Back in the mid ‘90s, before I had even conceived a career in the thrilling, high-profile, esteemed world of real estate, I got it into my head that I wanted a bigger house. I was a do-it-yourselfer — not by choice, but by circumstance. My father-in-law was a real estate agent, and we couldn’t make a move without him. (It had something to do with political correctness. And the fact that he was a retired Army Colonel; he scared us.)
And it just so happened that my father-in-law cut his teeth in the depression era. Consequently, his idea of financial risk-taking involved leaving lights on when he was in the room.
So, I wanted a new home, and even Steve of the “we’re-all-gonna-starve-‘cause-you-forgot-to-turn-off-the-oven” Steves (the apple doesn’t fall far from the tree) was softening. In those days, you needed an agent to look at homes. It was the law. They owned the inventory. Short of spending each Sunday driving aimlessly through random neighborhoods in search of open houses (which we did), aligning with a real estate agent was your only option. Then came the shiny computer.
One day, having weathered the thirty-minute booting process and after successfully navigating my way past the “a” prompt (our grayer readers will know what I am talking about), I stumbled on a site called Realtor.com. Mecca! There they were! All the listings! Granted, Realtor.com withheld the addresses (they still owned the information, after all), but with their rudimentary mapping feature, I could now troll the neighborhoods with confidence and eventually connect the dots.
Fast forward, and all of the formerly propriety listing information is laid out online in all of its glory. Where I had to walk five miles in the snow back in the day, kids have it so much easier today. The problem is that it can feel a little like someone threw you the car keys before they taught you to drive.
There they are! All the listings!
Not so fast. All of the listings are not online. Our Multiple Listing System (MLS) has now included as part of the input process an “opt out” option. It was always an option for brokers, but now a seller can opt out of having their listing displayed online.
Further, depending on your search site of choice, you may not be looking at all of the opt-in homes. Some sites, such as Realtor.com, populate using what is called an IDX (internet data exchange) feed. This is as complete as it gets where broker-represented listings are concerned. Other sites, however, rely on individual brokers to feed their listings, and while most of the large brokers and even many of the smaller independent brokerages (ourselves included) syndicate their listings to the world, many do not. This will explain why you may find different offerings on different sites. Therefore, one-stop shopping is really not a reality.
Only $1.95? I’ll take it!
There is a lot of information out there, and so much of it is either misinformation or subject to interpretation. On Trulia.com for instance, I see several questions posted daily from homebuyers wanting more information on a too-good-to-be-true listing. Yesterday, someone was asking about a 7,500 square foot Rancho Santa Fe home listed “for sale” at a price of $14,500. I’ll take twelve.
For whatever reason, homes listed for rent in the MLS show up with a status of “for sale” on Trulia. It should be intuitive that something goofy is going on, but every day I see another home shopper waving their virtual checkbook in the air at one of these smoking deals.
Then, there are the Notice of Foreclosure listings. On many sites, you will see these “offerings” cohabitating with the really-for-sale offerings, yet they aren’t. They are homes for which the foreclosure process has begun and an auction date has been set. Not only will many never see the county courthouse steps, but the lion’s share that do will go back into bank inventory and are many, many months away from coming to an MLS near you.
Other “too good to be true” tales
Short sales and bank owned homes are among the biggest offenders here, but even traditional sales are often the victims of a feeding frenzy resulting in multiple offers and a winning bid far over asking price. Here is what is happening in our market today, particularly in the more affordable price segments:
- Everyone wants a deal. Consumer confidence is up, rumors of finding the market bottom are rampant, and there are a whole bunch of sideliners (we call them “latent demand”) storming the field thinking it might not get much better. But, inventory is oh-so low, so any home that looks to be even slightly competitively priced draws a bigger crowd than Bono.
- Short sales, those homes for which the seller will see proceeds insufficient to pay the costs of sale and their outstanding debt, are often, deliberately priced low by the agent in order to generate a speedy, trial balloon which can then be submitted to the bank for consideration. Sometimes, the bank will accept an offer which on the face looks to be below market value. Other times, and only after a three to six-month or more process of waiting… and waiting… the offer will be rejected or countered, leaving the lucky winning bidder with nothing but a fresh hunting license.
Either way, short sale agents often use the dart board pricing method, and multiple offers in these situations are taking on a new meaning. Case in point: Steve showed a home this week, first day on the market, for which twelve offers had already been submitted. The listing agent vowed to cut it off at thirty-two offers before submitting the biggest and brightest to the bank. We have seen cases where the final offer exceeded the asking price by 20% or even more. And, if you are hoping for VA or FHA financing in these cases, good luck with that. One cash offer, or even a solid conventional loan offer, will trump you every time.
The point is that you have a virtual candy store of real estate information at your fingertips, but the information is still subject to interpretation. Whether you are a do-it-yourselfer as a victim of circumstances like I was, or you are taking matters into your own hands by choice, all may not be as it seems. And today, you don’t need to slink around blindly in the dark.
We have email. We even have telephones. Or, if you tend toward the shy, we have an innocuous little chat button on the right side bar here which actually works! You can even click on the Ask the Broker tab at the top of a page. (Give us a phony email if you must; you wouldn’t be the first.) In any event, think of us as information aggregators. We can pull all of the random pieces together to help make some sense out of it all.