Listings from Non-MLS Websites

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About once a week, I get an email from a client or prospect asking about a property they found on a site not sourced from MLS. These properties are pretty universally non-existent, at least as far as being for sale for the advertised price.

MLS listings have to pass some very important tests. Other agents, and for that matter, regular clients have got to be able to verify that they exist. What is it being offered for, what are the showing instructions. Agents who put properties in MLS without having listing agreements are subject to pretty severe sanctions when it is discovered. Fines, Loss of MLS access, possibly even regulatory action if it's severe enough.

That's not the case with the rest of the websites, the ones that get their listings from somewhere other than MLS. I'm not going to name names, but it's pretty easy to discover whether a site is sourced in MLS or not. I will say that client gateways and emails and IDX sites (such as agent websites that say "search MLS!" and realtor.com) are sourced on MLS. Sites sourced on MLS will still have puffery, but the property exists, is for sale for the listed asking price, and the hard numbers will be as correct as possible.

If the site does not source its listings from MLS, then agents can write up any property they want. In the past month or six weeks, I've had clients ask about

  • properties that were already sold - escrow closed before the ad was written
  • properties that aren't on the market and haven't been for years
  • properties allegedly priced at sale prices from over ten years ago
  • one property that doesn't exist anymore because it was torn down for new development

What is going on is that agents are writing up false listings for the express purpose of trolling for clients. Getting people to call so that they can maybe pick up a new client. This is very subject to the "talking a bigger better deal" phenomenon, because the person that talks the biggest best deals gets the most calls.

But here's the catch: These bigger better deals don't exist. What happens when you find out that deal doesn't exist? When you discover that an agent dishonestly claims to have a property for sale that they don't in order to get your business. Does that sound like the kind of agent you want? Of course, if you've already signed an exclusive agreement by then, you're stuck. Yet another reason to prefer the non-exclusive agency contract, where you can fire that agent by simply not working with them any more.

I have also seen the actual listing agent writing up ads on third party sites for far less than the list price of the property - a violation of fiduciary duty if ever there was one. This isn't a buyer's agent saying "I think I can get it for $X" This is a listing agent essentially repricing the property without consultation with the client. Nor can they have it both ways. If they believe that is a correct pricing of the property, why haven't they persuaded the owner of that, so the listing is priced correctly in MLS?

It is to be admitted that every once in a while - maybe one in a hundred - the property in question is a "For Sale By Owner" that hasn't figured out how to put their property on MLS through some discount service, or is too cheap to spend sixty or a hundred dollars to do so. Neither one of these is a recommendation for the property. If they're too greedy to spend that small an amount of money that will get the property sold better and faster than everything else, that doesn't bode well for their negotiating stance. On a $200,000 loan at six percent, $100 is three days interest, and that's a tiny loan around here. If the property gets sold three days faster by alerting the agents (and all of their clients with automatic feeds) to its existence, that owner is ahead. And if they can't figure this out, or don't care, how likely are they to negotiate in good faith?

On MLS, there are checks. The property is linked to public records. Other agents who know the area can challenge it. Not to mention the fact that the price listed must be the current asking price per the listing agreement. There are penalties for claiming something that is objectively untrue. There is a limit to the puffery due to these facts. Third party sites, not so much.

I suppose I should mention that it's not the MLS name that's important, nor ownership by Realtors. It's the fact that there are mechanisms for verification and challenge built into the website - mechanisms that are easily invoked, and once used, are actually followed up upon quickly with bogus entries being promptly removed or corrected and penalties applied for having put them there. I can send a complaint to my local MLS in about thirty seconds, the bogus information will be gone within 24 hours (usually within 30 minutes if it's during their business day), and the broker who put it there is likely to have some adverse consequences. Those are the important reasons MLS can be accorded some measure of respect.

All of this is quite aside from the fact that Dual Agency is a recipe for disaster, but at least a third of the buyers out there don't know this, because that's about the ratio of buyers that use the listing agent, according to Association of Realtor figures.

But the key feature of the third party sites for these ads is that they are not checked by anyone. The only way to find out if they're BS is by calling - and that's what the agent wants you to do. If they can convert one call in twenty to a client by writing an ad for a nonexistent listing on a third party site, they are way ahead of the game. The other nineteen weren't going to be their clients anyway, and one client with a $150,000 purchase - tiny around here - can put anywhere from $4500 to $9000 in their pocket. But do you really want to work with an agent who got your business by telling a lie?

I wouldn't.

Caveat Emptor

Original article here

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About this Entry

This page contains a single entry by Dan Melson published on November 28, 2014 8:00 AM.

Wells and Community Water Systems was the previous entry in this blog.

The Escrow Process and Reasons for Falling Out is the next entry in this blog.

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