An already crazed spring market is about to get even crazier.
Starting tomorrow, the number of homes for sale across inventory-starved Massachusetts will drop again, big time. For buyers house hunting online, the change will be dramatic. Thousands of “active” listings will now overnight be relabeled as “under agreement.”
Already battling it out in bidding wars for few available homes and bemoaning the lack of choices out there, buyers will suddenly have a lot fewer homes to look at.
OK, we already knew home listings were off by 30 percent compared to last spring. But a change in the way the MLS PIN, the main Realtor-controlled database, tracks sales could overnight heap another 12 to 13 percent onto that number. In some areas, such as Boston’s western suburbs, it could be even higher.
That, in turn, means the inventory of homes for sale is actually down by a whopping 40 percent or more compared to last spring.
“There are a lot of frustrated buyers out there,” noted Alex Coon, Boston area market manager for Redfin. “They are moving beyond finding the perfect place to finding a place that will do.”
Active Listings Set To Plunge
All told, more than 5,100 listings of homes across the state, previously listed as active, will now be labeled under agreement.
That’s out of a total of 42,000 homes across the state now listed for sale on the MLS PIN system.
In some areas, the ratio is even higher. In Middlesex County, which encompasses the western and parts of the Boston’s northern suburbs, roughly 800 of 2,800 active listings will now be officially all but off the market, classified as under agreement, Coon noted.
On the MLS database, restricted mainly to brokers and other professionals, the listings in question were classified as pending sales, but with a flag next to it indicating one or more contingencies.
Sometimes there was a serious issue or contingency holding up the sale. But too often it was simply the seller’s request that the home stay on the market until the official closing that triggered this special flagged status, noted Melissa Lindberg, marketing director for MLS PIN.
However, when real estate websites, from the big players to the small brokerages, downloaded the MLS data, they typically were either unaware or unable to screen for those flagged listings. (Redfin, a combination of brokerage and online real estate portal, was one of the exceptions.)
To the untrained eye, they appeared to be active listings and that is how they were posted online, for eager buyers to see.
Backlash From Buyers, Brokers
Why the change?
Irate brokers have played a key role in getting action here.
Some say they were tired of fielding calls from buyers excited about homes they saw online that were in fact already subject to signed, purchase and sales agreements.
And certainly that’s part of the story.
But let’s be honest, in the dog-eat-dog business of selling real estate, there were clearly other reasons as well.
Simply put, for brokers representing buyers, there’s both a commission and a client relationship at stake when a house that is under agreement is still being displayed online as if it were still on the market.
Moreover, such tensions, if anything, are clearly on the rise as the number of homes on the market dwindles.
Buyers are back, but sellers aren’t, and that has meant month after month of declining inventory, with the number of homes for sale across the state skidding along at all-time lows.
After fielding a steady stream of complaints, MLS PIN began looking at the listing issue a few months ago, Lindberg said.
The board of the Shrewsbury-based organization recently voted to tighten up its rules. The result is that, starting Tuesday, homes truly under agreement are listed that way when MLS PIN data is used by various websites.
“There will no longer be an option to leave a listing ACT (active) for any reason,” reads a memo sent out by MLS PIN explaining the change.
Yet that’s not quite the end of the story, with another change coming down the pike, so to speak, in how homes are listed.
New ‘Contingent Status’ Planned
So the little red flags will soon be gone from the MLS PIN database.
That said, come June the listing service will roll out “contingent status” for homes that have sales agreements, but have not yet closed.
In order to be able to use the contingent status, a broker selling a property will have to offer one of a half dozen specific reasons, including appraisal, financing, inspection and attorney review.
Most importantly, MLS PIN, when it sends out this data to real estate websites, will clearly mark these listings as “contingent” rather than as simply active.
All sound reasonable.
Yet you also don’t have to be a rocket scientist to see another battle brewing here, especially as desperate buyers and their eager-to-please brokers try to hone in on some of these deals.
But that’s a story for another day.
Email: sbvanvoorhis@hotmail.com
