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Should The Real Estate Industry Be FULL Disclosure?

By Doug Willis

Real Estate Broker/Owner with RE/MAX Property Concierge

July 23, 2007 07:00 AM

An editorial appeared last Friday in the LA Times entitled Not-so-open houses. Seems that the "Times" is critical of the decision by the Southern California Multiple Listing Service to modify the information available to consumers by removing the "days on market". The So Cal MLS is one of eight, Multiple Listing Services in the greater Los Angeles area. Houses listed for sale in Pasadena, typically do not appear in the So Cal MLS.

The question here is, "Should everything about a house for sale be public information"?

We already know when the Seller purchased the house and can easily find out what they paid for it. For that matter, we can also find out what is owed against the house. This information is not readily available in all states, but it is in California. If knowledge is power, does it leave the Seller that much more exposed to publish how long the house has been for sale? The implication here is that if Buyers have this information, they can assume a house is overpriced if it is not selling or that a Seller may be more motivated to sell and willing to accept an offer, even if it is well below the asking price.

Let's consider a simple analogy. Suppose you walk into the department store to buy a new suit or the car dealership to buy a car. On the price label, there is a date that the merchandise was purchased, and the price the store or dealer paid was there as well. Other industries don't readily offer this information, why should real estate be any different?

I have run across people who seem to think that real estate agents are responsible for the high housing prices we have here. Our Listing Agreement states that the owner of the house will make the decision on what price the house should be offered for sale, not the broker. By the way, these high housing prices have been a tremendous source of wealth for many home owners here in Southern California. If you have tapped your home equity line of credit, you know what I mean.

The bottom line is, "Should Real Estate be full disclosure, identifying every nuance along with the Sellers financial information", in order to sell a house? The Seller can always say no to any offer, but then again so can the Buyer.

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Kate Bourland

Marketing with Kate - Redding, CA

Onlilne Marketing Mobile Marketing

I think that time on market is a critical piece of information to professionals. I'm not so sure that it's relavant to homebuyers but it does raise questions as to why hasn't it sold? Is it just price or is something else wrong with the property - which could most likely be corrected with a price adjustment. It also provides trends for the non-licensed investor.

I'm still in a market where even Real Estate Agents are over pricing homes so this is an interesting question....

Jul 23, 2007 07:15 AM

Armando Rodriguez

QUEST REALTY SERVICES - Orlando, FL

Orlando Homes 4 Sale, Real Estate Broker-GRI

More and more of the States are requiring disclosures. I think if you have knowledge/info about something the other party should know then disclose it. It the ethical thing to do, isn't it?

Jul 23, 2007 07:24 AM

Jim Little

Ken Meade Realty - Sun City, AZ

Your Sun City Arizona Realtor

I don't believe that DOM are disclosure items. They can be useful for the professional, but only in a normal market. To correctly use DOM, you must know and understand what underlying causes are present, and if they have been corrected. Today, the obvious might be the property was over-priced. Once corrected, DOM will stigmatize the property unfairly.

Jul 23, 2007 08:06 AM

Irina Netchaev

Pasadena Views Real Estate Team, Inc. - Pasadena, CA

Pasadena CA Real Estate

Good post and a great question Doug. I think that CLAW made a great decision to remove DOM from public data. I think that in many ways it can be misleading. For example, I listed a house last month which was offered for sale last summer and then withdrawn due to personal reasons. My brand new listing was stigmatized with 330 some days on the market. Is that true? NO. Is it relevant? NO.

Buyers's agents can easily look up the history on the house and share that with the buyer if the buyer chooses to have that information.

I don't think that it even falls under the title of "disclosure". What is sad though is that each of the 8 MLSs have their own rules. That makes it more difficult for both consumers and real estate professionals to keep up with .

Jul 23, 2007 08:18 AM

Doug Willis

RE/MAX Property Concierge - Pasadena, CA

Kate-you mention that you are in a market where real estate agents are still over pricing hmes. Is it the agents or the home owners?

Armando- I agree about disclosing relevant facts regarding a property. But would "days on market" make someone change thier mind about buying the property? If a Buyer asks I will always tell them, but should it be up front and center?

Jim, many people still have the idea "we can always lower the price", so in this instance the DOM does not stigmatize the property in my opinion. Its a decision the Seller made, therefore they should own up to the consequences.

Irina- I agree with your post about how DOM can be misleading and how 8 maverick MLS' organizations can set thier own rules. There should be a set policy from NAR defining DOM with regard to each listing and time period.

Jul 23, 2007 11:06 AM

Should The Real Estate Industry Be FULL Disclosure?

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