Starting the Clock Again - Rule Change Reduces Waiting Period Before Relisting

Washington Post, February 23, 2008
By Mara Lee

When home shoppers see that a house has been on the market for months, they will probably conclude that it's priced too high -- and that there could be room to negotiate a lower offer.

Last week, Metropolitan Regional Information Systems, the Washington area's multiple-listing service, made it easier to hide that information.

The service is the database that real estate agents use to list and find homes for sale, and the information in it is the basis of many Web sites that allow home buyers to shop for themselves.

The change allows sellers to withdraw their property from the market for 90 days, then place it back on the market as a new listing. Previously, a seller had to wait 180 days to do that. As a new listing, it gets more attention from buyers, MRIS says. But others say the change favors sellers at the expense of buyers, who may not know to ask about an earlier failed attempt to sell the house.

The change was made because agents considered the previous six-month resting period too long. Those who favor the new rule say market conditions are changing more rapidly, so 90 days is enough to count as a new market cycle. "The home deserves another look in less than 180 days," said Mary Jo Powell, a spokeswoman for MRIS. The new rule "helps it pop up in the search without changing the facts at all."

Stephen Israel, president of Buyer's Edge, a Bethesda agency that represents only buyers, is indignant about the change.

"If it's been on for three months, that's a very different animal than a property that's been on the market for one day," he said. "It promotes the opportunity for there to be misinformation."

Many Web sites that buyers use to shop do not list how long the property has been on the market, although some, such as Long & Foster's, mark new listings.

But agents have access to the password-protected MRIS, which includes days-on-the-market information, as well as the history of price drops by the seller. The previous attempt to sell the house will still be in the records, but not on the current fact sheet. "Agents know to always look at the property history,"

Powell said. "So you can't deceive because that's always there."

Kim Bradley, owner of Marquee Properties in Haymarket, works as an appraiser and a real estate agent. She said she has mixed feelings about the change. From an agent's perspective, she said, "I prefer to see what's going on."

She said that with a little more effort, she will still be able to tell clients all the information they need to make an informed bid.

But the way it will change the appraisal side of her business underlines what potentially is the bigger impact -- blunting the bad news of declining prices and sales by presenting a lender with a rosier picture of a neighborhood because houses could show as being sold after fewer days on the market.

That's because an appraiser's report shows a year's worth of all comparable sales, or "comps," and three years of history for the property where a sale is progressing.

"As an appraiser, I like it," Bradley said of the change. She said she has seen 10 sales fall through in the past six months because lenders would not offer loans at the terms the buyers needed when they saw the patterns of slow sales and dropping prices.

"So many lenders are requiring [reporting of] days on market. When they see 233 days, they kind of freak out," she said.

If the lenders don't see those long times before a sale, they won't call her for clarification about those properties, which she said is "more work on our part."

"It's a game we play with underwriters, too," she said. "We all have to do our jobs and make things go through."

Ilissa Flamm, an agent with W.C. & A.N. Miller Realtors in Bethesda, supports the change. She said the MRIS argument that 90 days is a full market cycle makes sense because most buyers have found the house they want in that time.

She initially agreed with Bradley's position on leaving out information about previous attempts to sell when listing comparable sales. She said fresher sales statistics are a more accurate reflection of the market than those nine months ago, although she added: "I hate that the word 'game' was used."

But when pressed, she said the lender has the right to decide whether it needs to know a year's history for comps to decide if a neighborhood's prices are declining. That evaluation, she said, has an impact on how large a down payment would be needed to make it less likely that a buyer could owe more on the house than it is worth two years down the road.

"The lender having an interest in this property, the buyer having an interest in this property: Everyone wants [the selling history] accurately reflected," she said.

Nonetheless, she backed the rule change, which was supported by a majority of the 4,169 agents who responded to an MRIS survey.

"I don't think this change would be made if they thought games would be played," Flamm said.

Debra Leafty, owner of Leafty Appraisals in Gaithersburg, said the change makes hiring a buyer's agent more important; the agent can find the full history of listings.

Because the history is not erased, Leafty said, she doesn't think the new rule will change bidding patterns much. "People are going to still look that up and see you're desperate," she said.

And she wonders how many people will take their houses off the market anyway. "If it's vacant, you really can't afford to take it off for three months. You're still making payments."