MRIS has taken a self-serving turn in reporting a home's days on the market (DOM). According to an article in Saturday's WaPo:
When home shoppers see that a house has been on the market for months, they will probably conclude that it's priced too high -- and that there could be room to negotiate a lower offer.
Last week, Metropolitan Regional Information Systems, the Washington area's multiple-listing service, made it easier to hide that information.
The change allows sellers to withdraw their property from the market for 90 days, then place it back on the market as a new listing. Previously, a seller had to wait 180 days to do that. As a new listing, it gets more attention from buyers, MRIS says. But others say the change favors sellers at the expense of buyers, who may not know to ask about an earlier failed attempt to sell the house.
But wait! It gets better.
The change was made because agents considered the previous six-month resting period too long. Those who favor the new rule say market conditions are changing more rapidly, so 90 days is enough to count as a new market cycle. "The home deserves another look in less than 180 days," said Mary Jo Powell, a spokeswoman for MRIS. The new rule "helps it pop up in the search without changing the facts at all."
Without changing the facts at all? Conceivably, a house that has been on the market for 200 days could, under the change, be reported as having been on the market for only 20 days [90 days listed, 90 days "resting period", 20 days listed]. Bargaining leverage sure changes when a listing goes from 200 DOM to 20 DOM. Not surprisingly, the rule change "was supported by a majority of the 4,169 agents who responded to an MRIS survey."
...an agent with W.C. & A.N. Miller Realtors in Bethesda, supports the change. She said the MRIS argument that 90 days is a full market cycle makes sense because most buyers have found the house they want in that time.
I would buy that argument if 100% of homes were sold within 90 days of listing. However, MRIS' own data shows that in January 2008, only 66% of homes sold had been listed less than 90 days [71% in December, 75% in November].
I guess the local real estate industry believes it better to obfuscate the truth about a home's market condition than give buyers accurate market information. However, buyers aren't the only ones being gamed. Add lenders to the list.
But the way it will change the appraisal side of her business underlines what potentially is the bigger impact -- blunting the bad news of declining prices and sales by presenting a lender with a rosier picture of a neighborhood because houses could show as being sold after fewer days on the market.
"As an appraiser, I like it," Bradley said of the change. She said she has seen 10 sales fall through in the past six months because lenders would not offer loans at the terms the buyers needed when they saw the patterns of slow sales and dropping prices.
"So many lenders are requiring [reporting of] days on market. When they see 233 days, they kind of freak out," she said.
If the lenders don't see those long times before a sale, they won't call her for clarification about those properties, which she said is "more work on our part."
Ah, that's what we need: the mortgage industry being dealt more bogus information!