MLS Shenanigans Cause Concern

While it might not seem like a matter of great consequence, there are a couple of dirty little secrets among real estate agents. These tricks are forcing changes in the way the business is conducted.
Upper-end homes may sit on the market for some time in Northwest Arkansas. When a property has been available for a while without much buyer interest, there is often a temptation to take it off of the Multiple Listing Service and immediately re-list it — thus the property appears to be fresh on the market. This is what is known in the industry as “churning.”
Or maybe an agent wants to get the most exposure for his listing and includes it in both the residential and commercial categories.
These maneuvers might not seem like a big deal, but they’re actually against the bylaws of many of the largely self-regulated listing services across the country.
Besides being somewhat dishonest, pulling a house from the MLS and immediately re-listing it skews market data, because if a property is listed twice, it gives the impression that more homes are entering the market than really are, said LaVeta Key of Century 21 Key & Associates. Key is also secretary and treasurer for the Arkansas Regional MLS.
“If a home is listed twice at $100,000, then it changes the average home price, because it would look like there were two $100,000 homes instead of just one,” Key said.
No one is sure just how much this practice has happened in Northwest Arkansas, but it was often enough to cause concern at the Arkansas Realtors Association.
The ARA board of directors felt that churning hurt the validity of the “days on the market” number, and decided more than a year ago to no longer include it in their housing reports, said media relations director Ethan Nobles.
Under the bylaws of the Arkansas Regional MLS, if a property is taken off of the market and put back within fewer than 30 days by the same agent, it must be listed as being “back on the market” to differentiate it from properties that are actually being listed for the first time, said Jeff Israel, administrator for the listing service.
If an agent is caught doing this, that agent’s brokerage firm will be fined, beginning at $50 per violation. If an agent continues violating the rule, the fine increases to $100. If infractions continue, the agent’s broker could be restricted from accessing the MLS, although “it’s never gotten to that point,” Israel said.
Churning has probably been happening for as long as computerized listings have been used, Israel said. The practice has been policed and monitored in this area since the formation of the Arkansas Regional MLS in October 2006, he said.
As far as listing the same property in two different categories, this skews data for a similar reason as re-listing the same property does – it looks like more real estate entering the market than there really is.
The Arkansas Regional MLS committee is working to correct listing errors, both past and present, Key said. With the service’s most recent software, MLXchange, there is an option to report erroneous listings directly to the administrator, in this case Israel.
“Often agents are unaware they’re doing something wrong,” Key said. “But sometimes they’re trying to sneak it by.”