Sam DeBord
By Sam DeBord
There has been a lot of discussion lately about the propriety of pre-marketing listings. Promoting a “coming soon” listing on Zillow has been widely debated.
I’ll attempt to make the discussion for a REALTOR® as simple as possible. Ask yourself one single question, and you’ll know how to deal with this issue.
If you attempt to sell your client’s listing during a “coming soon” time period on an Internet portal that receives less than 20 percent of all real estate Internet traffic, but not advertise it simultaneously on the MLS and other websites (with delayed showing instructions if necessary): “What specific benefit are you telling your sellers they will receive by skipping the exposure to agents on the MLS, and buyers on agent, broker, and other portal websites?”
I’ve asked this question repeatedly to real estate professionals this week and have yet to receive a response. If we, as real estate professionals don’t have an answer as to why it is in our clients’ best interests, it will be assumed that we’re doing it to benefit ourselves.
Read more in an article by Katie Johnson, NAR’s general counsel: “Coming Soon” – Is it in the Seller’s Best Interest?
Sam DeBord is a state director for Washington REALTORS®, and managing broker with Coldwell Banker Danforth. Connect with his team, Seattle Homes Group, at SeattleHome.com and SeattleCondo.com.
Comments 32
Well I haven’t gone there yet, but this would be my answer to your question:
Increasingly new buyers want to look and get excited enough to actual go and apply for a loan and get an approval letter. In our current market this move might get a few more buyers to the table since they will have time to get an approval letter, thus put more pressure on the better funded buyers to offer over list. Placing an advance notice may also generate some questions about the listing that might need to be addressed before the formal marketing of the home.
That’s easy and I think it is as ethical as anything else in Real Estate. The Seller has agreed to a price, usually a seller net. If I can get a full price offer before we market the property we all win. I get both sides, usually I discount 1% to the seller if this happens, the seller doesn’t have to hassle with numerous showings, maybe sell as is without the usual show prep, and we skip the mls fees, photography fees and often it’s a cash investor so no worries on repairs and loans. The goal is sell the property right? Don’t we always tell sellers, “The first offer is usually the best.” This idea it must be listed insinuates a bidding process, aka an auction of types. In my experience this can cause all sorts of other issues. Bottom Line, Follow the Money. The MLS systems know their future is threatened. buggy Whips went out of business too. I say change with the times……
Just my view, I welcome yours
Our team is very deliberate in how we market properties. We would never, ever put a property on the MLS without professional photographs and thoughtful descriptions. This process takes a certain amount of days and our sellers are perfectly comfortable with that. We use “coming soon” signs during this time and offer the same access to any buyer regardless of their representation (i.e. I’m not the only agent allowed to show it pre-list.) Although our firm certainly benefits from a sign being in a yard for an extra few days, our sellers benefit by the prospect of soliciting an offer without enduring the “hassle” of showings and public open houses. They also love the “buzz” it creates around the neighborhood. We have a very strong track record of fetching prices at or even above fair market value. On the rare occasion that a listing gets an offer pre-list it is a strong, competitive offer, the buyer/agent knowing that the seller doesn’t have any motivation negotiate at that point. Our sellers that find themselves in this scenario are pleased to have a quick, effortless transaction and know they got a great price for their home.
You hit the nail on the head it is to benefit the Agent.
Sam – As CEO for an MLS we struggle with trying to understand ‘What’s in it for the Seller’. When we ask agents who withhold listings from the MLS for a few weeks that very question they reply: “We’re building hype and anticipation so when it hits MLS there’s pent up demand and therefore a bidding frenzy”. While I think this is bunk, I’d like to know your thoughts on that type of reply. Thanks.
Right on Sam! Those properties are not marketed to “the world” so may not be receiving the highest and best sale price. Same as a cuff listing.
We have a firm in our area that has done this for years, they take names and numbers of interested parties and call them just before it hits the market so they can double dip the sale. It’s only for their benefit not the clients.
You’ve answered your own query. There is no benefit to a seller to do “coming soon”. It benefits the agent who will try to do a dual agency and keep the entire commission. I work for my clients…I do what is best for them and it makes me a winner in the end. My least favorite role is as a dual agent so I encourage all agents to show my listings and bring an offer.
Exactly, Sam. Pre-marketing is a great idea, but you have to follow through and do the rest of your marketing. … get it in the MLS and distributed to all the other usual portals. Our goal is supposed to be to get the best price and terms for the seller, and you will not be able to show you have done that if the property goes under contract b4 it ever makes it into the MLS.
Right. Of course. It’s total bulls#it that we’re “just building marketing momentum,” we’d only do it because we’re trying to double-end the deal and we don’t care that the seller may net a whole lot less money as a result.
Great comments so far, though I think some may not have read the question carefully:
1) The concern is SELLING the property during the Coming Soon timeframe. This current program does not prohibit the sale of the property before it actually gets listed on the MLS. That will happen–quite often in this inventory crunch. That lack of exposure to current market competition is not good for most sellers.
Other “pre-marketing” (where allowed by local MLS/board rules), combined with a commitment to give sellers the full exposure of an MLS listing and broad internet marketing is not the concern here.
2) “If the seller agrees to it…” If I convince sellers that their house is worth X, they’ll happily take X. We all know that market competition often makes the sale price exceed X, and we’d be remiss if we didn’t fully educate our sellers on what they will miss out on by foregoing competition.
If we’re honest with ourselves, some agents “educate” their clients into quick sales that don’t maximize their returns. Most of us are more conscientious than that, but regulations and constraints are created for the bad eggs, not the good ones.
I have sold many homes in the last year that never were put on the MLS. Buyers do not always want the hassle or the home is in terrible condition where few buyers would put the money into them that would be needed to make it livable. Happy seller, happy investor. I see no issue except the MLS wanting total control over every house that’s for sale.
The NWMLS has a rule prohibiting this practice, and I have reason to believe our Department of Licensing might frown on it too. IMHO, the practice only benefits the agent.
Here in Colorado dual agency (representing both sides of the deal) is illegal unless one switches to a transaction broker status. At my employing agency being a t.b. is frowned upon heavily due to litigious reasons…and rightly so. That said, there have been complaints to the CO Department of Regulatory Agencies that brokers are advertising ‘coming soon’ listings for the purpose of trolling for buyers not already working with a broker. Because of this practice I’m guessing that D.O.R.A. will outlaw the entire ‘coming soon’ thing here altogether. In other words these “bad eggs” are being greedy and certainly not acting as fiduciaries for their clients.
In Michigan and I believe in every state, as a Listing Agent I have a fiduciary responsibility to my client to act in their best interest. The State deems the agent as the expert in the client-agent relationship and therefore it is incumbent upon the agent to provide all the scenarios that may play out and give advice accordingly. That being said, this is a fairly complex issue because it can be difficult to determine exactly what the Sellers “best interests” truly are. They might be to get the highest price for their home or it might be to complete the sale in the shortest amount of time. There are studies that indicate that homes that do not receive the benefit of being listed and exposed via the local MLS actually sell up to 17% less than homes that do (realtor.com). If that is accurate then it is a safe assumption that in order to generate a higher financial benefit every home should be listed and exposed to all agents.
Great discussion and worthwhile topic!
The benefit to the Broker who sells a ‘COMING SOON” property prior to MLS exposure is two fold….and both look like the folding of a double-ended commission in their pocket! There is no real benefit to the seller however. In most cases the seller can actually be injured by selling the home prior to exposing it to the thousands of eyeballs of both Brokers and the clients they work with on a daily basis. How foolish for a Broker to chance having a seller return after closing with a law suit for failure to use “reasonable skill and care” and the failure of “taking no action which is adverse or detrimental” to their clients interests. Both things occur if the property is not exposed to the market place and that means the MLS system.
Great discussion. Logic dictates the only benefit is to the agent not the seller. If you have a legitimate buyer for that home, list it and sell it!
Our primary job when representing a seller is to
Could this trend spell an end to the already precarious practice of dual agency?
I will impart my thoughts in this subtle way:
If it looks like a duck, smells like a duck, walks like a duck and quacks like a duck –
It’s a duck!
Ethics is knowing what’s right.
Integrity is Doing what’s right.
You do what is right for the seller – not for the selling agent.
To build a groundswell of interest in the property locally during the time the property is not yet ready to go live. In a down market it’s helped us get many multiple offer situations! Isn’t that what’s in the best interest of the client? And Sam DeBord is…?
To me it seems like and easy way to lose a deal, if it’s “coming soon” it’s really not listed right? So what happens when a Buyer or an agent with a Buyer knocks on the door, someone’s going to get burned. I would never do it, so it really doesn’t matter to me,
nor would I use Z or T for listings
“Building excitement” and “creating a buzz” are done by putting a brand new listing on the MLS and the internet simultaneously, and giving buyers one week to view it before reviewing all offers on a single date.
“Pre-marketing” is just an inferior version of this process, for a seller.
@ CHRISTOPHER DEIGHTON I would love to see those “studies.” Do you know where I can find them?
What is the harm of having a coming soon notice to the house itself being sold? I do not think any buyer will lose interest in buying the house by just having seen the sign, nor do I think that the seller will lose a buyer. My belief is that, the more number days that the house is advertised for sale the more it is possible for it to be sold fast.
From previous comments here, and other online conversations on the topic, it sounds like many work in real estate markets crawling with loose-cannon-cutthroats malpracting with total fiduciary disregard? I know those people exist, we don’t see it much in our market. In our market the extreme majority of Private or Pocket Listing transactions are co-broker transactions. We don’t practice dual agency in Texas.
Using a Private Sale, Coming Soon and or Pocket Listings Strategy we have enjoyed representing many appreciative seller clients who successfully sold their properties at or higher that the price they would have or did agree to market through the MLS if the strategy did not produce the desired results.
Sellers are provided with current facts, market data and information that impact price, property appraisal and buyer behavior. That is to say they were fully informed about market comparables, trends and analysis and the pro and cons of a Private Sale, a Coming Soon and or a Pocket Listing Strategy. When educated and informed some sellers choose one of these strategies to accomplish THEIR goals.
What our sellers appreciated (and refer us for) was an opportunity partner with a savvy agent to sell their property at their price or above, on their terms. Without the undeniable inconvenience of multiple showings (DOM = 30+ days and nights of inconvenience), having a parade of strangers march through their living room, patter through their master bedroom, open their medicine cabinets and inspect closets. Avoiding the semi-invasion of privacy that results from the display of multiple interior-home-photos across the the inter-webs galaxy is seen as a benefit too.
I find it surprising that a real estate Pro would not understand or see the obvious benefits. Sure it’s not for everyone, but in the correct circumstance it’s the best approach to meet the needs of the seller. What I’m wondering is if an agent represents a seller who might|could|would benefit from a private sale, a Pocket Listing or a Coming Soon Strategy and they don’t discuss all option with their seller would they be guilty of violating their fiduciary duties?
In summary I believe the benefits for certain completely informed sellers, in certain circumstances, is undeniable.
For those who struggle with imagining the seller benefits; sold at desired list price or higher, sold on their terms, avoiding massive inconvenience and preserving personal privacy. There are other benefits too.
My 25cents.
kb
Just because the seller agreed to a price and you get it doesn’t mean you represented his best interests. Discounting your commission by 1% on a $300,000 house saves the seller $3000. What if it sold for $310,000? What’s the seller benefit vs the agent benefit. Just had a listing sell for $15000 over list because of buyer’s bidding on the property. Most (not all) coming soon signs are there for the agents’ benefit, then they try and justify it.
The idea of building buzz is an age old marketing concept. Using it to one’s own benefit versus a client’s would seem to me to be bordering on a COE violation…The problem could be mostly settled if NAR took a bold stand and prohibited dual agency, but that’s a whole other topic 🙂
Sentence 1: I learned long ago everything is always for sale, the question is the price and terms.
The goal with marketing a home that is “coming soon” is to generate buzz and let buyers in the market know you’re about to list the property.
The question that everyone is posing is “is it for sale at that time?” for my answer refer to sentence 1 in this post.
I keep hearing from buyers agents who seem to think that they have the “right” to sell it. You might – it’s up to the sellers really, NOT you. For the real answer refer to sentence 1.
Lastly the idea that this has anything to do with anything other than a listing agent working in the best interest of the seller is confusing to me. Why does anyone care if someone else sells their own listings, or leverages them in hopes of finding a buyer? How does that hurt any other agent? Did you lose a buyer over it? I don’t get it. The only thing I *do* get is frustration over how to best serve your BUYER clients… how do we know that the homes are coming soon? This is why I wish we could find “coming soons” listed in our MLS. But if I have to go to Zillow for that, OK.
Lastly, I will use my most recent experience as an example… Coming soon sign in the yard, mentions on social media and in AGENT networks (note: I was marketing to agents as well as directly to buyers). Two agents called me about showing. One was able to show in the 5 hour window we permitted the day prior to the day before we expected the home to go on the MLS. (It was the same day the photographer was coming so we could make the MLS as attractive as possible.). The buyers wrote. Full price, met all of sellers requested terms on timing, it was a cash offer w/POF, no appraisal contingency. My sellers were very nervous over “public” showings via agents they hadn’t met or open houses (one was planned for the weekend). WHY would they NOT accept it? No reason I could think of. They accepted. They sold. $535K, higher than we probably should have hit the MLS. Closed a couple weeks ago. Two similar homes which hit the market in the 2 weeks following our ratification date are currently on the market for 30 days now priced below $500K.
WHY did we get a full price offer?
1. We promoted that it was COMING SOON. Without this, this offer likely would not have come to reality. The buyers had been looking for several months and were about to write on something they didn’t like as much.
2. We wouldn’t show until it was show ready.
3. It wasn’t listed. It was going to be listed. This created urgency for the buyers to bring their HIGHEST AND BEST so it would be accepted without the owners feeling the need to go through the typical process. It was, after all, the buyers who had the greatest urgency.
So… can someone can tell me how that was a disservice to my clients? If not, then can we all stop assuming ugly things about one another and assume that professional agents know how to do their job and work with their clients best interests in mind? (That would be RAISING THE BAR, my friends.)
And NAR… could YOU at least assume that? Its bad enough my colleagues feel the need to make blind statements that are not based on fact. Publishing articles like this one appears to me that (a) you do not support your members and (b) you are trying to promote a single method of doing business…. what was it that the DOJ called them…. hmm, something about restricting trade or something…
I agree with the few Agents that have commented in favor of Pre-marketing property as being in the best interests of the Client. I have quite a few clients that have houses that are not quite ready for pictures to be taken, or to have any potential buyers walking through their homes yet, however, they know they are going to sell, they want to list now, but have other things they need to get done first.
It would be my negligence to either list prematurely and wind up with a larger number of DOM, therefore insinuating to potential buyers that there is “something wrong” with the property or else someone would have already purchased it by now, or just wait until the property is ready and in the meantime do nothing. In that instance no one, not one buyer or Agent is made aware that this property is coming to the Market soon. A buyer could wind up settling for a different house, but if they knew this one would be available soon, maybe they would wait for it. Also, if my seller wants to sell ASAP for whatever their personal reasons are, and they wish for me to “spread the word” before everything is up and ready to be listed, this way they get the most possible exposure they can get to hopefully get a buyer right away, that is their prerogative, as well as their right.
As to Agents being upset regarding “pocket listings” and so called doubling their commissions by way of Dual Agency, that is just ludicrous. Am I the only one aware that an Agent would not double their commission through a dual agency? They would receive their normal commission for their listing and the other Agent in their office would receive their normal commission for their buyer. I don’t see the problem with pre-marketing, the objective is to sell the house, if you get the job done sooner I believe everyone benefits… If a seller gets an offer for a price they don’t like, they wont accept it, they will wait for the next, ultimately it’s their decision.
I personally do not like the “COMING SOON” on Zillow,Trulia and other public sites or on an MLS for that matter. In my opinion, it is just another gimmick to get around “POCKET LISTINGS”. The buyers agent has no control when this property will ever get on the MLS and in the meantime, giving an advantage to the listing agent to find a buyer. Because it has to be on the MLS to sell legally when going through a broker/association, by the time that happens and then the minute its posted, all of a sudden its in PENDING STATUS. Well, we all know what goes on in this type of scenario…right? Also, I really don’t believe in the “BACKUP” and or “HOLD” status, these are also terms used to mislead buyers agents. If the seller wants back up offers in order to get the best offer available, then just simply put it in the agents instruction remarks but just leave it at “ACTIVE” until an offer has actually been accepted. If the seller wants to hold off on the sale temporarly, THEN WITHDRAW THE LISTING…PERIOD! I do not think that NAR really has a handle on how creative listing agents can be when they want the full commission and what extremes they will take to make it happen. Pre- marketing is not a good idea because the buyers agent is usually unable to get a hold of the listing agent fast enough in order to get all the proper information and documents required so that their client can make a good sound decision and offer, again puts the listing agent to an advantage. In some cases, when going through some of these sites like Redfin, Zillow, Trulia, who have private paid premium members will leave their contact information off purposely so you can’t find them. It should be a mandatory law that all property disclosures having any influence (damages and certainly all inspections) in the decision making to purchase a property be uploaded in both the mls and sites like zillow/trulia etc..etc.. that are sindicated through the MLS. Othewise, we still have some form of “POCKET LISTING” activity. If made a new law, then “PRELISTING OR COMING SOON” has a possibility to be a win-win for all agents,buyers and sellers. But until then, the listing agent has the advantage.
Many things that Realtors do could be argued to be their own benefit and (arguably) to the contrary interests of the client. Can the lack of exposure be balanced by the ‘buzz’ created by a coming-soon listing? Will the market bear less for a pocket listing than a fully marketed one? From experience, exposure for the sake of exposure isn’t good enough – it’s targeted exposure to the right kind of buyer audience.