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Time on Market - Do Realtor Ethics Matter?

By
Real Estate Broker/Owner with Buyer's Broker of Northern Michigan, LLC

Once again I find myself asking the question, do Realtor ethics really matter?  Presumably, one of the principal reasons for using a Realtor is the fact that we are bound by a "strict" code of ethics.  In many instances, however, the Realtor Code of Ethics seems to fall short of its stated goals.

Case in point, time on the market.  On my MLS (and many others, I presume), when a listing expires and is renewed, the listing Realtor has the option to either re-enter as a new listing, or to show the renewed listing as an extension of the original listing.  By making a property appear to be new to the market, the listing agent is of course trying to gain a sales advantage.  But how can this be considered to be anything other than a deceptive trade practice? 

Some argue that if a property is re-listed with a new broker, it should be considered a new listing.  Others argue that if the listing expired fifteen days ago, or thirty, or whatever, that is should be considered a new listing when it is re-listed.  But what about a property which is re-listed with the same broker either prior to or at the time the previous listing agreement expires?  How can this possibly be considered a new listing? 

I think the simple answer is that it cannot.  We must turn to the Realtor Code of Ethics to determine whether this practice is ethical.  Under Article I, Realtors are obligated to treat all parties honestly.  Article XII requires that Realtors shall be careful at all time to present a true picture in their advertising and representations to the public. In my opinion, by misrepresenting actual time on market, a Realtor violates both Articles I and XII of the Code of Ethics.  How can this possibly be justified, from an ethical standpoint?  Just because everyone else is doing it does not cut the mustard, folks.

Nowhere is the traditional Realtor perspective on this issue more evident than in Bob Hunt's recent column for Realty Times, Time on Market: Elusive and Controversial Concept.  Mr. Hunt is a director of the National Association of Realtors.  In his column, he describes a situation where "123 Elm Street" was entered into the MLS system as listing number "L200".  The listing expires after ninety days and is immediately re-listed with new listing number "L250".  Ten days after being re-listed, the MLS shows the property as having been on the market for only ten days, even though it has actually been for sale for the past 100 days.

Mr. Hunt points out that "Some feel that a process such as just described is misleading.  They believe that the new listing for 123 Elm Street should show that it has been for sale for the past 100 days.  And they have a point."  Absolutely they have a point, Mr. Hunt.  How could this not be considered misleading?

Betraying what I feel to be the traditional Realtor establishment's anti-consumer bias, Mr. Hunt goes on to state parenthetically, "(Though we also might want to ask just who is misled, and whether we care that they are misled)."

Who is misled?  Perhaps other Realtors who relied on the days on market information contained in the MLS system.  Should other Realtors be required to conduct a full-blown investigation to determine whether the listing broker is trying to pull a fast one on them?  Is this any way to do business?  Unwitting consumers, perhaps, who relied on the "bogus" information contained in the listing sheet given to them by the seller's agent, or perhaps even by their own agent, who failed to verify the actual time on market. 

Do we care that they are misled?  I certainly do.  Which brings me to my initial question.  Does the Realtor Code of Ethics really matter?  Coming from a Director of the National Association of Realtors, I find Mr. Hunt's commentary to be disturbing.  I thought treating all parties honestly was an obligation of all Realtors.  If not, then the Realtor Code of Ethics isn't worth the paper it is printed on. 

Comments (34)

Fred Pickard
Fred Pickard Innovations Realty Inc - Hershey, PA
Hershey, PA

Stefan,

I have noticed that in one of the MLS systems we belong to many agents actually withdraw a listing after 90 days and then relist with a new number. They feel they can "brag" that they sell every listing within 3 months.

I brought this to the attention of one of the MLS board members back in November and his reaction was that "everyone does it", so it's no big deal.

We are able in this system to click on the H button (history) while viewing a listing and see every instance of the property being listed going back 4 or 5 years, so it's easy for a member to see, but that does not transfer over to the public version.

Feb 10, 2007 11:11 PM
Rick Beal
Coldwell Banker Residential Brokerage - Portland, ME

Fred,

The agent can get around the property history by "inadvertantly" spelling the name of the street different.  It's buyer beware and another reason why consumers need us to sort through this.

Feb 10, 2007 11:15 PM
Allen D. Butler
The Realty Butler llc/West USA Realty, Inc. - Peoria, AZ
MSSC, GRI, CDPE

So what, exactly, does the tracking of DOM actually accomplish? Is it a tool that buyer's agents use to determine value for their clients? If a home is on the market for 365 days, does it mean that the home is over-priced? Absolutely. However, let us say for the sake of discussion that you take a client to a home because they saw pictures of the listing on line, and thought it looked nice. So, you take them out to the listing, and they fall in love with the home. Now, as a professional agent, you have a duty to your clients to protect their interests. When they say to you that they love the property and want to write an offer, they are relying on your expertise to help them make a good decision. Would you advise them on what price to offer simply based on DOM? Of course not. In fact, to determine a good price for your clients to offer, would you take into consideration the DOM at all? You shouldn't, as it has no relavance to the home's value. To come up with an equitable offer, you would simply pull the comparable sold properties, and advise them of this. You would then advise them that the price you have suggested is what the property will likely appraise for, and that unless they want to pay part in cash, they should offer within this range. Paying any more would be unwise. However, an unwise person could pay whatever they want for a property if they have cash, they just need to sign a disclaimer that you advised them against it (someting I did repeatedly in the hot market of 04-05).

Now, can DOM stats help us to determine market trends? I would submit that they can, but that those numbers would be spurious anyway, because of agent's manipulation of these numbers. There are much better methods to use to determine market trends, such as calculating absorbtion rates.

Bear with me as I put on my flame-retardant suit before giving my undoubtedly unpopular opinion.  I think that, in the best interest of my clients, I need to be ethical with them. That means sharing the absolute truth about what their property could sell for. I also need to condition them to the idea that even though the price may be "right," it may not be the price that someone is willing to pay. Now, if I take an expired listing, I am of the opinion that the 1st agent was either not exactly honest with the seller in order to get the listing (buying the listing), or that they were simply a weak agent, and caved to the seller's demands. Either way, the agent failed on the job. Now then, should we punish the seller by publishing either their, or their former agent's, ineptitude? I don't think so.  I am not advocating that anyone manipulate data, just that that particular piece of data is useless anyway.

Feb 11, 2007 06:24 AM
Tim Maitski
Atlanta Communities Real Estate Brokerage - Atlanta, GA
Truth, Excellence and a Good Deal

Very well said Allen.

Do most MLS systems show the DOM on the listing sheets?  I could see where this could be considered unethical if a number like that is actually shown.  In my MLS there isn't a DOM shown until after the sale so maybe that's the point that I'm missing. 

Feb 11, 2007 07:39 AM
Timothy Schwartz
Century 21 Mack Morris Iris Lurie - Marlboro Twp, NJ
A good agent will research the listing and get the true days on market.  This should also be done when doing a market analysis in order to get the true picture of days on market.
Feb 11, 2007 10:28 AM
Christy Powers
Keller Williams Coastal Area Partners - Pooler, GA
Pooler, Savannah Real Estate Agent
I think it's unethical. I didn't know they misspelled street names and stuff. That's just awful!
Feb 11, 2007 01:56 PM
Allen D. Butler
The Realty Butler llc/West USA Realty, Inc. - Peoria, AZ
MSSC, GRI, CDPE

Christy. In the strictest sense of the word, yes. It is unethical. So was fighting the British during the American Revolution. Even the Bible says so ;>) Let's just call it an act of civil disobedience then. . .

Feb 11, 2007 03:06 PM
Jonathan Dalton
Realty ONE Group - Glendale, AZ

> Who is misled?  Perhaps other Realtors who relied on the days on market information contained in the MLS system.  Should other Realtors be required to conduct a full-blown investigation to determine whether the listing broker is trying to pull a fast one on them?

Well, in a word, hell yes! That's your job. This is almost like asking whether we as agents should have to pour through the tax records when completing a CMA to make sure there are no non-MLS sales. In this business, not everything you need to know is wrapped in a neat little bow.

If days on market matters to your client, then get them the information. My concern as a listing agent isn't your buyer, it's my seller.

Allen has it right ... Days on Market don't matter         

Feb 12, 2007 02:53 AM
Jim Lee, REALTOR, CRS, ABR
RE/MAX Shoreline - Portsmouth, NH
Buying or Selling? Ann & Jim are the local experts

Tilt!

In the MLS you are making a unilateral offer of cooperation to other members of that MLS and advertising that listing for sale.

The Code of Ethics requires you to present a true picture in your advertising.

Gaming the system to show listings as "NEW" or with shorter days on the market than they actually have does not fit my definition of a "true picture"

Why not also add a few hundred square feet to the description to make it look bigger after all; "hell yes! That's your job"

Throw in another couple of bedrooms; any person with half a brain can count the actual number of bedrooms after all: "hell yes! That's your job".

One thing we all have a reasonable expectation of receiving is accurate MLS data; fudging the numbers if not playing fair.

And in my opinion it really doesn't matter why anyone wants an accurate days on the market count; they have their reasons and they also have a reasonable expectation of getting accurate information without having to research that property back to pioneer days.

YMMV

Feb 12, 2007 05:34 AM
Jonathan Dalton
Realty ONE Group - Glendale, AZ

You're mixing my comment here with my post, Jim. Two different statements.

The question here was whether an agent should be required to fully investigate days on market if it's a material fact to their buyer. To that question my answer was yes (hell yes, even.) It's your job as the buyers' agent to find that information. Complaining because one click and a quick glance at a listing sheet may not provide the total picture is bogus. It's laziness.

You don't need to research back to Arizona statehood to determine the days on market. In fact, no matter what the trick, it shouldn't take more than 10 to 15 minutes to find the answer.

Ten to 15 minutes to protect your buyers' fiduciary interest? Doesn't seem like a lot to me. But heck, I'm one of those evil agents who actually takes listings from time to time. 

Feb 12, 2007 03:54 PM
David Elya
BROOKVIEW REALTY - Rochester, MI
ABR, CRS, e-PRO, GRI, SFR - Associate Broker

What if we REMOVE Days on Market from the MLS?

http://activerain.com/blogsview/55345/What-if-we-remove

The National Association of Realtors Code of Ethics provides that "Realtors shall be careful at all times to present a true picture in their advertising and representations to the public," though a spokesman for NAR, Lucien Salvant, Salvant said that MLSs are not considered advertising vehicles. "It's a local MLS issue on how they address (relisting)," he said. "There is no NAR requirement on that particular point." He said that though buyers may raise questions about how long a property has actually spent on the market, "What difference does it really make how long it is on the market if that's the property the buyer wants and the price is right?"

 Article 1

  • Standard of Practice 1-9

The obligation of Realtors® to preserve confidential information provided by their clients in the course of any agency relationship.

Isn't DOM confidential seller information?

Article 3

Realtors® shall cooperate with other brokers except when cooperation is not in the client's best interest. The obligation to cooperate does not include the obligation to share commissions, fees, or to otherwise compensate another broker

I believe in providing a history report for any property. DOM data shouldn't be and doesn't have to be one of the fields collected and distributed. This field serves no purpose or value for the seller, my client, our client, and our sellers.

Mar 18, 2007 01:55 AM
Billy Burke
The Auctionarium - Altadena, CA
CAI - AARE

This is exactly why the public holds realtors in such low esteem.

As a full time real estate auctioneer I have been the bearer of bad news to sellers about marketplace realities.

I turn down about 40 to 50 people wanting to sell every week because they cannot deal with reality.

Which brings me to my point.

Every time I speak with a realtor they ask me "...how can you tell sellers the truth?"

Why don't you just take the listing?

It is disturbing that every single practioner of a trade association with 1.3 million members I have had contact with has asked me the same question over the past 2-years.

More disturbing is:

Telling the truth to customers is a new and novel idea to 1.3 million realtors.

Its no wonder the public holds used car salesmen in higher esteem and as more trustworthy!

Mar 18, 2007 07:33 AM
Billy Burke
The Auctionarium - Altadena, CA
CAI - AARE

Pete:

Figures never lie but liars always figure.

Funny that the statement about telling the truth being a new and novel idea does not bother you.

Question: 

Do you know how to get a realtor of your front porch?

Answer:

Pay them for the pizza.

Don't quit your "day job" yet!

Mar 18, 2007 09:18 AM
Stefan Scholl
Buyer's Broker of Northern Michigan, LLC - Petoskey, MI
Northern Michigan Real Estate

David: While I can agree that DOM data may serve no purpose or have any value to your seller clients, what about my buyer clients?  Are sellers really all that matter to you?  At least I find your proposal more straightforward and truthful than those who would manipulate this data and thereby present an untrue picture of the actual state of affairs to prospective purchasers. 

Billy: I believe that the truth will set you free.  But you already know that.  Hopefully others will learn.

Pete: Your mathematical skills are truly impressive. 

 

  

Mar 18, 2007 10:27 AM
Benjamin Clark
Homebuyer Representation, Inc. - Salt Lake City, UT
Buyer's Agent - Certified Negotiation Expert

Luckily our MLS keeps the listing history for agents to review. I understand your point that many agents DON'T EVEN BOTHER to go look at this... But we do.

I just tell my clients that the home was relisted and shows as a new listing, but it has actually been on the market for 280 days.

I believe there are certain criteria in our market for the home to show as a new listing with a new MLS #. One of them is time off the market. I don't know the number of days. Another way to get a new # is to list it with a new company. This can happen the very next day. I understand the argument from the new listing brokerages point of view: It is the first day on the market that they have tried to sell it.

In either case, I am glad that listing history shows and that we look at it.

Sometimes we find a listing that pops up and shows 98 days on the market only to find that it was under contract for 95 of those days... It just didn't meet the right criteria for a new listing number... Is that fair either???

Oh well, what are you going to do? You can't really please everyone, so I focus on trying to please my clients. Keep doing your research and due diligence. Later!

May 09, 2007 04:35 PM
Rick Beal
Coldwell Banker Residential Brokerage - Portland, ME
There's no reason to really trust the statistics anymore on my MLS, it is now routine to see a listing come back on the day after expiration with a new MLS number and 0 DOM.  It does take an agent to research and tell the client about the house, which gives them all the more reason to hire us to represent them.  But I see the point, it doesn't make the industry look good.
Jun 13, 2007 09:52 AM
Daniel J. Brudnok, REALTOR
Berkshire Hathaway Home Services Fox & Roach, REALTORS - Exton - PA License #RS-225179-L / Delaware License #RS-0025038 - Downingtown, PA
SRES, e-PRO,ABR,GREEN,CSP

Stefan,

Very good topic and by the number of comments I see many interpretations.

Here is where I come down on this topic.  Only the Realtor can see days on the market on a listing (correct me if I am wrong here fellow PA Agents).....I am always asked the question by my Buyer's when we see homes.....I am always able to tell them because I look before I go out.  To me a duty of the Buyer's Agent to be as informed about every property they show as possible.  In PA it is one additional click to find this our....and MY responsibility as  representative of the Buyer.

Thanks for stimulating my brain on business, I just spent two hours on FAFSA for my son and his future college enrollment.

Jan 19, 2008 04:30 AM
Jeff Sorg
Portland, OR

I would think this to be a problem the MLS should address. For example, in my MLS you can list and relist without penalty, but you can also check the "history" of the property, meaning you can observe just how long the property has been on the market, how many times relisted, price changes, sale fails, company changes, etc. A record of activity is maintained by property address, not MLS number. I do not think the COE is at fault here.

Jan 20, 2008 04:28 AM
Stefan Scholl
Buyer's Broker of Northern Michigan, LLC - Petoskey, MI
Northern Michigan Real Estate

Kevin,

I will check out your story when I get a chance.

Dan & Jeff,

Thank you both for your comments.  One of the big ethical problems I see is with "gaming" the system.  I have seen a number of listings where the address will be entered slightly differently so as to try and throw off inquiring minds.  Should we have to launch a full-scale investigation just to try and figure out how many days a property has been on the market? 

I really believe that a free flow of information will lead to an efficient marketplace.  While I do think that DOM info is proprietary, and should be restricted to MLS members for their use in representing their clients, I cannot see how or why listing agents should be allowed to withhold or play games with DOM information on a particular property.

 

Jan 22, 2008 08:26 AM
Find a Notary Public needAnotary
QEC Internet Services - Long Beach, CA

I concur that ethics is at an all time low across the board in a lot of industries. Everything in life these days boils down to money. This is a sad state for our culture that money trumps values.

Jun 17, 2008 08:07 AM