Reading Property Advertisements: Many Grains of Salt

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The first thing you need to understand in reading any property advertisements is that agents write them to get people to call. They are trolling for clients. Except in the case of someone who doesn't accept dual agency advertising a listing they actually have, they are written purely with the idea of dangling something out there that clients want. Since most agents like dual agency just fine because it means they get paid twice for the same transaction, understand that only a tiny percentage of the ads that are written out there are written for any purpose other that to get potential clients to call.



Keeping this fact firmly in mind, there are two sorts of places where people go to search for property: Some that are based on MLS, and others that are not.



If it's in MLS or coming from MLS, it better be good information. I can (and do) file violations on liars in MLS. So do others - every time somebody wastes our time by saying the property has something that it doesn't. Filing violations in MLS is simple, it's effective, and after a certain low number of violations, the offender's input access gets restricted. They can't put properties in MLS and they might as well be out of business. Note that they can still "puff" a property significantly; but number of bedrooms, square footage, anything with a number or a yes/no associated with it had better be right. The big violation I'm finding most of recently is advertising it in MLS as "fee simple" when it should be either "PUD" or "Condominium". If it's got homeowner's association dues, it's not fee simple.



Everywhere else, everything that is not based on MLS, take all advertisements with a respectful amount of caution - Like at least equal in weight to the building. Once you get outside the domain of MLS, there are few sanctions possible for even the most outrageous puffery - or even advertising a property you do not, in fact, have. Or anything remotely similar. Some agents won't put anything out there that isn't as close to gospel truth as they can make it, but others are not nearly so fussy, and you really want to avoid the latter sort.



Non-MLS based property advertisements may now be pending, it may be sold, or it may in fact never have existed. The agent put that ad in trolling for buyers. What they want is your signature on an exclusive buyer broker agreement, so they can lock your business up. We know you shouldn't sign exclusive buyer's agency agreements, because that's a poor way to get a good buyer's agent, but most people don't know that and most agents are laying in wait for the ignorant.



Quite often, I have clients who should know better, as I've explained this to them - often more than once - ask me about this fantastic possibility they see somewhere else. About as surprising as gravity, they turn out to be in some way non-factual. 2 bedrooms when it's really one. 1 bedroom when it's really a studio or loft. And sometimes, they actually had it, at that price, six years ago. And then I call the agent listed on the ad, look it up on MLS, and voila! the deception becomes apparent.



There's nothing wrong with responding to such ads, and there's nothing wrong with working with the agents who advertise them, so long as you limit yourself to a nonexclusive agreement, so you can get rid of them when it become apparent they're not guarding your interests. But even with a non-exclusive agency agreement, I'd be asking myself "If they lied to get get me to call, what else are they going to lie to me about?"



I just had a client send me three prospects from one of the non-MLS based search services. All three of them were non-existent, posted by a lead generating service as bait so they could sell everyone who respondended as a lead to agents. They didn't have it, they never did have it, it wasn't even for sale, and hadn't been for over 10 years. But that's how they get leads, which they then sell to several agents.



Here's another sneaky trick: Services advertising themselves as foreclosure specialists go around to all the properties that have a trustee's sale happen. They illegally put a sign in the yard, relying upon the fact that the property is vacant, directing passersby to a phone number. On the phone number, they put the puff description from whatever the last time was that it was in MLS, whatever they can see, or something they can pull from assessor records. They say they have an exclusive listing. What they really have is nothing. I've tried contacting lenders before their new lender owned property gets listed. Even if I have a buyer willing to make an offer, they usually don't want to hear about it. What the places who claim they've got "foreclosures before they're listed" are doing is trying to get suckers to call - in other words, trolling for clients. They simply know that the lenders are eventually going to put 99.999999 percent of these on the market within a few weeks, and they can fend you off until then. They aren't offering anything real. They don't have anything real. They are doing nothing beyond trolling for clients who will generate easy commission checks. They don't have to even sell you that one. If they had anything real, when I call for a client they should be falling all over me, like the agents that really do have foreclosures. Those agents who really do have lender owned listings are falling all over themselves to get back with me. The troll services take my information and say, "We'll have to call you back," and they just don't. I call again, they do the same thing. I ask who's the listing agent responsible for a property and what number to call to contact them, they don't have an answer. Then it comes up on the MLS, and the agency that's been advertising it is nowhere in sight. This is different from people who are buyer's agents who have legitimately gone out and found bargains - because they'll tell you they want to act as buyer's agents. In the first case, they are claiming to have a listing that they do not, in fact, have. In the second case, they are claiming to have found a bargain, and are telling you quite straightforwardly that they are looking to represent buyers. that's what I do. But when you're acting as the agent for the seller, you're not supposed to say anything that violates a fiduciary relationship - in other words, a listing agent is supposed to pretend this property is the greatest bargain since the Dutch bought Manhattan. It's in the job description, not to mention the contract.



So be aware before you respond to property advertisements that quite often, advertisements don't exist. To avoid leads services, look for specific names of the agent in the advertisement. To avoid problem agents who require an exclusive agency agreement before showing, simply refuse to sign exclusive agreements. Dual Agency is a very bad idea for buyers. If they have the listing, they're going to get paid when the property sells regardless of whether you signed that agreement. If they don't have the listing, they still risk nothing with a non-exclusive buyer's agency agreement.



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About this Entry

This page contains a single entry by Dan Melson published on May 8, 2007 10:00 AM.

Gravity Is Not a Major Determinant Of Housing Prices was the previous entry in this blog.

Real Loans for Real People May 8, 2007 is the next entry in this blog.

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