THE MLS MYTH
In the hit movie Field of Dreams, Kevin Costner hears the voice of Shoeless Joe whispering over and over, “If you build it, they will come.” Today, many homeowners and Real Estate Agents alike believe in the myth, “If you put it in the MLS, the Buyers will come.” The Listing Agent inputs the home in the system, and waits for the promise to happen. What exactly is the MLS? The Multiple Listing Service (MLS) is the National Association of Realtors® (NAR) computerized list of homes currently for sale. Agents search the MLS daily to find potential matches for their Buyers. Thus, when new listings are entered, they are evaluated by sharonketko.com|1
Agents with prospective Buyers. This is a valuable tool that we will want to use to help sell your home, but it is also potentially very flawed. Read the second to last sentence again: The listings are evaluated by Agents with prospective Buyers. A Buyer’s Agent has one specific goal: Find the client a home that meets his or her needs and price range in the shortest amount of time possible. When this happens, the Buyer is happy and the Agent is on to the next client and commission. When Agents search the MLS, they might be sifting through forty or fifty listings in a particular area and price range. They are looking for reasons to shorten the list of homes that will be shown to their client. What exactly are they evaluating as they decide whether a home is worth their client’s consideration? The criteria their prospective Buyer has directed them to search for might include price, square footage, room count, age of the home, and style. You are probably thinking, “Okay, that makes sense; the Agent searches for what the Buyers want. What makes this a potential problem?” The problem is that your listing might be weeded out by factors you are not aware of.
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Let’s say that the tax assessor records state that your home is approximately 4,952 square feet. It was built in 1999.
The original design had five bedrooms, but you
converted the fifth bedroom downstairs to a really great office with built-ins. Your wife has a decorator’s eye and remodeled the entire home last year with the latest paint colors,
granite
countertops,
and
hardwood
floors
throughout. Thanks to the well thought out floor plan and storage space, everyone that steps into your home is amazed to find out that it has less than 5,000 square feet. It has been a wonderful home, but you are ready to move to that golf course community they keep advertising on the radio. When it comes time to sell, you list with a discount real estate service that will put you in the MLS. Everyone knows you can cut your Listing Agent’s fees by going this route. They make up a few brochures, put a sign in the yard, and a key box on the door. You know you have a desirable home; you don’t really need a full-service Listing Agent that specializes in your area. Besides, if you are in the MLS, you are as good as SOLD! And you wait for your Buyer. . . and you wait. . . and you wait. You get a few showing appointments, but not as
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many as you expected. No definite offers on the horizon. What’s going on? Let’s look at that description of your home again: 4,952 square feet; four bedrooms; built in 1999. It just so happens that the last four Buyers who purchased in your neighborhood did not even look at your home. Why not? Their Agents followed the Buyers’ criteria exactly.
The
Agents were told to search for homes over 5,000 square feet or that they needed five bedrooms. The clients may have stated they did not want to look at homes older than ten years because they did not want to remodel. (Wait! You just spent thousands on granite countertops, new carpet, and wood floors!) Did you know that much of the information in the MLS is incorrect because Agents and homeowners do not know how to read county tax appraisal reports? One of the biggest errors I find is in the critical Year-Built column. I cannot believe how many times I have looked up previously listed homes that show the “year-built” as the year the lot was purchased. In most cases, this is incorrect. A custom home builder might purchase ten to fifteen lots from a developer at one time. He will build a model
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home on one of the lots and spend the next few years marketing the lots and beginning construction on each lot as it sells. Depending on the size of the home, it could take over a year to complete the project. A home’s “born-on-date” is the day it passes city inspection and receives a certificate of occupancy; not the day the bulldozer starts to move dirt around on the lot for the foundation. Marketing your home as two years older than it actually is, is not in your best interest.
(Similarly, introducing your wife as two years
older than she really is, is also not in your best interest!) How can you figure out the true build date if you are not the original owner? Look in the deed history. For example, XYZ Developers sold the lot to Builders-R-Us in December 1998, and Builders-R-Us pulled the construction permit in July of 1999, and the home then sold to the first owner in April 2000. Which of these dates most accurately reflects the year that the construction of the home was completed? The home’s “born-on-date” is 2000. You would be surprised to know how many Listing Agents would put the year built as 1998 when the lot was sold, or 1999 when the builder pulled the permit. If the house was permitted after July of a given year, the city sometimes records that as the year built. You and I both know if you are looking at a
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5,000 square foot property it was not built in four months. The last few months of construction are when the important things that will have warranties are installed, like A/C compressors, appliances, pool equipment, garage door openers, light fixtures, etc. Sometimes it might take a few calls and a trip to the city building department to research the accurate date. This is well worth your time in many cases. (Obviously, save the trip if your home is an historic property and was built in 1932!) What about square footage? Most Real Estate Agents reference the county tax appraisal information for square footage before entering it in the MLS. This is also potentially inaccurate. The tax records are based on blueprints that were submitted to the city when the permits were issued for construction. As a custom home builder I can tell you, when the home is in the framing stage, builders will often add square footage that was originally planned to be attic space. These same builders do not always go back to the city to change the records and pay the fee for the extra square footage. When I go to a listing appointment and do the initial walk-through of the home, I can usually tell if the house “walks bigger� than the tax assessor’s claimed square 6|Page
footage. Sometimes my first recommendation is to have the square footage accurately measured by an appraiser before I will suggest a selling price. I am usually correct, and the owners might discover that their home is actually one to two hundred square feet larger than they thought.
If this
additional square footage takes you from being 4,952 square feet to 5,058 square feet, that is potentially very significant as to how many more times your home will pull up in an MLS search. After you make sure that the year-built and square footage data are accurate, your home still may not pull up in the MLS for a myriad of reasons. The facts of your home are the facts and cannot be tampered with in the MLS. If the MLS is your primary marketing strategy, you might wait a very long time before you can move into that new home in the golf course community.
SECRET: Putting your home in the MLS will not guarantee the sale of your home. Discount broker services and many Listing Agents subscribe to a marketing strategy I call the 3 P’s. Put the sign in the yard, Put it in the MLS, and Pray. Although I do sharonketko.com|7
believe in the power of prayer, I also believe you get what you pay for. Hiring a Real Estate Agent that specializes in your area is well worth whatever rebate that discount broker service is offering. (Your wife’s niece who just got her real estate license also falls into this category!) Let me give you an example of how a novice Agent can misinterpret
the
MLS.
Today’s
“Master
Planned
Communities” can incorporate properties that range from $500,000 to $2,000,000. The price points are separated by different “villages” within the neighborhood. Let’s say that the whole subdivision you live in is known as “Lakeview Ridge.”
Within Lakeview, you have Lakeview Country
offering homes between $1.5 — 2 million. Lakeview Shores has homes between $1 — 1.5 million. Lakeview Village homes are priced between $750,000 — $1 million, and Lakeview Manor has properties starting in the $500,000 range. Now this whole community is planned around a beautiful lake and park with the most expensive homes backing to the lake and creek. Obviously the lot size and finish out in the $2,000,000 dollar home is more elaborate than the finish out and lot size in the $550,000 home. It is interesting though, how many times a Real Estate Agent 8|Page
who is not familiar with the neighborhood of Lakeview Ridge might try to convince a Seller that his 5,000 square foot home in Lakeview Shores is worth the same as the 5,000 square foot home in Lakeview Village. After all, the comps are the comps, right? Your wife’s niece (who is giving you a great “deal” on the Listing Agent fee. . .) will not know how to negotiate with a potential Buyer’s Agent on the nuances of your neighborhood and why your street justifies a higher value and price per square foot than the home that is “just around the corner.”
A Real Estate Agent that prepares a
Comparative Market Analysis using the MLS on a subdivision like Lakeview Ridge as a whole is not necessarily presenting an accurate analysis of your home’s value. An Agent with true expertise will know what your home is worth, understand why, and have the ability to negotiate powerfully on your behalf. One last thought on MLS strategy. . . Do we state that you are offering five bedrooms, or four bedrooms with a study? Both are accurate. We will need to determine who your most likely Buyer is before we make that decision (family, empty nester, etc.). Every detail of the MLS must be deliberately considered and reviewed. What if your wife’s sharonketko.com|9
niece made an input error and the MLS states you have three bathrooms—not three and one-half, or four?
Your
prospective Buyer may not even consider a home that does not offer at least one bathroom per bedroom. Is the fact that you have granite countertops noted? What about an “Upgrades and Features” flyer attached to the MLS listing for all to see? Highlighting these details will appeal to Buyers who want evidence that the property has been well maintained over the years. Every aspect of your listing will be reviewed critically by prospective Buyers and their Agents. The MLS with its vital “facts” can sometimes be your biggest enemy—without an experienced Agent.
Selling
your home will depend on how many potential Buyers your Agent can direct to your location. The MLS should be only one of many marketing strategies. Your Real Estate Agent must know your home, know your neighborhood, and have the resources to attract Buyers beyond what the MLS and the 3 P’s have to offer.
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