Deceptive Listings in the Phoenix Area

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A potential buyer from Canada emailed this evening, requesting more information on a home listed for sale in Queen Creek.

So I dutifully logged into the MLS to begin my investigation.

Here are the particulars:

Location: Queen Creek
Bedrooms: 4
Baths: 3
Square footage: 2,336
Year Built : 2005
Private Pool
List price: $99,000

$99,000 for a 2300 square foot 4/3 with a pool?!?

Sounds too good to be true.

And it is.

From the listing remarks:

Property being sold on a Round-Robin Auction to highest bidder! Property open for showing. Auction dates and times to be announced; may be changed at auctioneers discretion. Qualified bidders must complete bid form, sign disclosures and provide a $500 refundable deposit.

 

According to the listings agents web site, here is how their “round robin” auction works:

For at least two consecutive weekends the listing agent will hold the property open for the public to visit and inspect the premises (See the published open-house schedule). Interested parties will be asked to sign up to participate in the auction and to place an initial sealed bid. The actual auction is held by phone in the evening on the second Sunday. Starting at the published hour, each bidder will receive a call informing him or her of the current high bid and offering them the opportunity to increase their bid in order to proceed to the next round. Rounds will continue until only one winning bidder remains. Bidders will need to be available by phone Sunday evening to receive multiple phone calls as the auction progresses.

Curiously, the agents site says the auction for this home will conclude on February 24 at 8:00pm. Note that today is March 13. Either the auction didn’t work, or the agent has failed to put the property into pending status over the last 18 days. You decide.

In my humble opinion, this is an incredibly deceptive listing.

The $99,000 list price is ludicrous. Let’s take a look at nearby listings and recent sales.

Searching for listings in this zip code, for homes within 200 square feet and 3 years of age yields these results:

QC Similar Actives

Note our subject property is the lowest priced listing, almost $90,000 lower than the average similar listing.

What’s the benefit to having the lowest priced listing in a search? Why that puts it at the top of the list. Think that position doesn’t matter? Ask anyone that uses Craig’s List, or pays for “enhanced” listings on realtor.com, Trulia, or any other listing site if top position matters.

This listing, with it’s bogus price trumps all the other listings in this area for positioning. That’s deceptive in my book.

“But Jay, these are listing prices. Maybe they are all overpriced”, you may be saying. There is certainly no shortage of unrealistically priced homes on the market.

So let’s pull up recent sales in the area:

QC Similar Solds

Hmmm. The lowest sale price in the last six months was $140K. Our deceptive listing is priced 30% less than the lowest priced sale, and a whopping 52% below the average sale in the area.

Do you really think the owner is going to sell for 30 – 50% below recent sales? The market isn’t the greatest, but it’s not that bad folks.

This home won’t sell for $99,000, and putting it the MLS for that price is nothing more than a scam designed to attract interest.

I’ve got nothing against auctions. They serve a purpose, if they are done correctly.

I’ve got nothing wrong with maximizing the exposure of a client’s listing — as long as it’s done truthfully, ethically and honestly.

Listing a home at a price less than half of what it’s worth is none of the above.

Just my opinion. Apparently others disagree.

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[tags]Deceptive real estate listings, Queen Creek real estate[/tags]

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About the Author
Jay Thompson

I'm a real estate broker in Phoenix, Arizona and the publisher of the Phoenix Real Estate Guy blog. I tend to drive too fast and scream at the University of Texas and Denver Broncos football teams. My two kids are smarter than most adults I know and my wife is simply amazing.

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Comments

  1. Isn't all marketing deceptive Jay? I bet any agent who read this listing never bothered to show it because they recognized it for what it is…bs.

  2. Will says:

    99k? Bah. There's a pair of realtors here who do it listed at $1. Yes, one single solitary dollar. Funny thing is that I don't think anyone sees them. When a client looks for property they do so with a range, don't they? I mean there's got to be a price point which simply won't supply what the buyer wants.

    Maybe the solution lies in auctions being listed as auctions and not at a price.

    All the same, wish them luck.

  3. It is indeed a marketing ploy. The reaction she probably got with a $99,000 price tag was most likely less than desireable. She priced it too low for that strategy to work properly. The proof of that is in the comps you provided. The reasoning for the low price is exactly as you stated, to show up first in the listings. The bidding would most likely be monitored by a silent party representing the owner or institution that holds the lien. This ensures that the home does not sell any lower than what their rock bottom figure is. If the bidding doesn't reach that rock bottom figure the observer will bid it up to entice more bidding or to ensure that ownership does not change. Is is all smoke screen like many advertising gimicks. As far as the status of the property in the MLS, well that is an issue that we deal with here also. I just strike that up to lazy agents and lazy brokers.

    **Disclaimer – I do not endorse or partake in this type of marketing or activity. Our area has many auction companies and I know this information from nothing other than sheer busniess relationships.

  4. I just had a bad experience with a bank-owned property. I have only been in real estate for 8.5 years, but I've never experienced this sort of "unethical" (in my opinion) behavior:

    http://www.foreclosureexpert.info/2008/03/unethic

  5. @IA – I hope that not all marketing is deceptive. It certainly doesn't need to be.

    @Will – yeah, we had the $1 listings too. Then the MLS threw down a rule that listing prices had to be "reasonable". Problem is, this listing at 99K is no more reasonable than if it was at a buck.

    Good point on the price range thing, I thought about working that into the post but decided to save it for a stand-alone post. Yes, LOTS of people search by price ranges, and this home will never show up is such a search. But lots of folks also search by a location and then narrow the search by price. In that case, this sort of listing does show up, and attracts attention — especially from people outside the market that have no idea how unrealistic it is.

    @Gatlinburg – per the listers website, "most" of their auctions have a minimum reserve price — which they won't disclose. So this is classic bait and switch — make someone think they have a chance at this home at $99K, only to have them find out later that you're probably looking at a minimum of $150K, if not more.

    @Ron – that is utterly ridiculous. And unethical in my opinion too.

  6. The same type of deceptive low ball pricing advertising appears to be happening in Orange County with great frequency.

    On the HomeGain blog, Peggy Aldinger points out that many of the low ball listing prices are coming from REO properties and while not causing decreasing home prices in Orange county, its certainly not helping.
    http://blog.homegain.com/foreclosures-short-sales

  7. Dante says:

    If you want to see exactly what they are trying to do, read "How to Sell Your Home in 5 Days" by Bill Effros

    I've done that before, it is working, but it supposed to be "For Sale By Owner". It looks like they are trying to enlarge their exposure by going on MLS.

    Is that good or bad for Agents and MLS? I don't know, but the way the appraisals are done lately by the banks it looks that this is going to affect the neigborhood.

  8. John Wake says:

    Add to the round robin auctions – fractional ownership and crazy-low-bank-will never-approve short sale prices.

    Answering internet inquiries on such crazy-low-bogus-priced properties are a huge waste of my time. These people are not serious buyers.

    I've never had one say, "Oh, if I can't get a large resort style home in Troon North for $350,000, I'll buy a condo further south." It doesn't happen.

    There are some clues that a buyer is not serious and emailing or calling on a crazy low priced home is definitely one.

    I do send such inquiries a note saying the price is bogus but I know it's a waste of my time and I should be focusing my attention on serious clients.

    I'm also ticked off at ARMLS for allowing fractional ownership to be displayed along side full ownership. Fractionals should have a separate category like time shares.

    Auction priced homes should not be displayed along side non-deceptive listings. ARMLS needs better disclosure about auction prices.

    Ron's link above gives a good example how deceptive listings waste a tremendous amount of time for agents and clients.

    They can end up with some clients becoming discouraged and deciding to put off their purchase for now. They lose excitement and focus.

  9. Ken Smith says:

    I HATE it when a client calls about a listing like this. They get all excited and think that they really can buy a home for 1/5 (or less) then its real value. The agents that do this crap just make life harder for themselves and every other agent out there trying to educate their clients on current values of homes.

  10. We're seeing this all over our MLS down here in South florida. I don't see how it's allowed. Also with the auctioneers who are travelling across the country for lenders they are doing this as well.

  11. As we see significant reduction in house sales, more and more “creative” ideas appear on the market. All these auctions and close bids, $1 listings are nothing else, but an attempt to attract interest of the buyers. If any honest agent getting an enquiry from a customer, who is looking to snap up a bargain, he should tell them what he thinks. Most of these listing have a reserve price and will never go below that. Customers should know that it is a trick and not to raise their hopes as they will never get it at 50% below the market price.

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