Buyer Beware: Unsold Homes Are Often 'Re-listed'

Feb. 20, 2008— -- If you're looking to sell your home fast, Minnesota realtor Joe Niece believes he's your guy.

"I'm probably the most aggressive person in the entire state," he said. "Maybe even the United States."

Niece says he will sell your home 30 percent faster than average market time.

"I do probably ten times more than a good many of my competitors when it comes to marketing," he said.

Niece sold one home in Eden Prairie, Minnesota, after just 27 days on the market, and another house after only 15 days.

"I can tell every single seller that I have, that I did everything to sell their house that I would have done for my mom's house or my house," Niece said.

How does he do it? The problem is, the figures he cites are not technically accurate. The first house in Eden Prairie actually lingered on the slumping market for 99 days. And the one that sold in 15 days actually sat for 126 days.

It's a tactic called "re-listing," which is legal and more common than you think.

"Re-listing is just refreshing the home on the market," Niece explained, "making the home look like it just came on the market."

Selling 'Stale Fish'

"When you re-list a home, you know, it's still been on the market for X amount of time, but a buyer that comes in with another agent very likely won't know," Niece said.

Here's how it works: Niece cancels house listings when they reach 70 days on the market, and then re-lists them as new, with 0 days on the market.

"So, when the buyer says, 'Well, how long's this one been on the market?' And he looks at a report that normally an agent or a buyer would have when they're showing houses, it only shows the current time on the market," Niece said. "So a buyer's going to be way more positive as they look through a home that says 25 days versus 125 days."

Niece believes that re-listing is an important marketing tool in tough periods like this, because first impressions are crucial.

"The very first thing a buyer says when a house has been on the market over 100 days is, 'Wow, they must be desperate,'" he explained, adding that people also wonder what's wrong with a house when it hasn't been sold.

And for desperate owners of "stale fish" — that's what some realtors call properties that linger on the market — Niece's tactics are welcome.

"He did open houses and helped us with staging ideas," said Sandra Wick. Niece re-listed Wick's Bloomington home after it sat on the market for 90 days. It sold 54 days later.

"As a seller, you know I have to think that it probably helped us," said Wick. "It certainly didn't hurt."

'It's Got to Stop'

But real estate blogger James Bednar says re-listing is simply unethical. "As a buyer, it does make me angry," he said. "I need to know how long a home's been on the market or what the original price is."

"Hiding that market information from consumers is wrong, and it's got to stop," he added.

Bednar started blogging in 2005 after growing aggravated with realtors during his own house-hunting search.

"The issue here is that when a re-listed home is sold, it skews the market transaction data," he said. "When an agent typically says they can sell a home in 30 or 60 days, is that really true? If they've re-listed a home, that might not necessarily be true."

In an effort to gain access to market data, he actually got a real estate license and a membership with his local listing service. With a few key strokes he can find the true history of any listing in his northern New Jersey neighborhood.

"The most common outcome is probably that a buyer overpays for a home," he said. "I think it's only a matter of time before a buyer who buys a home under these false pretenses realizes it and perhaps sues the real estate agent for misrepresenting a house."

In Niece's area of Minnesota, re-listing is surprisingly easy.

"As long as you have a new listing contract with the seller, then you can put [the house] back on the market two minutes later," he said. "I would say we re-list about 60 percent of our homes at least once."

Niece says sometimes when he re-lists, he lowers the price of the house or makes improvements, making what realtors call a "material change" in the property … but not always.

Niece doesn't think re-listing is deceiving buyers.

"It's all about giving your sellers a fair chance," he said. "It's not like they had water in the basement and we're hiding it. That would be deceptive to buyers. These are good houses that the average market time might be 139 days."

Niece said most buyers don't understand that more than 100 days on the market is actually average market time. "They perceive that 20 days is an average market time because for the last seven years that's what they've heard," he said. "It would only be cooking the numbers if buyers' agents couldn't easily get the numbers."

In Minneapolis, a buyer's agent can access the cumulative or total days on the market, known in some areas as CDOM — if they take the time to look it up.

"The only way you can trick the buyer is if the buyer has a bad agent," said Niece. "That's the only way."

Buyer Beware

Across the country in Sacramento, California, the problem got so bad that Michael Lyon, CEO of Lyon Real Estate, blew the whistle after he noticed that one third of all "new" listings were re-listings.

"This is just silliness," he said. "I'm sorry, but you can't pull the wool over the buyer's eyes."

Lyon forced his regional listing service to set a new standard. "We let people see all the previous listings, period, there are no secrets," he said. "We want the buyer to know everything about all the times it was listed, so we can allow them to truly investigate the home."

The Sacramento listing service also requires a material change in the house if it is to be re-listed. Other regional listing services have gone one step further, forcing sellers to take their home off the market for 30 days before posting it again. But because listing services are local agencies, each makes its own rules.

The National Association of Realtors says it hasn't seen a need for regulation on re-listing because it is not aware of a problem. Lyon says buyers should ask their agents to get the entire listing history.

"You want to know all the times the house has been listed in the last two years," he said, adding that days on the market are "very important" to buyers.

"It allows them to ask other questions," he said. "If it has been on a long time, why? Why is this happening? And those answers will allow them to make a fair offer. "

Niece remains undaunted, and continues to re-list, saying he has the best interest of his sellers in mind.

"It's let the buyer beware. If you go off and buy a car and don't have someone check it out, you deserve to get a bad car," he said.

Buyer beware indeed.