Leigh Brown warns that major brokerages are removing sold listings from the MLS following a 2023 lawsuit, forcing appraisers to rely on inaccurate tax records instead. Weaker appraisals make banks hesitant to fund loans, potentially shrinking mortgage availability for first-time buyers and threatening the 30-year fixed-rate mortgage system.
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How hard and how much time is it going to be for that appraiser to dig and dig and dig and find recent sales that were not in the MLS? And then they have to rely on the data in the tax records. And spoiler alert, tax records are not the most accurate place to get house information in the world. I'm Leigh Brown, and this is Real Talk with Leigh Brown coming at you today from my home studio. And it's not AI, it's real. That's my real book. You could buy it. And there's my first book. Oh, 10 years ago. Craziness. I was feeling compelled to share some thoughts with y'all right now about what's happening in organized real estate, because as somebody who has done a pretty good job over my life of seeing the unintended consequences in advance and seeing into situations, I'm seeing a side of our current real estate world that's got me concerned. Now, if you are watching this and you're not a real estate junkie, Stick with me because y'all need to know that what's happening in organized real estate right now very likely is going to have downstream effects that harm the consumer of American real estate and is going to change the American economy if we are not very thoughtful about the other side of the situation that we're in. Now, if you're in real estate, you might know everything that's going on, and you also might be completely numb to it because the noise has been so loud. Since October of '23, when Ketchmark made his 9 figures of dollars off the backs of hardworking realtors with a case that was at best flawed and at worst a direct attack on American entrepreneurs. But we won't get distracted today. I want to share with y'all, though, what's happening. So here's a quick snapshot, the TL;DR of what's been going on prior to October of 2023. We had our MLS system in US real estate, the MLS, a marketplace that had rules. And the rules said that, hey Leigh Thomas Brown, if a seller trusts you to sell their house and they've hired you, you have to put that house into the system so that every realtor can see it. That means every realtor who has a buyer, regardless of their tenure in the business or how many houses they sell or what they look like or who they're sleeping with or where they come from, doesn't matter. Everybody can see those houses. And of course there were rules that said it has to go in right away so that it would be fair and transparent. But then in October of '23, we had these lawsuits to come down that said the realtors weren't doing it the way that the elites of the world want it done. So it upended our system. And when our system upended, we have since then had a lot of changes to the rules and regulations. Some are helpful, some not so much. But the biggest thing we've seen is that some of the large companies out there have made a very targeted decision to say, we're going to hold our listings back. We're not going to put them in the big marketplace. We're going to hold it here at home. We're going to, we're going to keep everybody right here. And then if they ever want to get out of our little tiny bubble, we might let them fly free into the big marketplace. But, but we're going to see if we can service them here at home first. To me, it's a little bit like playing ball. You have a brand new baseball. And you don't want to share it because if you hit a home run out of the park, somebody's going to pick it up and you've lost your ball. So you're just going to play at home in your yard, but you only have a couple of kids to play with because you're in a neighborhood and the kids have grown up. So there's just a few of you, or you're in a family that's not got a ton of kids, which is— we are below the replacement rate right now. So you're probably not going to find a lot of kids at home. And so you tried to make a game on your street, couldn't make it work. So you went out to put together a pickup game because that was your your last resort instead of your first resort, because maybe if you'd gone to the big ball field first, you would've found your best friend, or you would've found a coach or a mentor, and it would open up all these opportunities to you. But you wanted to stay home first. All right. Real estate's working like that right now. We have some companies that when a seller says, hey, sell my house, the company says, we're gonna keep it in our house first and see if our people will buy it. And then we will let other people know about it. Okay, so that's the selling of the house piece, but there's a bigger point I need to make today. And yes, it took me a minute to get here, so thank you for your patience. When we're looking at the MLS, the way that agents use the Multiple Listing Service, if I am working for a buyer, I'm looking to see what's out there to make sure that they've had a chance to consider every option available. And of course, my buyers are looking around on apps to see what they can find. That's typical buyer behavior. They like to do the drive-bys first. When I'm listing a house, when somebody says, Leigh Thomas Brown, please come sell my house, I use the multiple listing service to see what else has sold. Those are my comps. What are comparable sales going for? What is the market telling us based on the most recent activity? I look at pending sales, under contracts. Where have buyers written offers most recently? Because that tells us where the market is going. And then I look at the available inventory, those active houses that are seeking a buyer. I can look at how many are out there, what they're asking, and again, see where the market is going. So I'm using that data set to help my seller establish a fair price in the market, but also to know what might be happening in the market next, because our markets change all the time. There's bigger economic things that happen. We have geopolitical events, we have local changes to local elections and zoning, and we're in an extreme drought right now. So we have water question marks. There's so many things to consider. One thing that I need everybody to know is that it is on the selling side that I am the most concerned about the loss of the MLS. Now, I'll posit to you that in an earlier episode, I did talk about my concern for buyers to not have access to the full market of inventory. However, there are buyers that can go out and do some digging and probably find houses. AI is going to replace all of this anyway, I'm pretty sure. So that part does have some problems, but the problem on the listing side is existential. I want you to think about who goes into the MLS to pull that comparable sale data, to do what I'm doing as an agent to help the seller ballpark what their value might be, to help them see where the market is going, help them determine where their timeframe falls. I'm a practicing realtor, practicing broker. I look at it for that. Appraisers use our data too. So I want you to realize that every time you sell a house, The appraisers are going in to see what sold so that they too will know what are the market trends. How can I give a true opinion of value? Because as a realtor, I don't give an opinion of value, but an appraiser can. I can help 'em look at some data and some ballparks, but the appraiser carries the license that says, here's what the asset is worth. What you should know about appraisers. Is that their opinion of value determines whether or not the banking institution is going to provide a loan for that property. And so the appraisers need the best and most complete data set possible so that the banks can feel comfortable collateralizing the loan with the house. Now I want you to think about something here. If indeed a house sells and it's not in the Multiple Listing Service, where's the appraiser going to find the data? Oh, well, Leigh Brown, he can search in the county tax records. Oh, he can, he can. How hard and how much time is it going to be for that appraiser to dig and dig and dig and find recent sales that were not in the MLS? And then they have to rely on the data in the tax records. And spoiler alert, Tax records are not the most accurate place to get house information in the world. So the appraiser is now going to be relying on incomplete, probably incorrect data if they can find it, because now they have to go swim out into the ocean to find the information that was withheld from the Multiple Listing Service. So for those of y'all that are saying, okay, so what, Leigh Brown, the appraiser can find enough comps, he's fine. Okay, I want you to know something about the United States. Did you know that we are a unicorn when it comes to mortgages and financing for real estate in the world? In the world. We have a 30-year fixed mortgage here that doesn't exist anywhere else, at least not with the low down payments that we have. We have a system that was designed with the backing of the federal government, and we'll not debate that today. All right. But with the backing of Fannie and Freddie, We have a system that says to a bank, go ahead and take a chance on the person who wants 3 bedrooms and 2 baths. We'll backstop you. So we have a federal backstop on the mortgages. The mortgages are applied for by the consumer, and then the data for the asset, for the collateral, is verified by the appraiser. The reason our banks in the US are so comfortable giving out mortgages is because our appraisers have access to good data, and the good data is the Multiple Listing Service. Y'all think about that. Did you realize that without good appraisal data, banks are less likely to lend loans? They're just less likely. They have a responsibility to their shareholders. They have a responsibility to safeguard their assets. And if the appraiser can't affirm the value of the underlying asset, why would they make a loan in the first place? And don't tell me it's because they have to, because we all know the banks are too big to fail. So they look out for themselves. But the way that they look out for themselves is through professional appraisers who are using data available through the Multiple Listing Service. So if our appraisers lose access to data, how are the banks going to determine value? And are they still going to make loans or are we going to turn into America's evil top hat Canada? I love my Canucks. Y'all know that. You watch the show. I love you. But y'all know how restricted your mortgage system is up there. You can't go beyond 10 years in Canada. You don't have a 30-year fixed. Don't y'all wish you did? That would help a lot with house prices in Toronto. Although actually it might drive prices up because you'd have a more available financing situation for buyers. I really think we should consider this, y'all. If you are watching this program and you're part of the company that says hold your data back, All right, at a minimum, your companies need to put the sold data back into the Multiple Listing Service so that the comp sets are available. But if you are withholding the data from day one and you're holding everything back, our future comps are now secretive, and that's not good for anybody. And if you're a consumer, I'm just gonna speak very bluntly to those of y'all that watch my show for the reasons that you watch my show. For me personally, I would be hesitant to hire a realtor that wants to hold my information and my property back from the market. Now, if you say, oh, but I'm a celebrity, you're not watching Leigh Thomas Brown Show, let's be honest. Or if you're a trustee for a big fancy billionaire, okay, there's maybe a half a dozen people who need some privacy around their real estate, but most people already know your privacy got sold out from under you with the Patriot Act a long time ago. Amen. You already know your privacy's gone.. And so what you're doing instead is holding back the data from somebody else having a complete dataset. The last thing I want to see is our appraisers unable to provide good information. So the banks pull back and now credit is less available. There's fewer mortgages because we already have a generation of young people who feel they will never buy a home. And if their financing options are diminished, that's going to drive up the cost of financing. And y'all know The hardest time to come up with a down payment is when you are a young person getting started. You're not in your earning years yet. You're in your getting started years. If we want to open up opportunity for first-time buyers, we should make sure that our appraisers have good data and make sure that the banks feel comfortable loaning on the best private property system in the world, which has always been the American system. And we have to fight like heck to protect it, y'all. And I just don't think we're fighting the right battle right now. I do know that if the big companies are successful in holding back a big percentage of the marketplace from the MLS, that they hold the data and restrict the buyers, it's our sellers that get hurt because those agents inside that company, you're gonna want to go comp out the next listing in that neighborhood. Where are you gonna get the information? You're then going to need to go to the Multiple Listing Service if your firm didn't have the SOLs, and now you're going to start digging in multiple places. Think about it. You're making life difficult for you to provide good information, which is the job of a great realtor, and you're making it hard for the appraiser to find the information, which makes it hard for the bank to lend, which makes things really hard. And at the core of all of this, the American dream starts to wither on the vine. I want to protect the American way. The American way is life, liberty, and the pursuit of happiness. But if you pay attention to the Federalist Papers, they almost made it the pursuit of property. That's how important this stuff is to the founding of this country. And the people who want to destroy it, well, let them go destroy another country. I'm not going to stand for that here. And you got to be better at equipping yourself for the fight too. By the way, let me give y'all a couple of stats on the 30-year fixed that I pulled up from Claw just because I was curious as to what the AI would give. And what it said is that, let's see, Denmark comes the closest to the US for a long-term fixed rate. They do have 30-year mortgages, but a higher down payment and a different structure. Canada is so different. You have a max loan term of 10 years and there are some low down payments, but a 10-year note's gonna have amortization that keeps those payments high. And the bottom line is that most of the world wishes they had what we have. How about we don't screw it up, y'all? That's some food for thought.
Think about it and let me know what you think. Well, friends, if that episode made you laugh, think, or shout, "Oppa, stink!" go ahead and smash that like button, hit subscribe, and turn on that little tiny bell so you don't miss the next round of Real Talk with Leigh Thomas Brown. You can also find me on your favorite podcast app. So whether you're in the car, at the gym, or dodging your inbox, I've got you covered. And hey, if you've got a story too wild to keep to yourself, send me a message because you just might be the perfect next guest. Thanks for hanging out with me. I'll see you next time right here where real estate gets real.
