Home : Blogs : Christopher Walker California Bank Owned Property : Christopher's Hemet CA REO Real Estate Blog - Mission Grove Realty

Churning Your Listings? - You Had Better be Making Butter!

you may be toast After reading The Silliest Realtor Game In Town (A Great Post) by George Tallabas , I felt that we all may need a serious "Heads Up" with regards to the practice of re-listing a property in order to "freshin' it up" or whatever you might wish to call this practice.

The "Churning" of a listing is a breech of the Realtor Code of Ethics.

What is Churning? This is when an agent cancels or withdraws a listing from the MLS in order to re-list it back on the MLS in order to create the appearance that it is a new on the market. In many cases, re-listing will reset the "days on market" for the "churned" listing. This is usually done to gain additional interest in an old or poorly represented listing. In doing this, the listing may reappear on an MLS "hot sheet" and on various e-mail alerts that are sent to clients through "listing alert subscriptions" or, move to the top of a website.

So....Everyone does it. It must be O.k.

The following is commentary from the California Association of Realtors Legal Center which would apply to ALL REALTORS regardless of geographic location:

"While practitioners want to zealously market their seller's listing, the big issue concerning this practice is that it makes a representation that can be misleading and inaccurate. Entering inaccurate data and making misleading representations are both violations set forth in existing MLS Rules . The REALTOR® Code of Ethics also requires REALTORS® to be careful to present a "true picture" in their advertising and representations to the public. Furthermore, misleading representations in the MLS pose potential legal liabilities to those involved in the listing transaction"

MLS rules apply to all Realtors regardless of whether the MLS you belong chooses, or has the resources to enforce the MLS regulations.
"Churning" is misleading and deceptive therefore violates the Realtor Code of Ethics and may lead to potential legal liabilities to those involved in the listing transaction (The Realtor AND the Seller).
MLS "manipultion" of any kind renders the MLS data wothless when presenting to a potential client, when viewing a picture of the health of your market or...for any other use other than wallpapering the spare bath with MLS data sheets. Makes for good bathroom reading but...little else. If the only thing you use the MLS for is to look up listings, you wont be able to understand why this practice is a problem. The MLS is so much more than a place to look up listings to so many people.

Harmless?.....Tell that to your seller and your broker when they both get served! And I am not talking about breakfast. You're toast!

In this market, homeowners facing foreclosure are looking for anyone to place blame on. If their lender leaves the market, and they may have well done, who else is left as a target? Why open yourself, your seller and your broker to this potential liability. It will cost everyone involved a ton more than your potential gain. If you do a great job at presenting the property the 1st time...there would be no need to "freshin' it up". You dont get a second chance to make a great 1st impression and "churning" wont change that.

Posted by Christopher Walker California Bank Owned Property on 08/23/2007 07:30 AM

Comments (52)

activerain

Originally posted at: Christopher's Hemet CA Real Estate Blog - Mission Grove Realty: Churning Your Listings? - You Had Better be Making Butter!

52 Comments on Churning Your Listings? - You Had Better be Making Butter!

AUG

2007

Christopher - well said - we're seen the Board crack down on that here.

While I never take on this practice, I see it ALL the time. What stumps me is that other agents think that I am so stupid that I don't pull up the history of the listing. There must be some seriously bad buyer agents out there, if they don't even look at the history of the listing, prior to showing it or making an offer.

My buyer's laugh when they see agents that do that. It also sets a precedent for working with that agent that their ethics are compromised. It sets a tone of distrust right from the get go. Prior to making an offer, I pull the history of the listing, what the seller paid for it (off our county database). I like to look at previous listings as there is often some good information in an old listing about when a roof was installed, furnace, etc so that my clients can have an idea of the age of some things.

I think this strategy is a reflection of a poor agent. What I find exceptionally humorous, is that these churned listings often have no, or horrible photos on them. Hmmm...

Christopher - one of the first things I do when I pull listings for a client is to check the DOM. If it's been listed/relisted and relisted again I point this out to my client and tell them that there is probably some reason this house has not 1) sold, 2) been pending or 3) placed contingent. We will still look at it if the client wishes to, but it is with eyes wide open. I don't like deception. It paints us all with a dirty brush and I resent the heck out of it. Thanks for a continuing look at a despicable practice.

They changed our system so it doesn't allow withdrawn listings to be reposted for two weeks. We are also able to click on the price and it brings up the status or any status changes to the listing. (i.e price, status changes, all activity including new listing, commission changes, dates etc. and lists everything) Then again, there are agents that are listing for six months with the intention that if it doesn't see by then they will relist with a new lisitng agreement (unless the seller goes with someone else).

If the property is an expired listing, I like to wait the 3 months if possible to re-list. Then the DOM legitimately dissappears

Cyndee: Thank you. Your Board should and it is up to us to watch for it too.

Melina: You are sooo right. Churning it wont peak interest in a poorly presented property.

Carol: As a Director...does your board watch for this at all? What is done there? Thanks for your participation!

Sally: Our system still allows the ability to churn yet does provide detailed information about all activity with the listing. It is funny to see some where, over the course of 3-4 months what the agent has done. EVERY time ANY change is made, it lets you know when, and what was done. Most don't even know the information is logged for all to see. They think that they are just so clever.

Lori: Cant see where that would be a problem and....good practice too.

Our board recently very substantially increased the fines for doing this. It has hopefully significantly decreased.

Then of course there are those agents who engage in the ethical, but rather silly practice, of any one of the following practices:

1. Clearing out the owner information on expired/withdrawn listings when the owner has not requested it, as if the rest of us were not capable of easily determining the owners of record

2. Withdrawing every listing that is about to expire just before it expires so they can claim that their listings "never" expire. If they don't sell it doesn't matter much whether they expire or are withdrawn IMHO.

Thanks again for the excellent post.

Jim and Deanna: My favorite is the "hold do not show" that comes up on the 89th day. Like we dont know whats about to happen there. This one just lets me know it is time to send a postcard to the neighborhood.

Chris - glad you said this. Here is my Pet Peeve. When listing agents put Show status on a listing that has a large deposit on it. What happens under show.....it's still advertised on the internet. Unless the seller permits, in writing, to place it on a show status, it has to read on deposit.

Risk, under a show status, if not closed yet, it kicks out of MLS as an expired listing while under deposit. This is not good. Do the seller's really know? Of course not. But it takes the cooperating broker to report it.

If a listing goes on deposit and the seller puts in writing to continue to show until commitment, that is one thing, but if the agent takes it upon themselves to put it on show and not on deposit, the risk is on the agent. In all respect, any listing that holds a deposit in an escrow account from a buyer needs to read "on deposit" as the status, unless the seller says otherwise, in writing.

Keep posting Chris. I came across this issue today in reality and I am so happy to see you posted this.

Maggie

Hey...one time I was watching a specific complex and noticed a change in commission %....click....and the agent changed to more on their side...what a goof ball.

AUG

2007

You are right. And any realtor worth his/her salt will look past the current listing and see that it was listed before. It's a red flag.

Chris- I agree with you completely on this one. In Massachusetts the MLS caught on to this practice and about a year ago changed the internal workings of the system. When an agent re-lists a property it no longer sets the clock back to zero. This is good for consumers because it's accurate information that they can make an informed decison with.

What amazes me is that there are still agents that re-list property just to have it come up on the daily "hot sheet" - Who cares! What does that accomplish - Nothing!

Christopher, thanks for the post. Being new to the buisness,I am still learning the ropes. I'll be sure to keep an eye out on our MLC here in Connecticut.

Rich Thewissen

Chris,

You have this amazing knack of identifying problems that I never even conceived of as being a problem. Am I so naive?

Of course, I recognize it as a problem and would be upset if I found out I was involved in a transaction representing the buyer, if it had been churned.

I suppose the process is rather simple, but who would have ever thought of doing something like this? How does the mind work?

Now Have a Blessed Day,

John Occhi, Hemet CA REALTOR
Mission Grove Realty

I would have never thougth of doing that. Isn't it strange sometimes what we DON'T think of ...maybe sometimes to our good.

Chris, this is a problem in my market as well, but as of yet nothing has been done about it. I don't think I've ever heard the term "churning" used for it though. Thanks for the post.

Given how strict our MLS is, I'm surprised they haven't cracked down on this yet. I worked for an agent who constantly did this and it was a pain for advertising. I did reach the point where I just omitted the MLS number - which IMHO, offsets whatever preceived value of "freshining" the listing up.

I have to play devils advocate here. If I choose to let a listing expire and re-list it as a "new" listing instead of extending the expiration date, I don't understand the problem with that. I am representing the seller and the sellers best interest. IF that means re-listing the home, taking new photos, new descriptions, new tours, isn't that working in their best interest?

Yes the information on the "history" of the property is always available at a "click" to all agent. I would think that as a buyers agent, it is their job to disclose to the buyers and do their do diligence to research this information for their buyer. When I represent a buyer and before i write up an offer that's one of the first things i check. But I certainly don't feel it is my job as a seller's agent to school the buyers agents on this information.

<shrug> Just my opinion, but I will check with my broker. I think if everything I do drives more traffic into a property than how can that be perceived as not in the seller's best interest?

Christopher: Our MLS allows this and I have "rolled over" a listing before to keep it fresh in the minds of agents and buyers. Our MLS feels that the without sellers and their homes there wouldn't be any listings. The homes aren't "rolled over" and then in the remarks featured as a "new listing" or anything like that, they simply come back up with a new identifying number and less DOM. There is a "Total" DOM featured with once click of the mouse. If I'm the listing agent it is my duty to them to represent them and their home in the best possible light. Naturally as a buyers agent I pull all info I can on the home and report back to my client on the history of the home and its time on the market.

"REALTORS® to be careful to present a "true picture" in their advertising and representations to the public. Furthermore, misleading representations in the MLS pose potential legal liabilities to those involved in the listing transaction"

If the homes are NOT stated to be "new to the market" or such how can that possibly be misleading?

Desiree: I can understand.....most of us can understand what you are talking about. Thank you for participating! Check with your broker AND your local board and finally, call NAR's legal hotline. What I post is fact....not fiction. Thank you for posting.

If a listing actually expires and then you re-list it after expiration....No problem there. I'm most markets, the CDOM will show this anyway. You comment does say "If I choose to....". Your client should be involved in that thought process as it is truly THEIR decision. You can always "revamp" a listing simply by changing all of the information and media......and lowering or raising the price by an insignificant amount. I would not to anything that would give the appearance of an attempt to "skirt" the MLS system. Not good for you or your client. Finding justification is easy...thats why so many do this.

Always involve your client in any decision about their property. If you make the decision to practice the art of MLS manipulation and do not involve your client, I can not imagine the fallout if a buyer were to push the issue sometime in the future. Churning, regardless of ones own justification, is still an ethics violation and could lead to potential and unwanted litigation.

Chris,

I have encountered this problem ften in af few neioghborhoods. I research the O&E from titel to double cehk the owner of record, and outstanding liens before I show, and adhere to a firm practice of previewing proeperties before showing them to clients. This is for their protection. I have had weapons drawn on me i a preview, and it is easier to protect me alone than seomone who may react differently than me.

For the sale of clients, I also check the Total Days on Market. Thre are neighborhoods where agents tell suctomers that they have sold peorperties in 45 days, but total days for the neighborhood shows 1,500...

A lot agent sare running scared in this market. As a result, many shortcut ethics, and fail to acknowledge that there are rules to follow. They look at their expenses, and instead of trusting their skills and knowledge to make thier income support them, they look only at potential commissions and con their way to them.

I have always believed that an up front attitude which is what I like to get fro my vendors is something I ardently seek to provide. A demaged reputation is awful hard to repair.

It seems that we are in such a hurry to get deals closed that we overlook the tinngs that got us to the deal: truct, confidence, amd patience. We have to maintain trust by being trustworthy, have confidence in our abilities to get a job doen both right and well, and patience to weather storms.

We forget the best yardstick: If we would be upset about someone doing something to you, why would you do it to someone just like you? Yes, it is a pay on the Golden Rule. and the Second Commandment "Love thy neighbor as thyself." In this statement alone is the sum of ethical behavior. We would never knowingly seek to hurt ourselves, now... would we?

This practice means the listing agent, if they have any mind at all, must constantly maintain the fiction when describing the property, thinking of the property, convincing the seller that they are the agent to do the job.

We used to live in a market where properties did NOT turn fast. No matter what. "Savvy" buyers would come to town and ask, archly, how long has it been on the market? When they heard MONTHS or YEARS, their eyes would get a vampirish glow which we would have to extinguish by explaining the market situation and that DOM was really not applicable. It wasn't even on the list of common information.

Sellers might be in on the activity, but mostly, it seems like the agents are the creeps who along with their flim/flam are creating a mountain of paper with new listing contracts. It's too bad that boards have to be punitive to get people to treat other people right -- while wishing to earn their living in the people business.

Chris,

The only "natural" way to have a listing re-appear as a newer listing is to have a shorter-term contract. Once it expires, there is the option to renew. Savvy clients don't allow for a listing period longer than 60 days. The agent should have a definite timeline, in the best interest of their client, to market and sell the home. If the clent is unwilling to take the steps to get their home sold (an offer accepted) in 60 days (de-cluttering, paint & floors, basic sprucing up, and PRICE POSITIONING), why would you want to make it look like it's a new listing, anyway? Great post, though. Ethics should always come first and foremost.

I would never and have never made a change to a listing without consulting and having written permission. But if you're saying that if it expires and signing a new listing agreement is okay, isn't that the same thing? What is stopping agents from listing homes for only 60-90 days and if they don't sell re-listing them?

Seems like a very "cloudy" area here. I am still wondering how it adversely affects the seller? And my earlier comment on how isn't it the "buyers' agent's" responsibility to do just that ... research the history on the property when writing an offer?

p.s. I love good conversation with coffee in the am... thanks for that

never mind I see your prior comment about not wanting to debate this ...

Chris: This is something I am most certainly going to pose to our MLS "heads" and my broker. I for one would like clarification on it as I'm sure most that participate in our MLS would. Thank you for the food for thought.

It is amazing that an agent in my office just announced at our weekly sales meeting that she intended to do just that and no one in my office even flinched...not even the Broker/manager...amazing. Thanks for the important information.

Thanks for the link Chris. I'm going to print it out and read it in its entirety.

I like the word, "churning". Agents do it here all the time and it schews the data stat's. I wish we had a rule on it, as an agent I can still check the history before making an offer. So it is all there, but it would be nice in this market to not have it mess the data up.

Yes, Finally someone has said it " it is a violation of the code of ethics" Thanks.
Our MLS has recently increased the fines for doing this 10 times what they were 2 years ago.

Christopher great post. So if it is indeed a violation why are these agents not getting stopped?

Patricia: Who runs your board? Do they understand the significance of this activity? Are they part of the problem? Do they have the resources to enforce? Would you be willing to do your share in educating those around you? Each board is unique and probably wont change for quite some time. Does not make it the right thing to do. The DOJ investigations into the value of agents will bring some of this to the forefront of the consumers mind and further discount the value of Realtors everywhere. Leave it to us to mess up our own industry.

Our MLS is going to change to cumulative days on market. Not sure how it will work but you have to take it off for 4 months for it to appear "new"

Christopher: as far as ideas go, I practice the 24 hour rule. It is yours for 24 hours, after that it is mine to do whatever I want with it. Selling ads, I will let you know sometime tomorrow afternoon.

Here in Kansas City a house must be off the market for 90 days Period to go back to zero days on market. It's one of the rules I do like about our MLS.

My MLS has been addressing this issue for over a year. In our next generation of MLS software we will have DAYS ON MARKET AND CUMULATIVE DAYS ON MARKET but that only works for listings within the same agency. Some of the brokers and agents in my area suggest that they are doing this at the direction of their sellers so it is OK. They actually fell that it is their fiduciary obligation to the seller to not show longer days on market.

Here's another dilemma we all face. What about a property that is listed with your competition, expires, and is relisted with you. When you are asked how long has it been on the market what is your answer? Remember you representthe seller. Ethics and business practices do not always go hand in hand do they? That's why we have professional standards panels. My point is that all the comments I have read on this so far try to make the issue BLACK & WHITE and I think we should all look at the shades of GREY here too before we all rush to judgement against our fellow practitioners. Maybe they are just trying to do their job and we not actually trying to be deceptive.

Christopher - I agree it is wrong!!!! And oh so clever people can be trying to get around it! Why not just be honest...what a novel idea.

Hmmm...is there any rule against this in our local assocation, Chris?

It is just beyond me why someone would do this, oh I know freshen the listing, give it more exposure, come on now, as reators we can easily see through this and tell our buters the truth.

Christopher - great post, and we have a rule here in our statewide MLS that prohibits withdrawing or letting a listing expire and then putting it in as a new listing UNLESS it's been withdrawn or expired for 30 days or more. On the 31st day, it can be entered as a new listing. Our MLS retains history on properties for a number of years, so it can easily be checked to see just how long a property has been on the market and with how many agents.

Ann

Ann: I have to say that viewing a particular listing and the data in that 1 listing is easy to decipher....for us anyway. The biggest problem is that all MLS data becomes corrupt at that point. How can you use the MLS to create an accurate view of your market when this is being done? Average days on market as a whole, days to sell, sold to list....all bad data. Bad data bad....SIT bad data sit. Good data ;)

Agents also "withdraw" their listing from the MLS a day before it expires. By doing this, their stats don't show they have any expired listings. So when they go to a seller with their numbers, they can say none of their listings expire. Talk about manipulation!

Also, our MLS posts the CDOM for each listing, that is Combined Days on the Market. This way you can see just how long a home has been active and under how many different MLS numbers. The only problem with this is that when that listing finally expires, the DOM shown are only for that listing number. If an agent has churned it for a year with four different listings, the actually data for DOM are incorrect. This is also a problem when you are doing a CMA for a listings and looking at DOM for a neighborhood. Many agents are not doing in-depth research into CDOM and analyzing properties wrong. Of course the seller then suffers as their home is more likely to sit alot longer than they thought it would, due to inaccurate data.

Christopher- Yesterday, I read the great post as well by George Tallabas on the Silliest Realtor game in town. I appreciated all the great comments made regarding Churning, and I wanted to say thanks to you for posting the link to the Legal section of CAR regarding Churning. Very informative!

Chris - Great post. I am dumbfounded by the claims that some MLS's actually allow this. I am pretty sure it is not "Allowed" but merely "Overlooked". Just because someone turns a blind eye to it doesn't make it right!!

Chris-very interesting. We are in an up market now so most properties are being bought with multiple offers on the first listing. I had no idea of that churning was such a serious problem.

Someone up top mentioned isn't it funny how alot of the people who do this have bad pictures or no pictures at all. I have noticed this too. I always think, maybe if they put in a picture, or better pictures, that it would sell. Sometimes I will send my client the withdrawn listing because that one had a picture and the new listing doesn't.

It really is annoying, but I really don't think it's so bad when a seller is dropping the price (not just $1 which I have seen!), but only then do I feel it is o.k.

Excellent post. As a new agent, I was told by a little bird that this was an OK practice. I now realize it doesn't help anyone, and it annoys other agents. Thanks for reminding us of this!

Great post - But this is why I take 90 day listings the problem is some properties get stail and in order to freshen it up it needs to be put back on the market. 90 day listings is the way to go. I have a home right now that is getting ready to go on its 3rd 90days.

AUG

2007

Hoping they start getting a little more strict on this issue. It sucks for those that choose to be ethical when they have to compete with others who aren't, because of lack of enforcement.

Christopher - our MLS requires that you wait at least 10 days to re-list a property or pay a $100 resubmission fee. I am not fond of that practice, but changing it takes a vote of the Executive Board and that hasn't happened yet. Perhaps that will become the topic on 9/27 at our meeting.

Carol: At the very least, it does discourage the practice. Focus on the larger issue of data corruption when you have the meeting. NO ONE can use MLS data for presenting AVG days on market or any other statistical data as factual. Even when the MLS states: information deemed reliable yet...not guaranteed, I feel that we are opening ourselves to a serious problem. Thanks for your input.

Leave a response…

Name:

Email:
(optional)

Comment:

What does the graphic say?