I’m going to carry the current internecine real estate debate about the syndication of listings to third-party sites such as Zillow and Trulia home to your door step. If you ever have used one of these sites to search for homes, or if you know anyone who ever has done so, you absolutely must make sure you read this.

That there are data errors throughout sites such as Zillow is evident – when there are two to three times as many homes listed for sale by agent as are showing for sale in the MLS, there’s a problem. But sometimes it’s hard to get a handle on the issue from 35,000 feet, as it were. So let’s drill down to one subdivision in the Phoenix area and see what we find.

Sonoran Mountain Ranch is a 1,476-home neighborhood located in northeastern Peoria, straight up 67th Avenue from the heart of Glendale itself. Like many subdivisions conceived and created in the early 2000s, values have taken a considerable hit there from the high point of 2005. And, like most of the rest of the Valley, there’s fairly little inventory available right now.

According to the Arizona Regional MLS, there are 26 homes for sale in Sonoran Mountain Ranch.

According to my own website’s listing feed for Sonoran Mountain Ranch via IDX (Internet Data eXchange), there are 27 – the discrepancy is the IDX hasn’t synced to ARMLS yet to see the one listing that was switched to “Temporarily Off Market” about four hours ago.

According to Zillow, filtering only by subdivision name and searching For Sale by Agent,there are 20 homes for sale in Sonoran Mountain Ranch.

Except …

6838 W Nadine, the first home listed, already is under contract.

So is 29576 N 68th.

30034 N 71st isn’t under contract; escrow closed on this property June 30, 2011 – seven months ago.

In fact, not a single one of the first 10 homes listed on Zillow’s search for Sonoran Mountain Ranch are active listings in the Arizona Regional MLS.

Not. A. Single. One.

Of the 20 homes Zillow lists for sale in Sonoran Mountain Ranch, exactly four – FOUR – of the 20 are active listings at this point in time.

I could tell you which four but that would defeat the point, because …

3rd Party Syndicators Hinder Buyers’ Ability to Find Homes

Anyone who has searched online for homes can understand the disappointment of sifting through listings, choosing the home that best fits your needs, the home that calls out to you when you look at the pictures, and then either find out it’s under contract or, if you have the chance to write an offer, to lose out to another bidder.

In my seven-plus years in the business, rare has been the buyer who doesn’t have one eye focused squarely on the rear-view mirror to see the home that got away.

When there only are four active listings out of 20 on a site such as Zillow, buyers are being subjected to the ultimate bait and switch. They are looking at homes long since under contract, in six of the cases long since closed escrow, only to learn later that the homes with which they fell in love are long gone.

Truzilia (Trulia and Zillow combined) can argue all they want about the front- and back-end checks that are in place to assure data quality – when there is a 15 percent accuracy rate as there is in Sonoran Mountain Ranch, the phrase “data quality” is little more than a punch line.

But it’s not just buyers who mistakenly use these sites who are getting a raw deal. It’s sellers as well. And it’s here where Jim Abbott’s decision to pull his brokerage’s listingsfrom Zillow and Trulia makes sense.

Poor Syndicated Data Disadvantages Sellers

Did you ever watch the game show Deal or No Deal? Each case had a different dollar amount and the goal for the contestant was to choose the case with the $1,000,000 in it – a 1-in-20 shot.

There are 25 models holding cases in the photograph to the left. Taking this argument to its most basic state, lets say each of those cases is a home listing.

Using the data for Sonoran Mountain Ranch as a baseline – 15 percent accuracy – 4 of those cases contain an active listing for a home for sale; the other 21 are empty (I even rounded up to give Truzilia the benefit of the doubt.)

Pick a case.

Is that home really for sale? No?

Pick another case. Empty again?

How many cases is a buyer going to open before he or she surrenders and either goes to another web site or, if he’s smart, finds a local real estate agent with access to the real list of homes for sale and gets some help.

You have your home for sale. Your agent tells you that it’s being marketed on Trulia and Zillow – the same thing that I tell my sellers, in the interest of disclosure. But really, how is your listing going to stand out from the bogus listings …

(Some real estate agents will interject now that they pay to have their homes featured on Truzilia – this isn’t so much solving the problem of miserable data quality as it is ignoring it and throwing money at it in the hopes that it goes away, though it won’t because Truzilia has won. It collected your cash.)

IDX and Listings Syndication Are NOT the Same

Abbott has been criticized in many corners, including the well-intentioned “Raise the Bar in Real Estate” Facebook group, for not syndicating his listings but continuing to use IDX on his brokerage’s site. He opened himself up for his by saying buyers should go to the source, presumably the listing agent, even though the point of an IDX feed is to help a buyers’ agent attract a buyer.

Taking the liberty of not interpreting Abbott’s message quite as literally, perhaps we ought to consider “the source” in this case to not be only listing agents but real estate professionals in general, those people who have access to the most accurate, most up-to-date information about homes for sale on the market.

IDX isn’t perfect; agents can opt-out of supplying their listings on an IDX feed and, as I showed above, there can be a lag between an update in the MLS and on IDX. As someone whose site features IDX prominently, I can live with a four-hour delay far easier than I can a seven-month lag in tagging a “home for sale” into a sold listing online.

Maybe refusing to send listings to Trulia and Zillow isn’t the answer. Given the data issues, it’s difficult for me to believe not sending listings there disadvantages the client a great deal more than not holding an open house or putting a sign on some random street corner; a lot of eyes will see the sign, but that doesn’t mean they’re going to distinguish the sign from the rest of the visual white noise and act.

We all talk about doing what’s right for the consumer – if we don’t demand better accountability of these third party syndication sites when it comes to data, if we blindly send our listings data there without any consideration of how it will be viewed and the quality of data which will surround it, we’re failing the very public who we claim to be so interested in protecting.

This was originally posted January 29 at AllPhoenixRealEstate.com. If you're not subscribed to the RSS feed, why not?

Before you chalk this post up to so-called inside baseball, consider this. You or someone you love likely has used or will use Trulia, Zillow or Realtor.Com to search for homes in the belief you are getting an accurate view of the local real estate market.

Sadly, that’s not at all the case – not that any of those sites ever will admit it.

This should matter to you as a consumer; whether it does is your call. If you are the type who prefers to be dazzled by rainbows and ladybugs while ignoring what really does make things happen, this post likely isn’t for you. If you’d like a more realistic view of real estate that allows you to set a more reasonable set of expectations, particularly for those selling but for those buying as well, read on.

Here was a video posted by Jim Abbott of ARG Abbott Realty in San Diego:

Reaction came fast and furiously, both from Trulia and Zillow (henceforth known as TruZilia) in defense of their data and from agents who either have axes to grind against syndication or those who don’t tend to favor syndication.

Welcome to the latest real estate tempest in a teapot, a solar flare that has erupted and just as quickly will loop back to the surface of the sun never to be seen again.

As is his wont, real estate marketing consultant Rob Hahn has deemed this entire issue to be of the utmost importance, one that will turn the entire real estate industry on its ear:

The “syndication debate” will not end with smacking down TruZiltor. It will ultimately end up being a debate about buyer agency, the purpose of the MLS, the purpose of data-sharing. I’ve been predicting we’ll be doing that by NAR Annual in November. Maybe it’ll happen sooner than that.

Yawn.

The only people who seem to debate the purpose of the MLS are those who don’t use the MLS to sell homes. These folks invariably view the MLS from the position of the consumer, which is all well and good except the MLS isn’t designed for the consumer. It’s a marketing database through which real estate agents can not only advertise their listings but also provide a cooperative offer of compensation to any agent who happens to sell said listing, so long as they’re a member of the same MLS.

In other words, let’s elevate the debate to the bare level of reality and stop confusing the MLS with a mythical national clearinghouse of homes. And, actually, let’s stop saying “the MLS” because “the MLS” is not a singular entity but a vast array of local platforms.

If you’re going to argue that the public should have total access, fine. Also make sure consumers have access to every industry’s inventory database from your Best Buys to your Auto Zones to your car dealerships to the local pizza place that only makes a set number of slices for the lunch crowd.

As for debating the role of buyers’ agency … Please Go Back to 2005, Do Not Pass Go, Do Not Collect $200.

We now return you to the debate at hand. And that debate, as well as Jim’s video, easily could be centered about transparency in real estate sales. What works, what doesn’t work, and what serves merely as slight of hand and misdirection to deflect from the reality that in the vast majority of cases, listing a home in the local MLS is what sells the property.

Writes Kris Berg of San Diego Castles Realty on her San Diego Homes Blog:

You see, my client’s home does not really need to be on 400 national websites. That is just a myth we have propagated out of convenience and our desire to win listings. It is rhetoric we bought into, rhetoric delivered by those who are in the business of profiting from our business.

In all honesty, the rhetoric delivered by would-be listing agents goes far beyond internet marketing.

We easily can throw in the positively Paleozoic broker tour, during which agents who have signed up and have a listing of their own to pimp caravan from listing to listing. Those gunning for a listing promote these as exceptional ways of getting a home “out there” in front of agents, because it’s so much more likely that there will be an agent on tour who happens to have a buyer than there will be an agent sitting in front of his or her computer searching the MLS for homes that match their buyers’ criteria. (Sarcasm added.)

And we also can add the beloved Open House, in which a parade of neighbors and unqualified buyers walk in the front door of a home for sale without any real intent or ability to purchase the home in question. Again, we offer this service to sellers in an effort to show we’re working hard when, in reality, we’re hardly working or, worse yet, trolling for buyers using our listing as bait.

All of this will continue to work, of course, because sellers don’t care to know any better. The more points in a marketing plan, the better the marketing plan must be even though selling a home usually comes down to a couple of basic concepts:

• Pricing it right
• Entering it in the MLS
• Taking photographs to entice agents and buyers alike (trust me on this – if there’s only one photo of the listing, it’s not being sent to my clients 9 times out of 10)
• Putting a lockbox on it
• … um … did I mention pricing it right?

Another direction this debate turned was ARG’s ultimate purpose behind the decision not to syndicate and whether it was less an effort to protect the consumer than to protect the supposedly coveted double dip.

Says my own broker, Jay Thompson, on the Phoenix Real Estate Guy:

At ARG we believe that when you hire a skilled, professional Realtor to represent your property that he or she is the best qualified and most logical person to respond to questions from buyers and buyer’s agents.

This is an argument I heard several times since the ARG announcement was made. It sure feels like what we’re talking about here is single-agent dual agency — where the same agent represents both the buyer and seller in the same transaction. We abhor single-agent dual agency, practice it only under very rare and extenuating circumstances and honestly wish it was outlawed.

It doesn’t happen often, but here is a situation where I disagree completely with my broker.

(Quick note: if I get the boot and if you’re a local broker and you need a really good blogger and real estate agent, DM me. It’s a wonderful thing to work at a brokerage where one has the freedom to operate their own business their way.)

As the ludicrously high-producing Russell Shaw pointed out long ago on the local blog that shall not be named, we as real estate agents are hired by sellers to sell their house. Ourselves, if at all possible. While there are exceptions to the rule – and I certainly respect those owners who do not want the listing agent to also represent the buyer, even in a limited fashion – the vast majority of sellers could give a damn less who is buying the house – my client, or someone else’s.

Single agent dual agency, it is true, is inherently conflicted. And that’s why there’s a remarkably straight forward disclosure form both buyer and seller sign explaining that the agent’s fiduciary relationship becomes more limited in a dual agency situation. I’ve done them before. I’ll do them again. As long as all sides know what is going on, it’s not as evil as some would portray it to be.

Back to the larger point, I don’t believe the syndication debate has anything to do what dual agency. Again quoting Kris Berg,

Defenders of syndication say that an argument against syndication is an argument for dual agency. Nothing could be further from the truth. Much like you can opt out of syndication, you can opt out of dual agency.  Take the call, answer the questions, and then send the buyer to the nearest competing brokerage to view the home and write the offer if that helps you sleep nights.

To my mind, the essence of this is trying to close Pandora’s box and pretend it never was opened. It’s likely a losing fight since, despite what many assert when blasting away at NAR, trying to get real estate agents all on the same page is similar to the cowboys’ work in this classic commercial.

Because agents felt there was a competitive advantage to be had posting listings to Zillow and Trulia, it was done. Even if thousands of agents stopped doing so, thousands of others would continue because it’s part of their seller marketing strategy. We can hope for better data, but when the sites themselves don’t give a damn about what they’re putting out there for the benefit of the public, improvement is unlikely.

Quantity is better than quality in the TruZilia world, even if that quantity is but a fraction of what really exists at any given moment in time.

Says Jay,

And lest we forget, every major syndication site has a way to correct inaccurate data. If you aren’t correcting bad data, that is just as much your own fault as it it is the syndicators.

Not really. I’m responsible for my own data; the fact I have to spend much of my time explaining to buyers who continue to use TruZilia for home searches until finally convinced the sites’ data is terrible shows there is a systemic problem on TruZilia’s side allowing for such large quantities of incorrect data to be entered into the system. There needs to be a better check and balance from the entry side, plain and simple.

And that doesn’t take into account faulty sales data that has nothing to do with agent entry; it’s the inability of TruZilia to distinguish types of recorded transactions, say the difference between an actual sale and a home that has reverted back to the bank after a failed trustee’s sale.

As I said at the beginning, all of this is a tempest in a teapot. While consultants and the like will continue on for a few days telling us how important an issue this really is, those of us who sell real estate to put food on the table – like me, for instance – will put our nose back to the grindstone in the morning and get back to work. TruZilia will remain letter more than an annoyance, a teaching opportunity in the making to help consumers learn what miserable sources of listings data (and, often, sales data) those sites are.

If you’re going to sell a house a week, you can’t spend more than a half hour on a Sunday night digesting all of the thoughts of our industry’s various and sundry thought leaders (as well as those of some by-God working agents and brokers.) There’s too much real work to be done.

Every two years, real estate agents in the state of Arizona are required to complete 24 hours of contining education. Most of these hours are separated into a variety of categories - Agency, Commissioner's Standards, Fair Housing, Legal Issues, Contract, etc. - and are designed to keep agents apprised of changes to the laws while also maintaining their knowledge in the general subjects.

That's well and good. But with bank owned inventories down to a mere trickle and traditional sales dominating the market, there should be a continuing education track for those agents who haven't practiced real estate over the past two to three years.

And by that, I mean the bank owned listing agents.

Sure, there still are some of these agents who have continued to sell non-bank owned homes over the past couple of years and therefore still are aware that real estate doesn't boil down to "the asset manager says." But sometimes the group must pay for the ills of the few (though the few truly are many); requiring anyone who has generated more than 25 percent of their business from listing bank owned homes to complete this course would be an excellent way of reintroducing them back into real estate:

CONTRACT LAW (3 HOURS): A comprehensive study of the Arizona Association of REALTORS Residential Resale Purchase Contract as written, unamended by any lender addenda. Special emphasis to be placed on the sections dealing with Seller Property Disclosure Statements, Insurance Claims Histories, Cure Periods and What All Those Financing Contingencies and deadlines really mean.

BASIC NEGOTIATIONS (3 HOURS): Agents will relearn the ability to negotiate an offer without entering basic data into a form and waiting to hear back from the Great and Glorious Oz asset manager. Agents will be required to run comparables for a subject property and speak to a live human being (further known as the seller) to discuss the pros and cons of countering, accepting or rejecting an offer.

BASIC EMPATHY (3 HOURS): A necessary trait when dealing with buyers and sellers, as the agent will discover in "Basic Negotiations" as real human beings allow emotions to influence their decisions as opposed to asset managers who can't understand why buyers don't act like automatons.

LOCKBOXES 101 (3 HOURS): Believe it or not, there are better ways to secure a property than with a $10 lockbox from the Home Depot using the same three codes as on three quarters of the other bank owned properties in the Phoenix real estate market. Learn what a SUPRA lockbox looks like - they've only been around for almost five years in their current iteration - and how to use that white thing with numbers, otherwise known as a lockbox key.

LOCKBOXES 201 (3 HOURS): For those who still aren't inclined to join the 21st Century, this class provides details on using the Mechanical Lockbox Code field in the MLS and how it really is just as secure as making an agent call to get a code, all so you can write down a five-digit MLS agent code than anyone with an IQ over 32 can make up on the spot. Because we all know, no one's looking these up in the MLS to make sure the person calling is who they say they are.

SMARTPHONES (3 HOURS): Learn the one function of a smartphone never utilized by bank owned listing agents - the ability to answer a phone call from someone calling for information.

INTERIOR PHOTOGRAPHY (3 HOURS): Believe it or not, most homebuyers want to see more than just the front of a house for sale - kitchens (assuming they aren't stripped of appliances), backyards (assuming the pool is neither drained nor green), living areas (assuming the past owner hasn't punched holes in the all trying to find 50 cents worth of a copper wire.) Learn how to set up your camera so that it takes more than one photo of a given property.

PROSPECTING 101 (3 HOURS): Now that the gravy train's run is at an end, how to make sure there's still sufficient income to pay the staff of dozens and still pay the bills.

There it is. A 24-hour continuing education course that will help re-program bank owned listing agents as they attempt to re-enter the real world of real estate.

Not that this will ever come to pass. But that's okay. The rest of us are used to having to walk other agents through the basics of a transaction anyway. It'll be just like normal for us.

Image: digitalart / FreeDigitalPhotos.net

Do you have any idea how difficult it is to find roller skates?

Not roller blades. Roller skates. Four polyutherane wheels arranged in a rectangle, not a single line, topped with a metal frame and then a leather-ish boot?

Three years ago, the quest to find roller skates turned into an all-day epic adventure. And it all took place on the Princess' tenth birthday with her in tow. Six different stores from Surprise to Metrocenter, all to find a simple set of roller skates for my girl.

Finally, we found them and she wore them triumphantly at her birthday party at Great Skate that afternoon. Even as they started to get a little tighter she would wear them either to Great Skate or to skate around the block ... maybe not as often as I would have hoped given the Herculean task that was the purchase, but still.

I just watched those skates walk out the door.

All those overpriced Build-A-Bear animals and accessories (including the wheelchair she purchased in case any of her animals were injured)? Buh-bye.

The flamenco dress my wife and I bought her on our once-in-a-lifetime trip to Spain a few years ago? Adios.

Her first bed when I bought my first home after my divorce, the bed that was the centerpiece first of a room with jaguar wallpaper borders and then her current room with the horses (who also soon will be departing). Hasta la vista.

If I sound heartbroken it's only because I am. I just watched much of my daughter's childhood disappear in a van for Homeward Bound, a group that helps homeless and domestic violence-addled families with children get a new start.

So all of these items are disappearing to an excellent cause and to children who hopefully will find the same joy my daughter did from her stuffed animals, her bed ... and her roller skates.

Nevertheless it's extremely emotional, much as it's emotional when you decide to sell your home and, though you may still have equity, the figures aren't close to what they were a half-dozen years ago.

It's difficult letting go of that past so much so that it colors our decisions today.

We invest our lives in our homes - not just the financial investment, but the day-to-day raising of our children to the celebrations to the sorrows and everything in between. Here's where the kids first had their tree swing. There's where they opened their Christmas presents. Do you remember wrestling with the kids after playing the My Little Pony memory game in that spot?

And yet, at some point, the time comes to let go, to move on to a new place to create new memories and to allow another family to come into our current home and start building memories of their own.

It's not easy. Letting go never is. The emotions never go away. But logic sometimes dictates the change.

My daughter's horsie wallpaper border is coming down within the next week or so to be replaced by, well, who knows what. Six months ago it would have been Jack Skellington and now it's Alice in Wonderland.

There will be new memories coming shortly which will help me stop clinging to the old.

Eventually.

It’s the first Tuesday of the winter television season and you all know what that means … it’s time for the semi-annual The Bachelor/Bachelorette post here on All Phoenix Real Estate.com.

When my wife first dragged me into watching the show using various unfulfilled promises spoken and implied, I visibly cringed when the topic of the Bachelor/Bachelorette franchise came up. I remember quite well the sheer volume of abuse I and others heaped upon this poor soul who used to work for me and who’s then-girlfriend and now wife organized a Final Rose viewing party after the final season.

Now? Let’s just say I didn’t see much of the first three quarters of the Fiesta Bowl last night. And, oddly enough, I’m okay with it.

Maybe it’s because I enjoy the car crash aspect. Maybe it’s because I get inexplicable pleasure out of seeing these idiots decide after just a handful of alcohol-fueled hours in a house filled with other women that they are staring at the man of their dreams. Or maybe it’s because, stressful as three kids (including a teenage boy who emerged from his room for the first time yesterday since Christmas break began and apparently is more than a full inch taller) and four beagles can be, it beats the hell out of being single again.

Much of the fun comes in the first episode when we, along with our intrepid Bachelor, get to size up the women vying to own a Neil Lane diamond ring for a short period of time. (Did anyone else watch those Neil Lane commercials for Kay Jewelers and think it has to be the jewelry product with the most liberal return policy in the history of man?) Of course it’s shallow and mean-spirited (read: funny) but that’s really the entire point of the show.

Last night, our producers decided to change the musical score when this year’s designated crazy person came out of the limo. Like we really needed anything so lacking in subtlety to arrive at this conclusion. It was clear from the get go that dear Jenna is neurotic to the point where she probably shouldn’t be watching reality television much less participating on a reality show.

And here’s the most amazing part … Ben, our intrepid Bachelor, gave the last rose to Jenna even as she stood their trying to hold back tears (and quite possibly not spontaneously combust on the spot) at the prospect of not finding love (and or a disease of some sort) with someone she had met a handful of hours before.

He must have had his eyes closed because there’s no way someone looking around couldn’t see that this just was a disaster in the making.

I thought of that moment this morning as I was driving around the Valley. Much is made about the difference between “south” Phoenix and the rest of town, often without those so speaking having any idea what might be in either place. You want so-called dicey areas? I can find them anywhere because they are everywhere.

The thing is, Fair Housing Act aside, it’s not really for me to determine what someone’s tolerances are for a given area. I’ve seen homes I’d never purchase happily bought by buyers for whom they were a perfect match; I’ve seen buyers look at homes I think are gorgeous and look like one of the Bachelor contestants on her way to the limousine of rejection.

Everything comes down to personal perception … and, quite frankly, your eyes are going to tell you what looks like it might be a match for you.

Some people will get turned off by billboards written in Spanish, others could care less. I only care as far as having to see the face of Guillermo Ochoa, goaltender for the Mexican national soccer team, during World Cup qualifying while I’m supporting Sam’s Army and our beloved Yanks.

The point is, it’s not my decision to make. And, at the same time, as a buyer for a particular area the fault lies with you if you end up somewhere that absolutely does not match what you want in a neighborhood or a home.

You have your own set of eyes. You have your own spidey-sense.

Unless you have a producer pointing a small-caliber weapon at the back of your head telling you that you will give the last rose of the night to the obviously crazy chick, you have no one to blame but yourself if you either ignore the obvious signs or simply choose not to look.

(Like what you see? Read more on AllPhoenixRealEstate.com!)

There was a rather interesting thread this past week on Trulia Voices, all revolving around the concept of the earnest deposit.

In theory, once a contract is accepted, the buyer (or their agent) opens escrow and deposits a check as the earnest deposit - essentially a good-faith deposit representing the buyers' intent to purchase the home.

Amazingly enough, though, the Arizona Association of REALTORS Residential Resale Purchase Contract is extremely vague as to when the earnest deposit needs to be deposited into escrow.

Some agents on the thread argued that there's a 48-hour rule, or that 48 hours is the accepted practice. I can handle that except, when push comes to shove as seems to be happening for this seller, there's nothing in the contract that says the buyer had to make the deposit within 48 hours.

In fact, there's no timeframe at all. Guidance from the state real estate department also is vague, saying that the deposit must be made promptly. And on wording like that, attorneys are retiring to the Bahamas.

What was most interesting, at least to me, was the broker wading into the fray:

In Arizona the contract is clear, Earnest money has to be deposited as soon as possible, failure to deposit the money can mean there is no Contract.

As a matter of fact, the contract is so clear in this respect that the phrase "as soon as possible" cannot be found - no timeframe at all is given in any of the paragraphs in which the earnest deposit is referenced. As for the idea that not making the earnest deposit "can mean there is no Contract," again, there is no wording anywhere in the AAR contract to that effect.

My guess is this broker, who specializes in bank owned homes, is confusing the AAR Purchase Contract with the Fannie Mae addendum that voids the contract if the earnest deposit isn't made within a set time period. Fortunately for us, the Fannie Mae addendum doesn't apply to all real estate transactions here in the great State of Arizona and the ability to negotiate rather than be given marching orders by a data entry drone asset manager still exists.

All of this does make me wonder what will happen when the foreclosures finally disappear and these agents who only know what Fannie Mae tells them are forced to (gasp) re-learn the Arizona contract. It might come as quite a shock to learn that what seems so black and white instead blends into nine pages of gray.

Photo credit: Blatantworld via Flickr Creative Commons

Back when I worked in Charles Schwab’s Active Trader division, I had access to Level II NASDAQ quotes.

What you see on CNBC on the crawler are the sales and, essentially, the Level I quotes – the lowest amount at which someone is willing to sell and the highest amount at which someone is willing to buy. (When these two meet, buyer and seller are matched electronically and a sale of stock takes place.)

Level II not only would show the current market price as defined by Level I, but also the full depth and breadth of the market as expressed by open orders entered into the system by a NASDAQ market maker.

On any given day, there were buyers and sellers looking at the realistic prices and trading either at those levels or in the same ballpark. And on any given day there would be orders for a stock like Apple, currently trading at $393 and change, such as someone looking to be 1,000 shares for $1 or someone looking to sell 1,000 shares at $1,000.

Going out on a limb, neither offer is likely to be executed today – neither the ludicrous low-ball purchase or the equally ludicrous high-ball sale.

Real estate’s MLS can be viewed as something similar to Level II quotes, at least on the seller side of the book. Various websites have attempted to create a buyer’s side of the book but it’s never gained any sort of traction (likely because any buyer who has a seller agree to what they have set forth almost certainly will either think they can purchase for even less or there’s just something wrong about the whole thing.)

If you were so inclined, you could take the active listings for a given size house in a given neighborhood and list them like you see in the Level II quote screen above. And what you would see is that the homes most likely to sell are those at the top, much like the people selling Apple stock within a percent or two of the current price.

As you get further away from the top, the less likely a sale is going to happen – and you don’t want to be the hopeless schlep trying to get $1,000 for a $300 stock or $300,000 for a $200,000 house.

Active listings can and should be used to find a price point to sell, however, they need to be used in the context of competition, not a baseline setting. Just because one idiot wants to sell Apple at $1,000 doesn’t mean you, as someone who legitimately wants to sell, should follow his lead.

Pending listings are helpful in determining what price attracted a buyer but they do nothing to tell you what price the seller and buyer actually agreed upon.

When trying to price a home, you as a seller have got to start with the sold listings – the last trade, using the stock analogy. You don’t have to match that last price but you need to start with the neighborhood averages as your baseline and then find a comfortable spot in the Active listings where you’re likely to attract a buyer.

That often is lower than what else is on the market; in these market conditions, it also can be higher if there is a dearth of competition. I proved this last summer when I listed and sold a house priced five figures above the last sale because it still was the best-priced home with a pool on the market in that area. And it took all of 10 days to do it.

There is so much information available to buyers and sellers these days … listings on this site and Realtor.Com, listings on Trulia and Zillow (some of which actually are for sale), Zestimates and the like. But not all of it is particularly helpful and much can be detrimental to those serious about buying or selling.

It may not take a rocket scientist to price a home to sell but it does take someone who understands how markets work and what prices you see really matter.

Let's jump into the Wayback Machine to February 2009, when President Obama visited my alma mater, Dobson High School in Mesa, and unveiled the Home Affordable Refinance Program.

At the time I wrote:

The overall goal is to modify loans in manners that allow homeowners to remain in ther homes rather than face foreclosure. Eligibility is limited to mortgages on primary homes (no second, vacation or investment properties) and appears to be limited to situations where the first mortgage is no more than 105% of the value of the home.

You don’t need to be behind on your payments to be eligible.

Unless I’m reading it wrong, this leaves out buyers in the Phoenix real estate market’s hardest hit markets as homes there have decreased far more significantly.

Come back to the present day, and the President will be announcing a revised version of HARP that would allow homeowners who owe more than 125 percent of their home's value to refinance their home.

A home sector analyst said the change likely will impact few homeowners as they need to be current on their payments; I'm not so certain, though it could cause some who have stopped paying to kick themselves in the head and wish the program had been expanded much earlier than this.

In the Phoenix area, there still are a large number of owners making payments (and often wondering why) who may benefit from the revised plan. Time will tell.

Also of note from the CNN/Money article:

Fannie and Freddie will also reduce the fees they have charged in the past in order to enable borrowers to better afford the new loans. Among the fees that will be reduced or eliminated are those for appraisals, title insurance and closing costs.

Fees will also be waived for some underwater borrowers who refinance into 20-year or other, shorter-term loans. By doing so, it could help homeowners get above water faster.

A homeowner who has a $200,000 balance on their 30-year mortgage with a 6.5% rate and a home value of $160,000, for example, currently makes payments of $1,264 a month.

If they refinance into a 20-year fixed-rate loan at 4.25%, it will reduce their monthly payments to $1,238 and slash their loan balance to $160,000 in just five-and-a-half years. If they refinance to a 30-year loan at 4.5%, their monthly payments will be quite a lot lower, $1,013, but it will take 10 years to reach $160,000.

Getting back above the waterline on a home in Phoenix ... imagine that.

This article originally appeared September 14 on All Phoenix Real Estate.com.

So what does an appraisal really mean?

Buyers usually view the appraisal as a declaration of a property’s value. Lenders view an appraisal as a benchmark for risk assessment. Real estate agents view appraisals and, more to the point, appraisers, as the bane of our existence.

Cached amidst the flowery legalistic language, disclaimers and overly long and complicated appraisal forms, the agents see what few others realize – the appraisal only is one person’s opinion of value. Nothing more. Nothing less.

It’s not even a pure opinion. Appraisers start the process with the purchase contract in hand. Since market value by definition is where buyer and seller meet on price, appraisers already know the home’s market value when they start. All that’s left to do is price out the quality of the home and find the comparable sales needed to either declare that the home “appraises” or “doesn’t appraise” at market value.

In that respect, appraisals are like the geometry proofs we all were tortured with back in high school. Pythagorus already gave us the answer. We only need to “prove” that the answer is correct.

How does this play out in real life?

Let’s take a house under contract for $496,000. And let’s say the appraiser, in filling out the paperwork, enters the contract sales price at $465,000 by mistake.

Amazingly enough (note sarcasm), when the home was “listed” as $465,000 by the appraiser, the appraised value was given at $470,000.

Notified of the error, the appraiser changed the list price to the correct value – $496,000 – changed one comp and provided a new appraised value of $497,000.

The reality of this situation? In the appraiser’s unofficial opinion, the home likely was worth more than even the $497,000 but no appraiser is going to provide an appraised value well above the agreed upon purchase price. Underwriters would scoff, sellers would feel they were taken advantage of, buyers would be bragging at every cocktail party they attended for the next five years.

So the appraiser artificially limited the appraised value to a more acceptable, politically correct if you will, value only slightly above the sales price.

In so doing, the appraiser also caused a two-plus week delay on the closing of the sale, but that’s another story for another day.

Appraisals are yet another of the many examples where real estate transactions are made far more complicated and seemingly more complex than they really ought to be. One person’s opinion of value isn’t even their true opinion of value; it’s the value they’re able to assign without catching hell from everyone else involved in the transaction.

I’m sure the state appraisal board will disagree with me but hey, what’s a little bit of transparency between friends, right?

Thanks to the prevalence of bank owned homes in the Phoenix real estate market, the rules are getting rewritten on a daily basis. And nearly all of these rewrites are to the detriment of the consumer.

Take the case of the hijacked earnest deposit, which I'd written about previously here.

The short version is my buyer at the beginning of august cancelled a purchase contract on a bank-owned home in accordance to the terms of the contract and requested the earnest deposit be returned to him.

This should have been cut and dried but it wasn't. The asset manager working on behalf of the bank decided to contest the earnest deposit based on the bank's addendum to the contract. Here was the paragraph in question:

6. Mortgage Contingency. Purchaser’s obligation to purchase the Property under the Agreement (check one): (_X_) IS (___) IS NOT contingent on Purchaser obtaining financing for the purchase of the Property. In the event this contract is subject to the Purchaser obtaining a mortgage then the Purchaser shall obtain a firm written commitment on or before June 27, 2011.

If said firm commitment is not obtained by said date, this Contract shall be null and void and neither party shall have any further rights or obligations or liabilities to the other by reason of this contract, except that the earnest money shall be promptly refunded, provided however that the purchaser has made a mortgage application within three (3) days of the receipt of a fully executed contract, has acted in good faith and has otherwise complied with the terms and conditions of the contract. Notwithstanding the foregoing, the seller, in writing only, at its sole and absolute discretion, which may be arbitrary, may extend the date for obtaining a firm written commitment. Purchasers agrees that the party holding escrow monies will release said funds once provided with a declination letter by from purchaser’s lender, without any further action or consent from purchaser.

It's the second paragraph that really is the issue as it both declares the contract null and void if a firm mortgage commitment isn't given by a certain date in one sentence with the earnest deposit going to the buyer and also says the seller gets the earnest deposit if the buyer is declined for a loan.

Symantically, the sentence dances on the head of a pin. If the buyer doesn't have a firm mortgage commitment by the lender but hasn't been declined for the loan by the date set, the earnest deposit goes to the buyer. Otherwise it goes to the seller.

In this instance, the buyer didn't have a firm mortgage commitment from the lender which would have rendered the contract null and void. The contract would still be alive if the seller had provided an extension in writing; none was given in this case, though all parties were continuing on as if it had happened.

Here's where the contract gets fun ... all's well unless things aren't. The seller had no interest in declaring the contract null and void. The seller also neglected to pay attention to its own addendum and boxed itself into a corner because of that neglect.

Enter the folks at Commerce Title, the hand-selected escrow company of the seller and the asset manager.

The purchase contract is incredibly clear on the role of the title company in the event of a dispute. In signing the contract, both buyer and seller authorize the escrow company to determine at its sole and absolute discretion who receives the earnest deposit.

On August 3, the area vice president for Commerce Title did just that, ruling that the seller had no valid claim and that the earnest deposit was to be returned to the buyer.

Except the money wasn't returned. The legal eagles for Commerce Title, based in Arizona and apparently ignorant of Arizona law and the purchase contract, decided that the escrow company had no authority to decide the issue even though both sides had granted the escrow company that power.

Commerce Title's new position was that it was only an instruction taker, an allegedly neutral third party, and it was up to the buyer and seller to figure out who gets the earnest deposit.

It was a ludicrous position. Both sides already had claimed the earnest deposit. Under what possibly logic would it be expected that one side or the other would change their mind?

The purchase contract is meant to protect both parties and provide guidelines for the transactions. The escrow company is meant to protect both sides by being the neutral arbiter of the earnest deposit in the event of a dispute. It is supposed to protect one side from unreasonable and/or invalid claims from the other.

Commerce Title failed to do so.

Under the logic used by Commerce, the seller could have claimed the earnest deposit because it was cloudy outside and, since the instructions were in writing, the claim would then become valid regardless of the terms and conditions of the contract.

Commerce Title's legal department essentially determined that unilateral cancellations are not possible in an Arizona real estate transaction, even though the legally binding executed contract provides the buyer a handful of opportunity for unilateral cancellation.

In acting as an alleged "neutral third party," attorneys in California working for an escrow company that is a subsidiary of Auction.com reinterpreted the real estate contract to the detriment of the buyer, the consumer.

Sadly, this isn't an uncommon occurrence.

Which begs the question, if the purpose of the Attorney General and the Arizona Department of Financial Institutions are here to enforce regulations in theory for the protection of the public, where are they when these things are happening?

In this instance, the listing agent also saw the invalidity of his client's claim and was able to get the asset manager to sign off on a mutual cancellation. My client should receive his earnest deposit today, some 32 days after the contract was cancelled.

If he hadn't, the buyer's only option would have been small claims court or other legal recourse, which would have been lengthy and expensive, even if at the end the seller would certainly have lost and then been responsible for the attorney's fees.

But the onus should never have been on the buyer. Responsibility rested with Commerce Title, the escrow company selected by the seller without input from the buyer. And the company failed in this responsibility to be a truly neutral third party.

Editor's note: It's been suggested that real estate agents are a dime a dozen. After spending a month battling the escrow company and its legal department, and having this company threaten to file a complaint about me with the Arizona Department of Real Estate because I dared to suggest I might contact DFI if the escrow company continued to ignore its responsibility, and doing all of this for zero compensation since the transaction didn't go through ... I think not all of us are cut from the same cloth.

Image: worradmu / FreeDigitalPhotos.net