I have been truly frustrated over the past few years with the misinformation in today’s market. The most egregious incidents that effect buyers and sellers on a daily basis are created solely by real estate salespeople. Right now, according to StreetEasy, there are 4,266 available properties on the market in Manhattan. But are there really? We have come across many cases where advertised properties are not truly available.
This affects both buyers and sellers dramatically. If a buyer believes there are four to five options for them it will curb their urgency and may lower their offer on one particular purchase. When homeowners price their homes they use current comparably listings to choose a valuation. When properties are not shown to the public as in contract, then the seller does not know what the market can support. They may also feel that their home is worth less, due to the inaccurate supply they are seeing on the market.
So I wanted to see exactly how often this was happening. I thought it could be fairly common, as I have come across cases when working with a buyer where they wanted to see five properties, which had all been listed as available, but when calling the listing brokers, three of them came back as already in contract.
So I hired an assistant and had them choose 1,000 sales in Manhattan, all listed as “available”. The group of 1,000 had no particular price range and been chosen throughout the borough in all areas below 110th Street. This search for the 1,000 was based on Streeteasy, but I also had the properties availability checked on the listing brokers website, just to makes sure any errors from Streeteasy could not be called into blame for listings being miscategorized. I also did not include any listings that did not have a broker or a broker who is not part of REBNY (Real Estate Board of New York).
The assistant called each listing agent and requested an appointment to see that property. We did not say we where with a particular brokerage (in case the listing broker held a case of distaste for that firm) and acted like we wanted to buy the property for ourselves.
The results of our probe:
536 of the properties were available to be seen right away
189 of the properties were in contract
101 of the properties had an accepted offer and were not available for showing
76 of the properties were already sold and closed
38 of the properties were not on the market or could not be shown
60 of the brokers did not take the call or return our messages (we left at least 3 messages and waited over a week)
This tells us that just over 50% of the available listings in the city are really available for sale at any one time.
Why is this done? There are many reasons for the inaccuracy. The most common culprits are:
1) Laziness. Brokers just don’t take the time to update their systems
2) Apparent volume. Brokers keep the listings active to make their portfolios larger.
3) Misleading buyers. The most common and unethical effect to the market.
A broker will leave a listing as active so direct buyers see the property and call that particular broker. Then that broker tells them that it just sold and directs them to another property. The “criminal” broker may not list that new property, but they will slide in to represent the purchasers as a buyer-side broker.
So how do we fix this issue? It is very simple. Throughout the country a Multiple Listing Service (MLS) oversees most brokerage areas. The MLS will fine brokers who are not readily updating the database or putting in misleading information. In New York City, there is no such service that oversees listings.
I don’t know if the answer is to institute an MLS authority for Manhattan, but I am sure companies like StreetEasy can punish or ban brokers who do not update their listings. REBNY can and should institute penalties and other punishments for these actions.
Why has it not been done yet? I can’t really say. But if I had to guess, I would say because there is no legislation making these actions necessary and there is no profit in it for the groups like REBNY or StreetEasy to take action.
To follow up I will conduct this same experiment in an area controlled by a regional MLS and see how the results differ.