Tuesday, August 23, 2011

NEW FEATURE: What's Wrong with This Listing?

First, the easy stuff.
Here's the description in the MLS:

Eligantly remodeled custom mediteranian tri-level home re-built from the ground up. Fantastic skyline and bay views, chef's kitchen w/viking appliances, oak flooring throughout, lg. master suite with walk in closets, den/office, multi terraces, surround sound and wet bar are just some of the many ammenities. A must see!
Come on, folks. There's a spell checker built right in to the form as you enter the information. All you have to do is CLICK IT!

Size Matters
The advertised size of the property:
Approx Square Feet:  2304                        Sq Ft Source:   Per Owner
The city's tax records show the property is 850 square feet. What accounts for the difference? Digging a little further into the city's permit records, numerous building permits have been issued for the property including moving bedrooms, adding an additional level with master suite and bath. The trouble is, none of the building permits have been finalized.

Location, Location, Location:
It may have "fantastic skyline and bay views" out the front. But the property backs up to the 101 freeway. It's a short lot -- only 58 feet deep so there's not much distance between the back of the house and freeway sound wall.

Type of Listing
So far, all of this is information than anyone can figure out from public records.  What you can't get from the public records is the type of listing -- "Exclusive Agency".  Most listings in our local MLSs are "Exclusive Right to Sell".  The main difference between the two is that "Exclusive Agency" lets the seller avoid paying a commission if he/she finds a seller on their own rather than through the listing agent. This creates a potential  disincentive on the part of the listing agent to do any marketing beyond the very basics of putting up a for sale sign and entering the listing in the MLS. 

Short Sale
The property is being sold as a short sale (asking price is less than the total of all liens/loans so the lender/s will have to agree to a less than total payoff).  To complicate matters, there are two lenders so each much agree to the short payoff.  The second lender, typically, gets a much smaller percentage of their outstanding balance than the first and can often be the major obstacle to approval of the short sale.

Surprise Deal?
On the same day the listing hit the MLS as "active", its status was changed to "active-contingent" meaning that it went into contract the same day the listing came on the market.  Interesting, when you take into account there is a tenant and showings have to be scheduled 24-hours in advance according to the listing.  Obviously the listing agent had a buyer already lined up to make an offer.  It's likely that the buyer and seller are being represented by the same agent/broker -- creating a dual agency situation.

The MLS listing is still encouraging other agents to "bring backups" but you have to wonder how aggressively the listing agent will be in presenting a backup offer when there is already an accepted offer where they will get both sides of the commission.  Short sales take a lot of work on the part of the listing agent (or the specialist they hire).
.  .  .

Lessons to be learned?

For a seller --
  • work with an agent who is knowledgeable about your market and transaction type
  • don't create disincentives for the listing agent, they will only work to your disadvantage
  • review all marketing materials including the MLS listing information
For a buyer --
  • work with an agent who is knowledgeable about your market and the type of transaction
  • like any investment, balance the risks involved against your risk tolerance level

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