school monopolies, MLS will eventually die a death on its own. How slow, I don’t know, but clearly it is already not what it was in the pre-internet days. Think travel agents and US postal system.

Dave,

I totally hear what you are saying, but if you read and believed Jim’s comments, this was a case of the lesser of two evils. You and I are not on opposite sides in our thinking here. I agree that publishing misleading sale stats is no service to anyone. What they were apparently facing was tainted data because of the agents pulling the listings before closing and not recording the sale as a sale at all. In retrospect, I kind of like our San Diego Board’s rule of showing a sale price of “$0″ in these instances. It puts everyone on notice that a price has been withheld because of extenuating circumstances. The fact remains that the County Recorder will always have the correct sale price figure.

Regarding the impending death of the MLS and your comparison of me to a travel agent, the MLS and our industry is certainly changing, but the better, evolutionary, open-minded and forward thinking agents are changing and adapting along with it. This evolution is the best thing that has happened to me, personally, during my entire real estate career. Consumers are expecting more, and the professionals who are prepared and positioned to deliver more will survive and thrive.

Thanks for you comments. By the way, are you available to help sit my Open Houses while Steve is out communing with nature?

Thanks, good to be back I think you’ll need to explain to me again why you think it’s good that the MLS allow people to input what is effectively incorrect information. I guess it really just depends how heavily this is used. I mean if the county has the right information (which they would), and anyone who was curious about a property could know to look there for the real information.

BTW, the county site for looking up sales information is:
http://arcc.co.san-diego.ca.us/arcc/services/propsales_search.aspx

Sven, The site you reference has long been a link on our website at http://www.SanDiegoCastles.com and is a good resource. Thanks for mentioning it here.

>I think you’ll need to explain to me again why you think it’s good that the MLS allow people to input what is effectively incorrect information.

First, one could argue that the recorded price is not often “correct”. Any credits from one party to another are not reflected in the recorded price. If a seller credits a buyer $10,000 for closing costs on a $500k purchase, the sale price shows as $500k, but you had better believe that the seller thinks he sold for $490k. The world, however, thinks otherwise.

In a situation where these credits are extraordinarily high (agent representing self and waives commission, 3% seller concession, etc.), the number can be even more misleading. Now, if the large concession is taken off the sale price instead of given in the form of a credit (as all of the seller’s neighbors are doing), it can give a misleading picture. That $500k effective sale with a 3% credit off the price will record as $485k, yet all of the neighbors who did the same thing but with a cash credit in escrow will record at $500k.

I’ll give you one more, and this is perhaps the best example of a situation that would have begged for some sort of “something unusual happened” flag. This is the case where the buyer is making a large concession. We had a recent closing where, for the purposes of property tax transfer, the buyer paid full price for a listing we had yet needed the sale price to record $25k lower. The buyer asked the seller to amend the price to be $25k lower and made up the difference with a $25k credit to the seller towards the seller’s costs. So, what recorded as a $950k sale was actually an effective $975k, full-price sale. The seller didn’t like this, because their full-price sale was a badge of honor which wouldn’t be reflected in the MLS and to their neighbors (who weren’t resourceful or interested enough to follow your link). As a listing agent, I was bummed because only I would go to bed knowing that we had facilitated a full-price sale. Ironically, we didn’t monkey with the number, but I think you can see the point.

In short, it is not a huge conspiracy to mislead the public. Which brings me back around to the original point. All of the stats, whether they be pulled from County Recorder or from the MLS, may be subject to some “back story” and may not reflect the true picture.

Kris,

I was referring to the MLS, not to real estate agents. The biggest “value” that the MLS has for buyers and sellers is a one-stop marketing tool for web surfing. So long as sellers think they have no choice but to list on MLS for buyers to see their advertisement (I mean, “listing”), they will pay for this service, although how much they pay (which already varies widely) may change.

The RE lobby has done a good job of getting CA (and other) state laws passed making RE transactions seemingly more complex than they really are (the “paperwork factor”), but again, every piece of paper can be downloaded. The RE industry benefits from the relatively low educational level of the public – easier to scare them into thinking they “need” a realtor, mortgage broker, etc., (“biggest transaction of your life”); plus, a large segment of buyers are not English reading/writing (if even speaking), at least not as their first language, and need someone to help them with english language paperwork. Again, however, what this service is worth is a different question.

The same lack of education makes buyers think that agents are “free” to them, since “seller pays the commission, right? Wrong. of course, since the buyer brings all the funds to the table. Commission kick backs to buyers are one way to even this out, but raise the specter that the lender is financing 80% (or more!) of the kickback. Of course, lenders have been funding 80% (or more!) of the agent commissions already, which are transaction costs, not property value, so they should not complain about kickbacks without complaining about funding commissions in the first place.

Anyway, thanks for allowing me a forum to state my views. I agree that there will be room for good RE agents that provide value-adding service, even when the other transaction inefficiencies I refer to are finally overcome. There are still plenty of travel agents and (more amazing) stock brokers, tax form preparers, etc. that make a living “adding value” (real or perceived – does not matter) to transactions.

Plus RE agents, should be able to provide valuable insight to a local community for out of town buyers that cannot be perceived from the internet. The problem is overcoming the conflict between giving good advice to stay away from some properties, and still getting a commission.

This is a foolish step being taken by your area MLS. The reason the MLS’s are, and remain, relavant is that they contain all of the information and accurate information.

Once you take that away by chipping at the integrity of the information, the MLS becomes just another source, among many, for information on homes being sold.

The public already looks at the industry sideways and this only gives them further reason to. In addition to the moral and legal issues surrounding this practice, there will be a majority of agents who will never take the time to investigate every comp for this “code’ and will use this faulty information in their comps and the public will see this innacurate information on websites (like Zillow) and make uninformed decisions.

What if a large group of brokers begin to withhold the actual sales prices? What about when the sales price was higher than the listing price? What if people withhold those sales prices, too? Now you’ve got it going both ways and making the water even more mucky.

Bad idea all the way around. The MLS needs to support Realtors by continuing to provide accurate information and allowing the agents to do their jobs explaining it to the clients.

THE ISSUE OF WHETHER OR NOT TO PUBLISH THE DETAILS OF A SALES TRANSACTION SHOULD ALWAYS BE AT THE OPTION OF THE CLIENT. HOWEVER, MOST MLS CONRTRACTS REQUIRE THAT THE MLS OWNS THE RIGHT TO PUBLISH THE DATA AS A CONTRACT CONDITION OF ADVERTISING THE PROPERTY ON THE MLS SITE. THE REAL REASON FOR THIS IS THAT THE MLS SELLS THE INFORMATION TO THE STATE AND OTHER INTERESTED PARTIES. IT’S ALL ABOUT THE MONEY. STATES THAT SELL REVENUE STAMPS CAN NOT BE RELIED ON TO PRESENT A REAL BASIS OF VALUE. ONE CAN ALWAYS OVERPAY OR BUY EXTRA REVENUE STAMPS TO DISGUISE THE REAL SALES PRICE. THIS IS DONE QUITE A LOT BY ATTORNEYS.