BUILDERS' PRICES OFTEN DON'T MATCH MLS LISTINGS
Home prices on builders' web sites often differ from that found on multiple listing services.
As many as one in three new homes advertised on builders' websites are incorrectly priced on the local MLS, according to a new study.
The HomesUSA.com “New Home Prices and Data Accuracy” study, which examined home prices listed on top builder websites and the local MLS in four Texas markets including Dallas, Houston, San Antonio and Austin found sales price discrepancies in some cases that totaled more than $1 million dollars.
It's a widespread problem that many builders aren't aware of, says real estate agent Ben Caballero, who led the study. “Even the builders that are aware of the problem are unable to maintain price consistency across their multiple marketing channels," he says.
The MLS is a builder’s best way to reach real estate agents but many builders’ listings are poorly managed, Caballero adds. He found sales prices discrepancies for a single home could vary several hundred thousand dollars. Here, BUILDER talks with Caballero about the problem and the system he has developed to fix it.
What were the inconsistencies you noticed in your analysis?
Everywhere I looked I found inconsistencies, discrepancies and mistakes in builder MLS listings. Here are the most common areas:
- Price discrepancies between builders’ MLS listings, their websites and real estate websites are very common. Some comparison reports I’ve done reveal discrepancies averaging as high as $19,000 per listing and individually listings as high as $90,000.
- Builder names – I recently noticed the MLS listings for a medium size builder who listed homes with seven different agents and each of the seven agents had a different variation or misspelling of the company name. In another case a large public builder that lists homes with a broker who assigns multiple agents to list its homes had twenty-two variations and misspellings of its name.
- Community names have the same issues as builder names with variations and misspellings being very common.
- Construction stage – it is very common for new homes to be listed before completion and for the construction status to remain as incomplete long after construction has been completed.
- Photos – it is common for builders’ listings to have no photos, poor quality photos or ones taken by sales counselor using a smart phone that do not reflect a home’s quality.
- Availability – when a home sells, the sale is not always reported and remains in MLS as available for sale. This causes an agent to waste time and be embarrassed when attempting to show the home to a client. It also causes the builder embarrassment when a family that recently moved into their new home has prospective buyers knocking on their door wanting to see the home they saw for sale on Realtor.com.
What do you believe caused these errors?
Builders’ core competency is building and selling homes, thus their MLS listings are rarely a priority and few understand the nuances involved. If their homes are in MLS, a common builder mindset is to consider their MLS marketing done and trust that somehow the several hundred data fields in their listings will be taken care of accurately and timely.
As the grid above demonstrates many builders do not grasp the complexity of MLS listings. Builders have two options, either manage their listings in-house or make the easy decision to outsource them to one of the many hundreds of agents eager for listings.
In-house MLS listing management is usually assigned to a marketing admin with other responsibilities and little MLS experience. Admins will usually schedule listing management activity once a week or take care of listings as they have time. A few volume builders have a dedicated staff for this purpose but do not have systems to ensure listing accuracy and timeliness, or reporting transparency and accountability.
It’s easy for a builder to assume an agent will properly manage their listings, but unless there is a process to transmit listing data to the agent in a timely manner listings will not be accurate. Also, agents are often busy listing, showing, marketing and selling homes and not always available to manage tens or hundreds of homes for a volume builder in a timely manner.
The task is simply too onerous and complex: Data accuracy and timely management reports do not happen without a robust system with reliable quality control and metrics. When a builder lists a handful of new homes in MLS and their website, there are dozens of data fields to manage and maintain. When they have 100 to 200 homes listed, there are thousands of data fields to manage and maintain. Each listing needs to be touched many times before the home is sold. It is simply beyond the ability of most agents and volume builders to adequately manage all that data without technology, automation and a trained staff.
How do errors like those affect home builders?
- Price discrepancies can be expensive and legally dangerous. I’m constantly surprised at the casual way some builders deal with price discrepancies. Such discrepancies affect their relationships with consumers, and agents.
- Misspelled builder and community names make agents’ MLS searches yield results that omit a builder’s listings and reduce showing and sale opportunities.
- Construction stage – If MLS shows a home as under construction after it is completed, it is a misrepresentation that may well cause builder to lose showings and sales.
- Availability – If a home is under contract or sold but still showing as available in MLS, agent good will is diminished.
- Photos - Photos are the most important part of a MLS listing. Listings without photos or poor photos mean less agent and buyer interest.
- MLS fines – MLS levies fines for violations of its rules. Fines can amount to several thousand dollars annually.
- Credibility – Builders spend enormous resources to build and maintain their credibility. They have a huge opportunity to increase ROI by improving the quality of their MLS listings.
What can builders do to make sure their listings are correct?
MLS listings require regular updating as a home progresses through construction. Prices change often. Most homes are listed before completion so construction status must also be changed promptly. When homes are completed photos must be ordered, reviewed and entered in MLS. When a contract is written, its availability must be changed in MLS. If it closes, sales information must be entered in MLS, but if it doesn’t close the status must be changed back to available in MLS. Finally, builder management needs regular status reports to monitor their inventory’s performance and to quickly determine the accuracy of the most important MLS information.
Considering the above, volume builders have a real challenge, whether they have 20 or 200 MLS listings. Each listing must be touched 15 to 20 times before the home sells or listings will not be accurate, timely and complete.
How do you propose making sure prices are accurate?
To efficiently manage a large volume of MLS listings, builders need a system designed specifically for that purpose. The more technologically advanced a system is the more efficient it will be. The obstacle volume builders encounter in building and maintaining such a system is they have limited MLS familiarity and inaccurate assumptions of MLS’s complexity. The degree of difficulty reaches near impossible levels if they want it to serve multiple markets. When a project is that difficult, expensive and outside builders’ core competency of building and selling homes, it is wise to seek an alternative.
We created the HomesUSA.com platform to specifically solve this problem in an affordable way. HomesUSA.com is a web based platform that delivers accurate, timely and complete new home data to real estate agents via MLS. It efficiently manages the MLS listing process throughout the life of the listing by maximizing technology that delivers quality and greatly reduces builder overhead. Our 60 client builders have access to a real-time dashboard and receive timely management reports that ensure accountability, transparency and integrity of their data. The result is builders sell homes faster and recapture our fee several times over.