That new property listing may not be so new, after all.
Some agents are pulling properties out of local multiple listing services and then re-listing the properties with the MLSs in an effort to give the properties a fresh start in the eyes of other agents and prospective buyers.
This practice, which is referred to as “re-listing” or “refreshing,” can be deceptive if it is used to give the appearance that a property has spent fewer days on the market, say critics, and it is becoming more widespread in slowing real estate markets as inventory builds up and properties take longer to sell.
Proponents of re-listing say it can be a useful strategy for attracting fresh attention to a property that has remained on the market for a prolonged period, as it may have been overlooked by agents or buyers when it was first introduced. And they say re-listing can be especially beneficial when a property re-enters the market with a substantial change in price, for example.
Whether re-listing is an acceptable practice that exemplifies creative marketing in a down market — or whether it is a misleading and potentially illegal practice — is a topic of heated debate in the industry. The National Association of Realtors trade group, which has about 1.3 million members working in the real estate industry, has not taken a formal stance on the issue and looks to local MLSs to set their own policies for re-listing practices.
Some MLSs have countered the practice by enacting rules designed to prevent members from re-listing properties within a certain time period, and some MLSs also track a property’s entire listing history and provide that information to all members.
Northwest MLS, a regional MLS in Washington state, on Sept. 1 issued a notice to members threatening “disciplinary proceedings against agents and brokers who improperly cancel and re-list properties or input meaningless price changes. Canceling and re-listing is only permitted when there has been a substantial change in the quality or condition of the property.”
The notice advises that price changes should only be entered into the MLS “when there has been a material change in the price of the property. Otherwise, canceling and re-listing and inputting changes are deceptive and misleading marketing ploys, designed only to gain undeserved market exposure at the expense of other properties.”
Re-listing and insignificant price changes can be misleading to other members and their clients, can violate NWMLS rules, and “successful legal claims have been brought by buyers who have discovered that a ‘newly listed’ property they agreed to purchase was in fact a deception created when the listing agent cancelled and re-listed a ‘stale’ listing,” according to the notice, written by NWMLS lawyer Christopher R. Osborn. Washington state also has a consumer protection act that would likely be violated by misleading re-listing and price-change practices, the notice states.
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 Lucien Salvant, a spokesman for NAR, said that MLSs are not considered advertising vehicles. “It’s a local MLS issue on how they address (re-listing),” 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?”
Gerry Fitzpatrick, broker-owner of RE/MAX Southeast in Denver and a member of a rules and regulations committee for MetroMLS, a local MLS, said the MLS changed its policy several years ago on re-listing practices.
“The only time it resets is if the property is out of the MLS more than 30 days,” he said. The reset only applies to “current days on market,” he said, while MLS members can still view the listing history for properties, which includes total time on market from the original listing date.
Fitzpatrick said it is his view that the MLS should always strive to provide the most accurate data possible. “There is always a certain amount of people in this business trying to get around the system — to make the information benefit them in their situation. Our charge is to make the information accurate, so that it shows the true story.”
While some MLSs have placed new restrictions on re-listing practices, Roberta Murphy said she would like to see an easing to these rules in her market area. Murphy, a real estate agent at Windermere Exclusive Properties in northern San Diego County, said substantial price changes to a listing should warrant a re-listing of the same property, and she hopes that Sandicor, a regional MLS in her market area, will revisit the issue.
Sandicor prevents the same agent from canceling a property listing and re-listing the property within a 30-day period, she said. “We have some heroic sellers who are reducing their prices 20 percent, and it’s really tough for them to be showing that they’ve been on the market since March,” she said. Sellers seem to have a “double-penalty put on them,” she said, because of price reductions and prolonged time on market, along with re-listing restrictions.
Murphy said she would be in favor of a new policy that allows agents to re-list prices if there are substantial price changes to a property — and she favors a report of listing time as days on market at the current price rather than a report on the total time that the property has been listed on the market.
She said she does view it as a “spammy” practice when agents re-list properties with insignificant price or other changes, “and I don’t blame MLS systems for banning the practice. But it is an unfair burden for sellers who drastically reduce their property price — which in effect would make it an entirely different proposition for a potential buyer.”
Re-listing can be necessary in some instances, said Jim Homolka of RE/MAX Equity Group in Portland, Ore. “There are times when a listing needs to be re-listed if there are major changes to the property or ownership.” Homolka said the MLS in his company’s market area has changed its policy to make it less desirable to re-list properties, and MLS statistics show “cumulative days on market” that are not reset by any re-listing activities.
“We also include the time if it is listed with one broker, expires and goes to one or more (brokers) before it sells. This gives a more true picture of market time,” he said.
Several real estate brokers told Inman News that they do not have formal policies on re-listing. Some real estate companies maintain Web sites that display information about price reductions and days on market. ZipRealty’s Web site, for example, has a feature that tracks prices though the feature is not designed to detect re-listing, said Patrick Lashinsky, a senior vice president for the company. ZipRealty, he said, does not have a formal policy on re-listing, and most company agents do not re-list properties.
Company agents will typically only re-list properties, he said, if the properties are “taken off the market for some time to make cosmetic or other changes such as repainting a room or redoing landscaping.”
Gene Vaughan of RE/MAX Alliance in Fort Collins, Colo., said he hasn’t established a formal policy for agents in the five offices he manages in Northern Colorado, though he doesn’t encourage arbitrary re-listing.
“We know there’s a lot of (re-listing going on),” he said, and the local MLS doesn’t prohibit the practice in its policies. “I do think it’s an ethical problem because it’s deceptive.” Vaughan also said that he expects the issue will be addressed at some point by state licensing law.
In a posting at the ActiveRain.com site this month, real estate agent Jim Wolcott referred to some forms of re-listing as “nefarious real estate practices,” and stated that re-listing “seems to be all the rage here in Washington state, and a hot topic among Realtors.”
Wolcott, an agent with Preview Properties Skagit LLC, said he believes that arbitrarily canceling an MLS listing and re-listing the property can make the accuracy of MLS data “laughable,” and he believes the practice may also be unethical.
He said he supports the Northwest MLS’s stand against the practice. While Wolcott said there are situations in which re-listing may be warranted — medical emergencies, for example — an abuse of the system can cause a deliberate misrepresentation of property data, as public-facing data may not provide an accurate listing history of a given property.
Home sellers who do not want their listing agents to misrepresent their properties through re-listing should specifically tell their agents that they must authorize any changes to the property listing, Wolcott said. “That’s fair. The seller deserves to know that activity.” Buyers, too, should be kept informed about the actual listing history of a property, he said. “From a buyer’s point of view, all of this (re-listing) is just to confuse the buyer about the status of the property.”
The practice of re-listing for marketing purposes was nonexistent about three years ago, though in December the market began to shift. “This is recent, and it’s a reflection of the market,” Wolcott said of the re-listing practices in his market area.
Re-listing is widespread in some states. The New Jersey Star-Ledger newspaper reported in an August article that it gained access to MLS data that showed hundreds of examples of re-listing practices in three New Jersey counties.
James Bednar, who publishes the Northern New Jersey Real Estate Bubble blog, said he and members of his audience believe that re-listing for purposes of restarting a listing’s time on market is deceptive.
“I feel the practice walks the very thin line between marketing and fraudulent misrepresentation, especially if this information is not revealed to the buyer by their agent,” he said, and the misuse of re-listing “obscures the time on market as well as any price reduction information” for New Jersey consumers.
“The fact that this issue is even being debated as potentially unethical and misrepresentation should be more than enough for the NAR to take a stance against it,” he said.