Crackdown on Relisting Homes

A few weeks ago, we introduced in our paid research three new statistics tracking the percentage of properties in a market that have been priced-reduced, re-listed, or flipped.

Re-listing is the tactic used by agents to re-introduce a property to the market. It gets treated as a fresh property. The tactic can sometimes frustrate buyers who have already seen a property. From our point of view, it's a really fascinating marker of real estate market and housing demand conditions.

Apparently, many MLSes had heard the same market feedback that pushed us to introduce the re-listing monitor feature. In September, the Northwest MLS which serves Seattle introduced member rules to expressly prohibit properties from being relisted (Story today at Inman News.) Also in September, the Silicon Valley MLS introduced a "continuous days on market" which measures the listing time across all the relistings. (Here's Kevin's take on relisting in Silicon Valley). From the Inman article today:

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 relist properties or input meaningless price changes. Canceling and relisting 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 relisting and inputting changes are deceptive and misleading marketing ploys, designed only to gain undeserved market exposure at the expense of other properties."

So is relisting a dirty, potentially illegal, trick? Or is it merely smart marketing? Is there such a thing as "undeserved market exposure?" If I'm selling a property, it's ALL deserved, baby. Furthermore, why now?

My take is that the re-listing phenomenon is intertwined with the current legal/monopolistic howling about the MLSes - born of the same parents, as it were. In an ironic twist, by aggressively addressing this relisting tactic, the MLSs may be building the case for their detractors. The logic goes something like this:

• Initially, MLS systems were simply books. Collections of the properties for sale. Everyone had a handy repository for the local properties.

• At that time, property marketing was all personal. Agents show a house. People walk through. Deals get done. Any impersonal marketing, say an ad in the newspaper, was done outside the MLS.

• The paper was the aggregator for whomever is marketing. No one cared if the local paper had FSBO ads along side properties that also happened to be listed with a Realtor, and therefore on the MLS, which was merely a back-end convenience for the Agents to use. No one had to game the MLS to get more attention for their property.

• Enter the internet. MLSs go online and instantly become highly effective marketing channels in and of themselves. Much more effective than a newspaper ad. And everyone gets it for "free".

• On top of that, the internet also opens additional marketing opportunities. Send me an email instantly when a new property meets my criteria. Put the listings on a map. Tell me about the neighborhood crime stats. Great stuff, if you're a home buyer.

• But this is where the trouble begins. You can change your ad in the paper. But is it wrong to change your listing? If the only way to trigger the "new listings" email to put my property in front of hundreds of potential buyers is to re-list it, I'm going to be tempted.

• Now, with the MLS as marketer, they have to fight competitive marketing channels. By blocking out, or even appearing to dissuade, competitive marketers, they invite the monopoly catcalls.
  

• Meanwhile, the MLSes want to be seen as an advocate of the consumer. So they crack down on this nefarious re-listing practice, effectively admitting that they are first and foremost a marketing channel, rather than being a central repository. They're painting the target on their chests. Bummer of a birthmark, Hal.

The duality makes for a catch 22. MLS as repository makes sense to centralize, like a stock exchange. But the MLS as marketing channel makes sense to blow wide open. The repository must have accurate data, be legally binding and consistent. But how do you reconcile that control in the face of external marketing necessities? One thing is sure: the re-listing tactic is merely a symptom of the greater challenge. Addressing the symptom may be desirable in the short term, but there is more pain to come.