ACTIVE WITH CONTINGENCIES – HOW THIS CATEGORY AFFECTS THE REAL ESTATE MARKET
Many years ago Realtors were having a problem with showing homes that were already closed. Agents held off on “Pending” a home in the MLS, Multiple Listing Service, until after inspection, appraisals and sometimes until the home closed escrow. The board tried levying fines on Realtors without success.
AWC or Active with Contingencies was Born
We were presented with this grand plan and new category for homes after the seller had accepted an offer. This new Category was AWC. There were several sub-categories such as Written Instructions from Seller, Contingent on the buyer selling a home, and others.
The idea was that a home in AWC can still be shown to a prospective buyer. The buyer can put a back up offer in on the home. The buyer had a very good chance of moving into first position.
In reality, Realtors don’t show Sold Homes. Meaning we don’t show homes that have accepted an offer. The last thing we want to do is show a human being something they can’t have. How many times have you experienced this?
Buyer says, “This home is OK, but we really want the house on 123 Elm St.” Realtors response: But it is the same floor plan on a better lot with more upgrades for the same price???
I know I have experienced that situation many times. Buyers want what they can’t have. The Truth is Realtors Rarely show a home in AWC and probably show them at the same rate as a home in Pending.
What Does AWC Mean to the Seller?
Since Realtors won’t show the home anymore than they would if it was in Pending, what does it do for the seller? The best way to describe this is compare them side by side:
Action AWC Pending
Home goes under contract Showing Stop Showing Stop
Under contract 10 DOM Days keep going Days stop at 10
What happens on Realtor.com, Trulia, Still Shows Available No longer listed
Zillow and all the others
Buyer sees on Realtor.com etc.. Thinks Available Buyer realizes missed opportunity on this home
Buyer Calls Buyer Agent re Internet Agent says home
listing found on sites is Sold AWC
Contract Cancels after 20 days Still Shows Active Comes Back on Websites after being gone
Back on Market Shows for 2 days Shows for 2 days
Days on Market? Now 31 days Now 11 days
Buyer Action May not know diff- Knows Back on Market, goes after home
erence, thinks sold
What Does This Really Mean to the Seller?
If their home is put in AWC in lieu of Pending and the buyer cancels, the seller may not be exposed to ALL buyers and the home shows many more days on the market compared to Pending. The longer on the market, the more the buyer expects to negotiate a lower price. THIS MEANS THE SELLER HAS A GREATER CHANCE OF SELLING AT A LOWER PRICE, PERIOD!
Why Do Listing Agents Use AWC? – How Does This Affect the Listing Agent?
If the home falls out of escrow, the home may sell for Less and take Longer to sell. Their time on market will always be longer than that of equal agents using Pending, due to the days on market continuing to accumulate while in AWC. This is a big negative for the Listing Agent.
The home will show on most websites as Available. Meaning Realtor.com, Zillow, Trulia and the others will have the home listed as Available. The Listing Agent may get leads from these websites.
Internet leads are very warm. Meaning that don’t convert quickly, average is 18 months. Are these leads worth leaving a home in AWC, adding to days on market and increasing the perceived Available Inventory by local and national economists. We will review this next.
How Does AWC Affect The Real Estate Market?
Let’s look at today’s numbers. It is August 15, 2011
We See Active = 15,724 Single Family Residences SFR
AWC – I = 5,394 SFR
AWC – O = 38 SFR
AWC – C = 1,404 SFR
PENDING = 10,529 SFR
SOLD = 54,747 SFR YTD
Let me first say, I would wage money on the fact these home sellers don’t know what AWC is and 5,394 have not sent their agent written instructions to keep it in AWC.
As a local Realtor in Metro Phoenix and Scottsdale, I see 17,365 SFR that have accepted offers and I will not show them. I see 15,724 SFR that are Active and available to show. I see 54,747 closed homes YTD.
Home closings are averaging 7,300 per month. With 15,724 Active homes there is 2.15 month supply of homes on the market. This is incredibly low. There is 2.4 month supply Pending. There are more homes Pending than Active and available.
ASU, national economists, the Arizona Republic, and just about every reporting agency uses the numbers supplied by Arizona MLS as Active. They are told AWC is Available. They are told 22,560 SFR are Active and Available, or 3.1 months supply of homes. This over states the reality by 43%. I can go on and on. The reality is the Metro Phoenix real estate market is on fire, but the reports are not supporting that because they are inaccurately reporting the numbers.
This single Fact hurts our home sellers more than anything else!
Why would a Listing Agent use AWC?
1. They value Internet leads and their personal gain over their Sellers!
2. They are ignorant to the facts.
PLEASE ELIMINATE AWC TODAY!
Thank you for taking to the time to read this report.
Jeff Cameron
MRW HOMES
480-502-7699
Jeff@TheCameronTeam.com
480-652-2004