The Games Realtors Play With "Original Price" and DOM (Days On Market)

Hello Friends,

Today we are going to look at what I believe is an honest mistake made by a Real Estate company which obviously hasn't kept close tabs on one of its entries to my favorite MLS in the Florida Keys. This Real Estate company in question simply keeps tabs on properties for sale down in the Keys and adds very good slideshows and a decent, quick-searchable data base set up by price, different Florida Keys, different types of homes (condos, duplexes, etc.) and so on. As this Real Estate company does officially represent the sellers of but just a few of the properties on this searchable MLS, my guess is they sell "shoppers" on using them to mediate a sale.

This particular MLS is the one with photos of most every home and business listed and can be found at www.keywestmls.com.

This particular MLS, sponsored and edited by Key West's Seaport Real Estate, is the most popular MLS which my Key West friends use. Other MLS searchable databases put together by other Real Estate company go nowhere near the lengths which Seaport provides information.

Most especially welcome on this great website is the tab for "Just Reduced" homes which, like it's title, shows all homes and their new reduced "listing" prices over the past 7 days. (And please, please, please . . . if you are new to looking for a Key West home . . . notice nowhere on the website of www.keywestmls.com is there a tab for "Just Increased" home prices. That should tell any novice that prices are still cratering in the Keys.)

Nevertheless, Seaport Realty's webmaster makes a mistake once in a while and leaves up two MLS numbered entries for the same home. Today, I discovered one I want to share. And please keep in mind this is not to condemn Seaport Realtors for their mistake, but it is to applaud the fact that their mistake is another in a long line of proof which I have supplied over the years that Realtors are trying everything to put lipstick on the Housing Crash Pig.

Onward.

In many a past blog post I have told you why I recommend you keep your own Excel spreadsheet on falling home prices if you are seriously considering buying in the Keys within the next 6 months. Among my reasons, I told you how Realtors play this game of ripping homes off a market after an "original" price had multiple price drops and then coming back on the market a few days or weeks later with a new MLS number and new "original" price.

The reason for doing this is obvious:

1) The new "original" price is a much lower price than the old "original" price and subsequent price drops. Hence, with a newer starting price, one cannot fathom the "panic" in the seller's position, giving a potential buyer less leverage in making a deal.

2) When a new "original" price is listed, it also means the DOM (Days On Market) start afresh. Meaning a listing with only 7 days on market and an "original" price looks more enticing to sellers than one which has been on the market for 300 days and has had 5 price reductions would look to buyers. Sellers and Realtors want to "keep up appearances". Buyers are looking for desperation from sellers, i.e., deals.

3) And when a new, lower "orginal" price is lowered or reduced to a new listing price, should that price sell, the Real Estate cartel will trumpet it was only 20% off the original price and prices are firming, when in reality, the "Just Sold" price could be as much as 50-70% off the first "orginal" price. All of the above might sound confusing to a new reader, so let me show how one house in Cudjoe Key has been marketed, accidentally, with two MLS numbers - one of which shows the real drop in value on the property.

Let's start with the more benign listing, the one with the least amount of depreciation in pricing.

Here's the mansion in question:

MLS#:	550147
Original Price:	$3,795,000
Listing Price:	$3,100,000
Address:	23069 Redfish Lane
City:	Cudjoe Key
Subdivision:	Cudjoe Acres
Mile Marker:	23
Prop Type:	Single Family
Waterfront:	Yes
Days on Market:	276
Bedrooms:	5
Bathrooms:	5.5
Interior Sq Ft.	4,430
Price Per Sq. Ft.	$699.77
Lot Sq. Ft.	0
Year Built:	2007
Taxes:	$25,000.00
Tax Year:	2008
Exemptions:	Homestead

Here's the description of the property by the Realtor:

Private Gated Keys Estate With Open Water Views. Chestnut & Marble Floors, Gourmet Kitchen, Elevator, Private Boat Basin, Ramp & 2 Lifts. Lounge By By Your Pool Or Beach. 5 Bds/ 5.1 Baths + A Library & Loft. Main House Features 3bd/3.5 Baths & Thguest House Offers 2 Bd/2 Ba. True Paradise Living To The Most Discriminating Buyer Who Wants Everything...With A Sense Of Being Away From It All.

Notice the following three data points above: Original price, Listing price and DOM (Days On Market)
1. Original Price: $3,795,000
2. Listing Price: $3,100,000
3. Days On Market: 276
(By the way, to see the 9 slide photo shoot of this listing click here)

Now as I never kept track of Florida Keys mansions by entering their info on a spreadsheet, it is very possible this mansion had more than one "Reduction In Price" in the past 276 days.

Regardless, let's pretend for a moment that some well heeled buyer simply comes along today, plops down the new listing price of $3,100,000.

Well, the way the Good Deeds in the Sunday paper would report this sale is "100% of asking price". And, invariably, some of the Realtors in our town would crow that this 100% bid on the listing price is "proof that the Real Estate market is bottoming in the Keys."

In reality, the sale at $3,100,000 would represent a drop of 18-19% from the owner's "Original Price" some 276 days ago at $3,795,000. But the Good Deeds in the Sunday Key West Citizen long ago quit showing both "Original Price" and "Listing Price". So, buyers looking at the Good Deeds now are thinking, "Prices don't seem to be falling as much. That's good."


Time For Another Strong Dose Of Reality In Keys Real Estate

But what if the mansion discussed above had been on the market for a longer period of time at a much higher price? Don't you think a savvy buyer would like to know this information so he/she could drive a better bargain with maybe a panicked seller?

Well, in a case of laxity (that's my guess), the keywestmls.com webmaster did not notice the same mansion appears twice, with a different front photo shot, and a different MLS number on their www.keywestmls.com website.

Here's the first entry for the same mansion we are looking at above with new cover photo. (Also if you want to see the original 19 photo slide show, click here) :

MLS#:	107685
Original Price:	$4,499,000
Listing Price:	$3,100,000
Address:	23069 Redfish Ln
City:	Cudjoe Key
Subdivision:	Cudjoe Ocean Shores Sec 2,2b,3
Mile Marker:	23
Prop Type:	Single Family
Waterfront:	Yes
Days on Market:	813
Bedrooms:	5
Bathrooms:	5.5
Interior Sq Ft.	4,443
Price Per Sq. Ft.	$697.73
Lot Sq. Ft.	32,242
Year Built:
Taxes:	$20,589.00
Tax Year:	2009

Notice the following:

This earlier listing of the exact same property with different MLS number has been on the market for 813 days! That means this mansion has been on the market since early 2008 and is really in its third year of being marketed.

Secondly, notice the "Original Price" of $4,499,000! That is $704,000 more than what the newest listing (MLS #550147 with 276 Days On The Market) is showing as an "Original Price" of $3,795,000.

Same property, two different MLS numbers showing, two different DOMs showing, and two different, very different "Original Prices" showing. (Meaning the webmaster's slip is showing how Realtors really play the game to "juice" Potemkin pricing which many times is a facade for what has really gone on behind the scenes.)

If some rich buyer comes to the Keys today, without thinking about hurricanes and oil spills, rising sea levels, a county government in deficit, declining county services, bad schools, etc., and pays $3,100,000 (the new listing price), said buyer would actually be getting 31-32% discount from the real "Original Price". Not only is that the real discount so far, but, the Key West Citizen would be showing the sale as 100% of the Listing Price in the Sunday paper's Good Deeds. (It should be noticed that "Good Deeds" are sponsored by some Title Company here in the Keys, and it is they who obviously decided to discontinue showing "Original Price" of homes sold.)

These are the games going on all the time with the MLS as played by Realtors. They put homes on the MLS. They rip them off. They assign new MLS numbers and put properties which have been for sale for years back on the market after a few days breather to hide market inefficiencies and buyers who were in denial for a loooooong time and who are now determined to get out of their money holes.

This is why serious buyers must pay attention and do their own diligence: Realtors are not going to give you the whole story and you will not have the macro-Economic wide angle view you need to know whether you are getting a deal, whether Real Estate is really bottoming (don't worry, buyers, it is not) and whether you should rush in now to get a "deal" compared to 2006 prices (don't, rates have only one way to go . . . higher . . . and as rates go higher, even fewer people will afford "more" home meaning home prices will have to drop even further).

That said, anyone buying a home in the Florida Keys or Florida before the BP Oil Deluge is finally stopped is not paying attention to the current Double Dip Recession which may turn into a Depression forcing even more pressure downward on Keys home pricing.

Stay aware of Macro-Economic trends. Stay aware of local trends. And whatever you do, don't listen to the FIRE Economy cheerleaders who are telling you "There's never been a better time to buy a home!" They've been saying this for the last ten years. Keep in mind these are the vested interests who do not have your best interests at heart.

As always,

Caveat emptor!


Rock Trueblood

Florida's Blasting Cap For A Double Dip Recession? Oil Slick from Ongoing Deepwater Horizon Catastrophe On The Way To The Florida Keys

(Images scooped from the Big Picture Blog's: "Oil spill approaches Louisiana coast")


Headlines from around the world on the unfolding Deepwater Horizon Catastrophe:


Oil Spill To Hit Florida Keys: Will Hit Loop Current Within 24 Hours

GULFPORT, Miss. — Scientists say the Gulf oil spill could get into the what's called the Loop Current within a day, eventually carrying oil south along the Florida coast and into the Florida Keys.

Nick Shay, a physical oceanographer at the University of Miami Rosenstiel School of Marine and Atmospheric Science, said Monday once the oil enters the Loop Current, it likely will end up in the Keys and continue east into the Gulf Stream.

Shay says the oil could affect Florida's beaches, coral reefs, fisheries and ecosystem within a week.

Note to long time readers of this blog: this environmental disaster is the talk of the town (Key West). Can you imagine what will happen to our economy when fishing, jet-skiing, scuba diving, kite surfing, paddle boarding, sunbathing and swimming, etc., are all adversely affected by large sheens and globs of oil washing up on our beaches?



For North Florida fishermen, passion and livelihood at stake

PERDIDO KEY -- Paul Redman Sr. has made a living off the water since he was a teenager, first as a crabber then as a commercial fisherman.

The captain had just returned from a six-day trip where he brought back 2,100 pounds of reef fish, when the rig in the Gulf of Mexico collapsed, causing a massive oil spill that has come to haunt this part of Florida.

With a 10-day federal ban on recreational and commercial fishing, Redman is out of business for now, just as the season begins. From Pensacola Beach to Panama City, the sting of a massive oil spill almost 100 miles away made landfall, restricting fishing in federal waters from the mouth of the Mississippi River to the Florida Panhandle.

``Zero. Zero. Zero. I am sitting here stuck with a three-man crew who have families and house notes,'' said Redman, 59, who operates the Jim-n-i, a 40-foot snapper vessel. ``I have been trying to figure out a way for us to go fishing to make a living but I haven't come up with anything yet. I invested 30 years of my life in the Gulf and now it's covered in oil.''

More than 6,800 square miles of federal fishing areas in the Gulf of Mexico were closed Sunday, robbing an industry of its livelihood. The National Oceanic and Atmospheric Administration issued the ban as a public safety measure to prevent possibly tainted seafood from reaching the market.

Readers of this blog know commercial and recreational fishing in the Florida Keys has never returned to what it once was since the double whammy of the Great Recession and Hurricane Wilma. Now with the threat of an uncontrolled oil volcano still spreading a giant toxic amoeba across the Gulf of Mexico to the Loop Current, Florida fishermen south of the Panhandle are glum.

There are not enough oil booms in existence to stop this spreading into the Keys. And no matter how many days we might see fishing banned, nobody is going to want to eat fish or shellfish taken from the waters surrounding the Keys anytime soon after the oil hits our waters.

Can you imagine what this will do to fishing fleets everywhere down here? Here's how it is affecting Panhandle commercial fishermen already:

Although the ban is only for 10 days right now, if you talk to the fishermen, this is only the first step of what is likely to kill the season, roughly from May to September.

``That ban is the precursor of what is to come,'' said Paul Redman Jr., president of the Pensacola Charter Boat Association and the son of a commercial fishermen. ``This could economically collapse our area. We don't have big plants around here or other huge industries. Fishing is our Disney World. It's all we have.''

The ban sent a ripple of panic throughout the Panhandle fishing industry, grounding some fishermen to their docks and driving others to look for gold in the waters outside the restricted areas.

For three decades, Redman has fished across the Gulf of Mexico, up to 110 miles west of the Florida coast, mostly for Vermillion snapper, pink snapper and amberjack. On a good run, he and the crew crew would bring back a bounty of 3,500 pounds -- the first 1,000 pounds needed just to break even -- that would eventually make it to restaurants and seafood markets as far north as New York.

But in a business this specialized, there isn't always a Plan B.

``I spent Monday going through my Rolodex trying to find other fisheries that me and the crew could work with,'' said Redman, whose boat is docked at Perdido Bay Seafood. ``I didn't have much luck.''

Mike Carden, captain of the 80-foot Daytona, was in a race against time Monday. Docked at Panama City Marina in St. Andrew Bay, Carden's deckhands hurried to stock up while Carden used his onboard computer to check the Gulf's currents.

``My whole thing is to get out in front of the oil,'' said Carden, who watched the Deep Water Horizon rig burn from about 30 miles away. ``If I get locked in here, I'm done. All the little boats that can't go nowhere else, they're not going to be able to fish.''

Carden, a seasoned captain of 40 years, expects St. Andrew Bay to be shut down within the next two days.

``The damage has already been done,'' Carden said. ``If they cap it off now, it doesn't matter. We're refugees from the oil spill now. For this industry, this is pretty grim. It looks to shut down the whole industry, domestic anyway.''

And it's not just the commercial fishermen. Think about all the charter boats at Charter Boat Row which don't go out on beautiful days. I saw this firsthand last week when I and two co-workers went out fishing on the Gulfstream IV on Tuesday. First of all, "tourist season" is coming to an end. Secondly, hurricane season is about to begin. Lastly, the threat of oil simply kills what few people may have wanted to go out for a four hour excursion. Add these three components together and we could very well enter a Double Dip Great Recession in Florida.

The Herald article tells what is happening North of here:

As a band of storms passed through Pensacola Beach, Captain Mike Newell looked out at the emptiness of the 31-slip marine where his 46-foot boat named Miss Marisa, is docked. He would like to blame it on the rain, but knows better.

``My phone has been ringing and they all are saying the same thing. They are canceling because of this oil mess,'' said Newell, a Vietnam vet who owns a sportfishing charter business. ``I don't know how we are going to through this season.''

Had the rig not blew a leak two weeks ago, Newell would have been running his six-passenger boat out 20 or 30 miles off the coast.

Out the 15 excursions he had booked -- priced at $900 to $1,500 each -- eight have already canceled.

``I would much rather have a hurricane come through here,'' he said. ``The way this is going, we will go out of business, but slowly.''

I'll suggest this again:

End of Tourist Season + Hurricane Season + Oil Amoeba Hitting The Keys = Double-Dip Great Recession?

Stay tuned.