Andrew Wetzel's Musings

March 22, 2019

“Coming Soon” Property Listings

Filed under: Buying,Ethics,Marketing,Selling — awetzel @ 5:29 PM

Sharing property listing information and making our listings available for other agents to show to their prospective buyer-clients is at the heart of the Real Estate profession.  Listing agents control the inventory and how they handle their inventory greatly affects their seller clients and how buyers and their agents perceive them.  We call how we do this “cooperation”.  There are two related issues:  compensation and procuring cause that I will avoid at this time.

One of the hottest topics today is “Coming Soon” property listings.  These are properties not yet on the active market or available for showings where the agent has put up a “For Sale” sign with signage that says “Coming Soon”.  Whatever the thinking behind it, these signs generate interest which could help a house sell fast or it could frustrate some agents and buyers if not handled ethically.  Many buyer agents seem to feel that the practice is deceptive and designed to allow listing agents to find buyers for their own listings thereby earning them more commission dollars.  Like most things in life where there are opposing points of view, this issue can quickly develop into a hot debate involving feelings and emotions regardless of the actual facts.  The practice is perfectly legal and can be very effective for sellers if handled properly.  My concern is that it may cause some buyers to have a less than favorable impression of us and our industry.

As I like to say, we are not all the same.  Some agents may do things that do not conform to our rules and regulations and I like to think that these instances are unintentional, perhaps resulting from a lack of understanding the rules or not thinking about how an agent’s actions may be perceived by others.  However, when a listing agent’s actions cause a buyer to miss out on a house they like and/ or a seller is deprived of additional competition that could have earned them a higher selling price, that is unacceptable.  A competitive market for scarce listings only adds to the situation.

Let me start with two disclaimers.  First, this NOT intended as legal advice.  Second, while the practice is legal if done properly, the devil is in the details and that is where “Coming Soon” property listings intersect with rules, regulations and emotion.  The fact that someone feels slighted may not necessarily mean that something wrong happened.

If a private citizen posted a “For Sale” sign on their own lawn with a sign that said “Coming Soon” we would have nothing to complain about.  Of course we would expect them to allow anybody interested in their home to see inside so that they could try to sell it for either the highest price or in the shortest period of time, wouldn’t we?  That changes when another agent posts the sign.  The difference is “competition”.

Our PA Real Estate Licensing and Registration Act, RELRA, and our Code of Ethics both require that an agent have a seller’s permission to post a sign on their property and to advertise a property as being “For Sale”.  Whether an agent is a REALTOR or not makes no difference.  The ideal documentation for this permission or authorization is a formal listing contract such as the one PAR created and updates from time to time.  I say that because it is a legally-approved form that also includes details relevant to forming a business relationship including the term or length of the arrangement, the duties of the listing agent, the amount of compensation earned and how it is earned among other important protections.  I suppose that a seller could send you an email asking you to put a sign on their lawn and authorizing you to advertise their property but would you?  If you only want the opportunity to generate buyer leads and are not concerned about selling the specific house or getting paid when it sells, this could work but I would not advise doing that for a number of reasons.

What happens when an agent, either on their own or through a buyer-client, becomes aware of a “Coming Soon” sign on a property that may interest their buyer?  If the agent knows of no one who may be interested, chances are nothing will happen.  Otherwise, the agent may soon find that the house is not listed in the MLS or it could be listed as “Coming Soon” for up to 21 calendar days without running up the days-on-the-market statistic.  In that case they will most likely call the listing agent to ask the price, features and anything else relevant to their buyer.  If the listing agent answers the phone or returns the call, this may go no further.  The problem comes to a boiling point when the listing agent, for whatever reason, does not respond and the agent placing the call feels that others are gaining access to show the property.  When there is a buyer chomping at the bit to learn about a house or a buyer who wants to see inside and their agent cannot get answers, the situation gets worse.  What to do???

In addition to rules governing signage and advertising which I mentioned earlier, agents who belong to the multiple listing service must abide by their rules.  The relevant one here is that once a listing contract is signed, the property must be uploaded into the MLS for other agents to be able to search within 3-business days.  That process leads to “syndication” which means that, if authorized by the seller, the information is disseminated to the Internet for the public to find in their searches.  I am aware that some sites allow agents to upload listings even though they are not on the MLS and that may or may not be a problem depending on what the seller has authorized and whether there is a listing contract.  While probably viewed as a benefit to the listing agent and seller, buyer agents can get frustrated when their clients learn about listings before they do especially if a property is not in our MLS.

If you see a “Coming Soon” sign on a property, regardless of when you think it went in the lawn, by the end of the third “business day” the property information should either be in the MLS for all agents to access OR the listing agent should have filed a waiver with the MLS which states that the seller has authorized the listing agent to withhold the listing from the MLS.  Many buyer agents question why a seller would do that and seem inclined to speculate that the listing agent did not properly advise their client about how this could harm them by preventing competition but the fact is they do not know what was discussed and the Code of Ethics and the general concept of professionalism should prevent them from speculating and judging another agent’s conduct just because they feel it unfair or because it does not meet their needs.  The seller is the boss and has the right to make decisions even if they may not make everyone else happy.

If the listing is uploaded to the MLS, all seems right unless the house quickly goes to “pending” or “under contract” since the buyer agent may feel that they were blocked from showing the house and that their buyer was treated unfairly.  True or not depends on the details and it may take filing a complaint to find out but, in my experience, things are not always unethical just because we did not get what we wanted.  Perhaps you or your buyer saw the sign and hesitated taking action.  Real Estate works at the speed of life and competition can be fierce!

If there is a waiver, the listing agent should still respond to another agent’s inquiry even if to tell them that they can show the house but that it is an exclusive listing where the listing broker will not be offering compensation to the buyer’s agent.  That is another subject I will ignore.  In addition, if there are no showings until a specified date, that should apply to everyone.  Of course, that does not stop a buyer from making an offer “sight unseen”.  All offers, even verbal ones, must be presented to the seller.

If the listing is not uploaded to the MLS and there is no waiver, the situation gets real cloudy because you do not know whether there is a listing contract or not.  I cannot tell you how to handle this but if you alert the MLS they will most likely contact the agent or company named on the sign although that may not happen quickly or make you feel any better.  If an agent does not call to ask if there is a waiver, they need to accept some responsibility for the tension that may arise with their buyer, perhaps to the point where the buyer no longer feels that their agent is working in their best interests.  These situations have ripple effects.

I will conclude by stating two of my truisms about Real Estate.  First, buying and selling is like playing poker:  you have two or more people who would like to know what the other people are thinking.  This includes agents.  Second, in most cases, even if everything is done ethically and professionally, the listing agent is in the preferred position.  They are working with the seller and may know them on a personal level.  All routes to a sale go through them and that is just the way it is.  While protecting and promoting the best interests of our client may not make everyone else happy, we should conduct ourselves as ethically and professionally as possible in terms of how we handle what is going on.  Buying and selling Real Estate often involves emotions because you cannot always get what you want when you want it.  While we cannot control other agents, we can keep those who wander ethically or professionally on track if we take the initiative.  While we cannot control our clients, we can do what we are expected to do and document what we have done so that we can at least rest assured that we did our best.  Again, the devil is always in the details.  This will not make everyone happy.  My goal is to clarify what I believe to be the proper way to handle “Coming Soon” listings so that we can at least minimize the controllable problems.

In the ideal world, every buyer would know their financial qualifications and limitations and know their wants and needs.  Every property listing would be made available to every possible buyer and all would be given a specified time to evaluate a house, schedule a showing and make an offer.  This should maximize the seller’s price and would give all buyers an equal chance to make an offer.  This is not an ideal world.

Here is the reality:  many buyers will delay getting pre-qualified or determining exactly what they are looking for which may prevent them from getting a house they think they want; buyer agents will continue to work with unqualified or not-yet-qualified buyers which may waste everyone’s time.  Some buyers and some buyer agents will always be more diligent than others when it comes to managing the buying process and identifying houses to consider, some will take action more quickly than others and be more realistic in terms of what they offer and how they construct an offer.  Human beings are funny creatures, aren’t we?

One of the best management aphorisms I ever heard is this:  “some people will make things happen; some people will watch things happen; some people will wonder what happened”.  On a related note, “Lead, follow or get out of the way”.  I mean no disrespect but too often people blame others when things do not go their way.  Buying and selling Real Estate often lacks etiquette and it is not for the faint of heart!  Be prepared!

There is no time for inexperience, empty promises or false expectations!

Remember:  HIRE WISELY!  We are not all the same!

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