Re-Listing Distorts Market, Fools Buyers

Re-listing is a problem in our local market area, including the greater Los Angeles area, and the San Fernando, Antelope and Santa Clarita valleys. Free markets work best when information flows well between buyer and seller. Re-listing distorts market information, and is in effect a fraud upon the buyer. While the big listing agents may like this distortion, I think it hurts our market overall.

Daily Real Estate News October 2, 2006

No More Hiding Days on Market by Relisting

RE Infolink, the company that operates the multiple listing service for the five California counties that make up the Silicon Valley, has changed a policy to make relisting a home more difficult.Previously, all it took was paying a $25 fee to earn a new MLS number and hide the “days on market” figure. Now all homes on the MLS will display the correct days on market number unless they have been taken off the market for more than 30 days.The change was prompted by a recommendation this summer by the CALIFORNIA ASSOCIATION OF REALTORS®. Relisting can mislead consumers, and it also corrupts the integrity of data on the multiple listing service, says June Barlow, general counsel for the CAR. ``We're real persnickety about keeping the data clean,'' Barlow says.
Source: San Jose Mercury News, Sue McAllister (09/29/2006)

I have never liked the practice and while it is good to see that the Realtors up north have gotten a handle on the problem, it is disappointing that it is still tolerated down here.

One of the major indications of market activity is 'days on market'. When a property has been re-listed the DOM resets to zero. Averaged out, reset listings tend to distort the DOM figures shown in the MLS data which is posted and updated monthly on this Blog. Long-time readers here know that I have never pointed to the DOM figure as accurately reflecting anything in the market, and that was due to the specific reason of the practice of 're-listing'. Right now DOM is about 90 days or so, but the real figure is unknown due to this distortion.

The second figure that is distorted on the market data is the 'new listings' figure. As the market slows down, re-listings have gone up. Funny thing, so have new listings. Do you see where this could distort the numbers? While I haven't crunched numbers over just how many 'new listings' are in reality re-listed homes, I would guess that it is around 15%.

Finally, re-listing hides market swings in pricing in that a home that has been on the market for a while may go through multiple price reductions from the original price. The market data provided by the Southland Regional Association of Realtors (SRAR) that includes the San Fernando and Santa Clarita Valleys includes percentage of list price that a property sells for, as well as percentage of original list price that a property sells for. When a property gets re-listed at a new, lower price and then subsequently sells, the percent off of list price figure is distorted. It may well be that the relative stability of percent off of list price has some distotion due to re-listing.

As an aside, seller concessions to the buyer in the form of seller credits for buyers' closing costs have never been included in the data, but as real estate practice has been increasing over the last year plus. In the seller's market, these price and terms concessions were not a part of the deal. Now they nearly always are.

Realtor estate practice should not add to distortions in the housing market, nor should we be tolerant of any fraud on the buyer. I have been in contact with our Realtor association leadership urging a change in the policy for over a year.
~~Ray