Changes to the Santa Cruz MLS
June 05, 2008
It’s 6:30 AM, which means I must be hard at work. Coffee’s done brewing, time to pour a cup. Right out of the gate, I’m researching properties today. One thing I notice is that MLS numbers have gone from six digits to eight - woooah! MLS numbers have been recycled for some time now - there can be several MLS entries with the same MLS number. I think they expanded the digit count because the MLS is growing, it won’t just be the five counties around here (Santa Cruz, Santa Clara, San Mateo, Monterey, and San Benito) but will expand to include the Greater San Francisco Bay Area.
Another thing that’s happened release with “Release 3.8″ of MLSListings.com is that you can now search for bank-owned REO properties. There’s a new attribute on each listing that says if it’s bank-owned. The thing is, of course, that the agent has to manually set that flag, and agents are not the most detail-oriented people in the world - especially busy REO agents, who often put no comments or pictures on their REO listings. We’ll see how well that works out - but no matter, because I have my own weekly Santa Cruz REO and Short Sale list that I send out, which I find by manually reviewing all the listings that come on the market each week and send the list out to subscribers.
Posted by SantaCruzBroker at 6:48am
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Real High Stakes Poker, Round Two
February 25, 2008
I had an escrow close last week, but we were barely able to keep the deal together. I alluded to this deal in my earlier posting about Real HIgh Stakes Poker a few weeks ago. It may not surprise you to read that a deal which was hard to put together was hard to keep together, but listen to this…
We were well on our way to closing. The seller had actually already signed the documents she needed to, all that was left for the buyers to go to their friendly neighborhood First American Title Company office and do their signatures, and then we’d just sit around and wait for those fat commission checks to come rolling in. Then, late one evening, my phone rings. It’s the buyer’s agent. It seems we had a problem.
“A new material fact has just come to light,” she began. “It significantly affects the value of the property.” Now, the buyers had already released their physical contingencies. They had already signed off on the property, saying that after having had ten days to investigate it, everything was kosher. But now, on the eve of the day when they sign their loan and title documents, a new material fact had apparently come to light. Wouldn’t you know it.
“Oh?” I asked, “What’s that?” The agent replied, “Well, in the MLS, you listed the property as 1690 square feet. When the appraiser measured it, he came up with only 1505 square feet.” It seems that the buyers had gone ballistic, had threatened to file a lawsuit, to sue us for misrepresentation or fraud or something…but that the buyer’s agent had calmed them down to the point where all they wanted was a discount of $15,000.
Well, that’s a bummer. The truth is, I had no idea how many square feet the house is. I had read several different figures from a variety of different sources, and come up with 1690. It “felt” like about 1690 to me, too. Also, the carpet guys and the hardwood floor guys, guys who measure houses all day long, none of them ever said anything to me like, “Hey, you really think this house is 1690 square feet? It feels smaller than that to me.”
However, right in the agent’s private comments on the MLS, it said quite clearly: “SF Approx.” Not only that, but the buyers had submitted a Buyer’s Inspection Advisory along with their offer, a signed document which reads, in part:
YOU ARE ADVISED TO CONDUCT INVESTIGATIONS OF THE ENTIRE PROPERTY, INCLUDING, BUT NOT LIMITED TO THE FOLLOWING:
…
2. SQUARE FOOTAGE, AGE, BOUNDARIES: Square footage, room dimensions, lot size, age of improvements and boundaries. Any numerical statements regarding these items are APPROXIMATIONS ONLY and have not been verified by Seller and cannot be verified by Brokers.
You see, the seller really isn’t on the hook to provide a precisely accurate measurement of anything. And, what’s more, if you take three different appraisers and have each measure the house, each one would probably come up with a slightly different figure.
Now, this measurement of 1505 square feet came from the appraisal. The buyer (or his agent, or lender) orders the appraisal, and the buyer pays for it. The buyer is entitled to see it, it is his property. The buyer has a specific contingency on the contract called the appraisal contingency - if there’s anything in the appraisal that does not satisfy the buyer, the buyer can back out of the contract. However, the buyer had specifically released his appraisal contingency as well. Why, if this square footage was so important to the buyer, did he not bother to read his appraisal which he paid for, before releasing the contingency?
And perhaps the biggest weakness in the buyer’s ploy to get a $15,000 discount was that even at 1505 square feet, the home had appraised for at least the purchase price. So how, then, is a $15,000 price deduction justified?
The answer is that it’s not justified. To my eyes, this was a last-minute ploy to chisel some more cash out of the seller. Not such a bad ploy, really, but a bit unfortunate. It would have been more effective to use this before releasing the physical and appraisal contingencies, because as I said, the seller had already signed off and was thinking that it was basically a done deal. Pulling something like this at the last minute kind of left a sour taste in everyone’s mouth.
The buyers had sent over an addendum, asking for the $15,000. After consulting with my client, I informed the buyer’s agent that it wasn’t going to happen, no way would my client be signing that addendum, and that she needed to talk some sense into her client.
Alas, the word came back from the buyer the next morning, in the form of a cancellation of contract form. I shipped that off to my client the seller, and in a few hours I had it back, and forwarded it on to the buyer’s agent, saying, “OK, here’s the cancellation of contract. I’m going to let you send it in to the escrow company, if that’s really what your client wants to do.”
Heh. I had a feeling that’s not what the buyer really wanted to do. I think the buyer really wanted to buy the house (it was a good house, good location, good price). And, sure ’nuff, a few hours later I got a phone call from the buyer’s agent. “Seb, we’re gonna hold off on sending that cancellation to escrow. I’ll let you know later on in the day.”
Well, a whole lot more drama ensued, which I won’t go in to. In the end, the buyer’s agent chipped in $2,500 of her commission, and we had to chip in $2,500 of our commission - except that our client, bless her heart, signed a separate agreement and wrote my brokerage a check after the close of escrow, giving us the $2,500 back.
What a crazy business. Ya win some, ya lose some. After all the hard glares across the poker table I’m glad we won this one.
Posted by SantaCruzBroker at 7:44pm
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Fiduciary Responsibility - Get the Picture?
January 21, 2008
I had a pretty busy weekend showing property. That’s a good sign, I think - there’s a different class of buyer out there now, the kind of folks who were sitting on the sidelines in ‘04 and ‘05, who thought the market was too high and that the values couldn’t be sustained, and they should wait a bit. Well, the waiting for many of these people, it seems, has come to an end. Sure, the market is still in the tank for the most part, but some keen people out there recognize this as being a great time to buy.
I spent a good number of hours on Sunday driving around, looking at low-end properties. There’s a lot of low-end real estate out there these days, and a lot of it happens to be (surprise) short sale and REO listings. There were a lot of properties on our list (a good dozen, which is a fair number to see on a property tour). Now, you’d think that in a market like this, where there’s so much competition in the low-end of the market, that the listing agent would pull out all the stops to get potential buyers in to sell the homes, right? You’d think.
When you’re out looking at properties, naturally you get to talking, and my client was telling me a bit about how he’d chosen the homes we were seeing today. And he said something which isn’t surprising at all, but is noteworthy: “I just skipped over all the ones that didn’t have pictures.”
The fact that he said that isn’t really surprising, not to me, anyway. Most people are like that. What IS surprising is that there are so many listings out there that have no pictures. Not even a single exterior shot. Nothing. Now, I can appreciate that many of these homes are not exactly beauties - but a lot of buyers aren’t expecting them to be, when they’re looking at the bottom of the market. However, if there’s no pictures at all, and many listings DO have pictures, and you have so many to choose from - which are you going to look at first? The ones where you have at least a bit of an idea what the house is like, visually.
What really gets me is that sometimes, there are no pictures and no remarks. Or, sometimes the remarks will be so brief and uninformative as to be useless, like for example: “Nice 3bd 2ba home.” Yeah, that’s really gonna lure in the buyers, especially when there’s so many of them with so many properties to choose from.
Out here in California, every real estate licensee has a fiduciary responsibility to their clients. As part of that fiduciary responsibility, agents must exercise “reasonable care and diligence” as they do the work for their clients. To quote from the California Department of Real Estate Summer 2007 Bulletin, the following is among the fiduciary duties imposed on California Real Estate licensees:
To diligently exercise reasonable care, diligence and skill in representing a client and in the performance of the responsibilities of the agency relationship. By reason of his or her licensure, a real estate agent is deemed to have specialized and professional expertise, knowledge and skill in real estate related matters superior to that of the average person.
I’m not a lawyer, so I will admit that I am not qualified to give any kind of legal opinion about whether or not omitting photographs and remarks from the MLS falls below the level of “reasonable care and diligence.” It does seem reasonable to me, though, that if you want to sell a property in today’s market, that you at least put up a picture and some remarks that would make a buyer at least want to drive by.
While I’m on the subject, I just have to wonder: how is it that sellers let their agents market their properties like this? Do sellers not even hop on the MLS and take a look to see how their home is being marketed to the 87% (or whatever) of the buying public that shops for real estate primarily on the Internet? Sheesh.
Well, that’s enough vitriol for one blog entry. Thanks for letting me vent!
Posted by SantaCruzBroker at 10:23am
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