Debate escalates as “coming soon” listings are appearing in more MLS marketplaces, and with the recent decision by Zillow to allow agents to advertise “coming soon” homes on the network.
There are arguments on one that offering and selling a private, “quiet” listing without exposure to the whole marketplace (1) does not represent the seller’s best interest (2) undermine the industry that could collapse the MLS model (consider a world where you don’t have access to a single source of property information or an offer to cooperate on deals). Hum, pretty different.
There are arguments on the other side that this can be an effective tool for the seller to sell quickly and at lower cost.
So what is the right answer? The answer is clear that the only way you can legally and ethically handle pocket listings is to fully understand the consequences, and fully share them with the seller – and let the seller decide for their own real estate needs. Be wary of ANY action you take to direct or steer a client in a direction for your own benefit and not theirs. The REALTOR is the PROFESSIONAL entrusted to REPRESENT their best interests. Here’s what NAR has to say
NAR reports that the “increasing use of “coming soon” ads for homes for sale has some in the real estate industry alarmed about whether brokers who use it are violating state license laws or MLS rules and confusing consumers. Therefore, the National Association of REALTORS® has issued guidance for its members on the use of “coming soon” ads.”
“The first important step in advising a seller-client on whether to advertise a property as ‘coming soon’ is to identify the client’s best interests, as defined by that client,” says Katie Johnson, NAR’s General Counsel. “Failing to act in the client’s best interest and failing to disclose the pros and cons of a limited marketing plan, such as ‘coming soon’ advertising, can violate state real estate license laws and regulations, MLS policies, and the REALTOR® Code of Ethics.”
Some “coming soon” advertisements involve unlisted properties that may be listed with a broker in the near future. Other “coming soon” advertisements may relate to properties that are subject to listing agreements where property is available to potential purchasers only through the listing broker and not available — temporarily or indefinitely — for showing or purchase through other MLS participants, Johnson writes. Regardless, “coming soon” properties are often withheld from the MLS.
Restricting the marketing of a seller’s property to only a small network limits that property’s exposure and the seller’s ability to attract competitive offers, NAR notes.
“It’s important that sellers understand the implications of various ways of marketing the property so that they can knowingly determine the choice that best serves their interests,” Johnson says. “If a broker determines that ‘coming soon’ advertising is in the client’s best interest and confirms that the client understands the possible consequences, then it is imperative for the broker to know the real estate license laws and regulations of their state to ensure that such advertising is in compliance. A broker who fails to comply with state laws and regulations risks facing disciplinary action from licensing authorities, as well as the possibility of litigation from unsatisfied clients.”
Some states have recently taken a stance on “coming soon” advertisements. For example, in South Carolina, advertising a property as “coming soon” before entering into a listing agreement with the seller violates South Carolina’s license law.
Also, the Colorado Department of Regulatory Agencies, Real Estate Division, recently issued a position that states that a licensee’s existing duty to “promote the interests of the seller or landlord with the utmost good faith, loyalty, and fidelity” requires Colorado licensees to advise clients during the negotiation of the listing contract of the benefits or risks of limiting a property’s exposure through “coming soon” advertising.
Besides complying with state license laws, brokers also need to comply with their MLS rules when listing a property as “coming soon,” Johnson says. She urges brokers to research the license laws and regulations in their states for further guidance regarding “coming soon” advertising, as well as to check with their local MLS rules to make sure they are in compliance.
“REALTORS® must remember to promote and protect the interest of the clients, present a true picture in their advertising, marketing, and other representations, and make property available to other brokers for showing to prospective purchasers when it is in the best interest of the seller,” Johnson says. “Failing to do so harms the reputation of the broker and REALTORS® generally and may result in disciplinary action from the broker’s local association of REALTORS®.”
Source: “‘Coming Soon’ – Is It in the Seller’s Best Interest?” National Association of REALTORS® (June 16, 2014)