All New, Except for All Those Months Before

We had once sincerely hoped that the whole DOM issue would just go away. But it won't.

We'll write up some current activity on this front now, but henceforth we'll try to confine references to re-lists and True DOM to our twice-monthly market updates.

The bottom line for now is that the old tricks seem to be back. Our faith that Mr. MLS would solve this issue is largely broken, and the practice of bogus re-lists survives.

To recap: As is well-documented in MBC's 1-year history of public market tracking, it's a deeply embedded practice among local real estate agents to cancel and re-list properties that have gone stale. We call the tactic a "bogus re-list." The new sheriff in town, Mr. MLS, calls it "churning," and also a "deceptive business practice." Nice. We agree.

Getting ready for the Feb. 4 transition, Mr. MLS notified our local MLS members of its "data integrity policy" prohibiting churning. Individual agents would no longer be able to cancel listings. They'd need broker approval – a step that, in Mr. MLS's experience, had "virtually eliminated the practice" of churning. (We're quoting from Kaye Thomas quoting the memo. See our Jan. 20 story here.)

So how is this new regime working? In our view, impressively, but not perfectly. We've seen one bogus re-list get reversed (3009 Poinsettia), while another that some view as arguable was let stand (1413 Pine).

Now there are 3 new examples.

Heading the new bogus re-list parade is 2309 Pacific, new construction that was first put on public offer on May 18, 2007. (Click address for details via Redfin.)

About 10 days ago, the listing with MLS # S951920 was canceled. This week, it's back with a new price and a new MLS # S08042842. This one began in May at $2.299m, got re-listed in July 2007 at $2.239m, trimmed a bit before dropping off and came back at $2.099m – $200k in reductions over 300+ days.

An alternative tack is being taken over at 516 24th. The old listing has not been canceled. There are 2 active listings for the same home. Click to see the old listing under MLS # S961440, or click the new MLS # S08042231 to see the same information there, with fewer DOM.

The existence of two listings for the same home creates the bizarre spectacle captured here in a screen grab from Realtor.com. Same home, same details, but one is "New this week!"

There may be some perfectly reasonable explanation for the dupes on 24th. F'rinstance, the older one is listed as Sand Section, while the new one is Tree Section. Wait, that's not an explanation for the re-list.

There is also the matter of the change in construction date listed for this home – from 2007, to 2008. It's a small detail, perhaps. But the fact is that the home was first offered in October 2007, and it was quite complete then – staged, even. MBC featured the home in "Mrs. MBC's Xmas List," and also in a year-end column in the Easy Reader, because we like it. However, since it's now said to have been built in 2008, we have to conclude that the completion date was changed willfully while freshening up the listing.

Finally, another re-list has hidden the history of 473 31st. This brand-new home first came on in early November 2007. The listing with MLS # S957772 expired recently, but the home began a new life right away – how very nicely in keeping with the season! – with a new clock and a new # S08039357. (There's also a dupe of this one on CLAW MLS.) Best that can be said: The "CDOM" (combined days on market) field for this one properly states 140 CDOM.

Two of the listings above meet the "new product" test, put forth by a prominent local agent in the Daily Breeze earlier this year:

"My contention is that when you have a piece of property, and you change it $100,000 in price, it's a new piece of property. It shouldn't be penalized by the number of days on the market that it was at another number. It's a new product."

Of course, we'll watch to see if Mr. MLS takes any action to un-re-list these properties, but we're skeptical. After all, if "broker approval" is all that's needed to make a re-list legit, we've got plenty of brokers in town who will gladly give their approval. That, we have learned.

As we wind down this perennial discussion, after all the battle-line-drawing, back-and-forth debating and you-don't-get-it lectures, what have we learned?

First, the number for "Days on Market" means something other than the "number" of "days" that a property has been "on market."

Second, there's an unbridgeable gap in perspectives on this issue between agents and consumers. Some people view re-listing as "deceptive" and some don't. Here's wondering if we can come together on the idea of changing new-construction completion dates.

Third, there's still a need for independent tracking to keep more accurate records of our local RE market. MBC will keep doing that, and we'll try to stop explaining why we need to.

Finally: caveat emptor, but then, you knew that.

The Mystery of 2310 Palm

A funny thing happened to MBC on the way to publishing a nice little exposé. The substance of the story changed – for the better.

So, while we don't exactly have a scandal to discuss, we'll walk you through the chronology of events, as we saw them, on the sale price at 2310 Palm.

Close readers of MBC know we've been on the trail of the mystery of the final sale price of 2310 Palm for a while. This home was newly built in 2006 (5br/3ba, 3150 sq. ft.), and we rather liked it for its distinctive, authentic-feeling Spanish details. We also noted some strikes against the property when we wrote it up (see "The 1-Year Club in the Trees").


When the home went into escrow in late October, after 443 DOM, the MLS listing was canceled, rather than being posted as "pending," so we feared we'd lose track of the sale price. Alas, a new MLS entry came up in early December showing that the property had closed for $2.325m. (Click on the little graphics here to see screen shots of the MLS posting of the price – the page is, of necessity, broken into halves.)

In comments on MBC several days later, someone noted that property tax records indicated that the sale price was, in fact, $2.2m, a discrepancy of $125k, or almost 6%. Why would the MLS record and the tax records differ?

First, we had to get the public records. The page you need to see (with names redacted by MBC) here notes the "documentary transfer tax" of $2,420.00. (Click to enlarge the closeup or click here if you want the whole page [PDF].) Since the transfer tax on all homes in California is 1.1%, you can use the reported tax payment to calculate the sale price. Sure enough, that tax amount translates to a sale price of $2.2m.

Next, we started asking around. Why might there be a difference?

Here's where your humble correspondent's eyes were opened a bit. Turns out it's not unheard of for the MLS-reported price to differ from the true sale price.

The practice is controversial even among agents, but here's the theory: If a home happens to sell to an agent, or for some reason one or both sides does not receive commissions, you might report the price as if full commissions were paid, to reflect what would have been the price but for the freebies. If you don't alter the reported price, that comp will drag down the neighbors and continuing listings unfairly. So, if no commissions were paid (in a hypothetical case), the MLS-reported price might be boosted by 5% or 6%.

The only problem in such a case is that the MLS now carries a fabricated number. Future comp reports are partly fiction. As a buyer, when you're trying to figure out how much to pay, you might be upset to learn you're being told that other buyers paid more than they really did. As a homeowner or seller, you might be happy that home values are being protected by adjustments like this to reported sale prices.

If that's the sometime practice, the next question was whether the circumstances of this sale involved zero or less-than-normal commissions. (Remember the reported price was almost 6% higher than the true sale price.)

Was the new owner an agent, as someone suspected? No, apparently – completely different field. Did one or both sides waive commissions? No one's talking, but it seems doubtful that both the buyer's agent and selling side took zero.

So who created the MLS entry with $2.325m as the sale price for 2310 Palm, and why?

MBC is certain that the answers are interesting, but now the story has changed.

In recent days, the entry with the sale price has been amended. (Click to enlarge the screenshot.) Now the MLS will tell you that the sale price was $2.2m, same as the tax records.

Oh, the entry is still a little bit bogus. For one thing, the construction date is still listed as 2007, rather than 2006. Also, this entry says the list price was $2.325m, but that's just an artifact of the, achem, adjusted sale price reported last month. But they did plunk in the proper CDOM ("combined days on market"), which mitigates the impression that this was a brand-new home that sold quickly for close to asking.

The reality is that 2310 Palm began at $2.699m in August 2006, and its final sale price is -$499k/-18% from there. The list was $2.399m when it went into escrow.

The lot was purchased for $1.45m in August 2005, meaning the final sale price was just $750k higher. If the home was built for $200/SF, the builder broke even. Do you think it was built for $200/SF?

Reasonable people might look at these circumstances and suspect that someone was trying to hide losses, protect comps – even specific current listings – or avoid reporting data that might show a market in decline. Those are reasonable inferences, but we're not yet sure which facts apply to the mystery of 2310 Palm.

Listing DOM Just Confuses People, Let's Stop

Are you ready for a shock?

Buyers beware.

MBC shares the head-shaking incredulity of LA Times real estate blogger Peter Viles over this news:

HUGE SWATHS OF SOUTHERN CALIFORNIA REAL ESTATE SHALL NO LONGER SHOW DAYS ON MARKET (DOM) ON CLIENT REPORTS

The SoCalMLS (covering Orange County, eastern LA County, the SG Valley and Catalina) has officially decided to drop DOM and CDOM from "client reports" generated by their systems.

Why stop? Well, you see, as the SoCal MLS explains about publishing DOM figures:

One view is that it hurts sellers, another is that it helps buyers.

Actually, that's the same view.

We can all agree that publishing DOM – particularly long DOM figures – helps buyers at the expense of sellers. Doesn't this reveal whose needs the SoCalMLS is most responsive to? (Or, for that matter, to whom any MLS is beholden?)

Realtors rely first and foremost on sellers, both because they select the selling agent and because they set the key terms of sale (price and commission rates). It's a supreme irony that the buyers actually pay everyone else. This move by the SoCalMLS tells you how secondary the buyer's importance really is to the leaders in the field.

Again, from the SoCalMLS notice:

The bottom line is that you, the real estate professional are in the best position to explain to your customer - buyer or seller - what the true DOM figure is and what it means.

When do you think a realtor would have to explain the "true DOM figure" to a seller? Hmmm. We don't really have space here to re-explain how bogus re-listings compromise the reports buyers' agents will generate...

Let's get parochial: Does this move affect MB? Not really, not yet.

The Greater South Bay MLS (GSBMLS), under which you'll find most MB listings, is a separate entity. We're not subject to this decision. (MBC warns you not to delve into the byzantine complexities of MLS authorities from region to region. It will make you mad, or sleepy, or both, but here's a map.)

Indeed, local realtor/blogger Kaye Thomas recently commended our local MLS for adding "combined" days on market to client reports. It's conceivable that a buyer using a SoCalMLS-aligned agent to search for properties in MB would be affected.

Within the next year or so, GSBMLS is going to "merge" with the MRMLS (Multi-Regional MLS), which covers areas north and east of the SoCalMLS, and excludes the L.A. Westside. At some point, GSB needs to work out its rule differences (and enforcement differences!) regarding DOM with the MRMLS folks.

Here's hoping both hold their heads high while the SoCalMLS effort to deprive all market participants of critical information flames out.

A distinct possibility: All the local MLSes go in this direction... and reduce their own relevance as new information sources arise.