New “Coming Soon” Rules for Spring Market

2019-02-04 New Coming Soon Rules

Have you ever seen properties advertised as “Coming Soon” either online or with a sign in the yard?

That type of pre-market promotion has been like the Wild West for agents.

Individual agents each handled it a little differently since there was no real guidance. There were many misunderstandings, and some questionable practices, as both agents and buyers struggled to understand what “Coming Soon” meant on a property-by-property basis.

Although most agents promoted their listings responsibly, enough complaints were registered that someone decided to step in and act as a regulator.

Beginning today (February 4, 2019) new rules issued by the local Multiple Listing Service regulate how MLS members (basically all agents) must manage their listings at each stage of the listing process.

Specifically, two types of pre-market listings have been defined:

Delayed Listings: An owner has hired an agent, but the property is not ready for marketing. The agent is allowed to help the owner prepare the property during this time. However, the agent is not allowed to publicly market the home, and no showings are allowed. When the property is ready, then it is listed in the MLS and marketing and showings may begin.

Coming Soon Listing: An agent can publicly market a property before it is available for showings by entering it into the MLS in the “Coming Soon” status with a specific “Go Active” date. Although public marketing is allowed, showings are not allowed and the owner may not accept an offer until the “Go Active” date passes. Importantly, the “Go Active” date may not be moved up once it has been publicized. A property can only be in the “Coming Soon” status in the MLS for a maximum of 14 days.

Another new rule covers listings that are withheld from the MLS.

Withheld Listings: An agent can opt to not enter a listing into the MLS. This is discouraged since marketing properties in the MLS is the best way to maximize exposure to buyers. However, in some situations withholding a listing may be appropriate. An agent who withholds their listing from the MLS may not publicly market the property.

The new rules define “Public Marketing” to include open houses, displaying the listing anywhere on the internet, advertising the listing in written publications, placing a sign in the yard, sharing the listing on social media, or distributing the listing via email.

These rules mean that if you see a property advertised by an agent, whether it is “Coming Soon” or not, then you should be able to find out about that listing from any agent because there is a corresponding MLS entry. Public marketing is not allowed under these rules unless the property is already listed in the MLS. This is good for buyers, and it is good for agents representing buyers.

We’ll see how the new rules work in practice over the coming months. In order to be effective the agent community needs to know about the new rules, understand them, and buy in to the changes. There also needs to be a reasonable enforcement mechanism.

Amy and I have already discussed small changes to our pre-marketing strategy in order to make sure we comply. Our expectation is that other local agents will comply too.

That said, it will be interesting to see what happens this spring. The rules represent a meaningful reduction in the flexibility we previously enjoyed while building awareness of new listings.

Are Real Estate Websites Your Friend?

Real estate websites came up in yesterday’s post. The basic question was, “Can buyers rely on public real estate websites during a home search?” I think we can all agree that they’re fun to look at, and they do a very nice job at presenting and consolidating data. But do they have a buyer’s (or seller’s) best interests in mind?

Downtown Hartford from Bushnell ParkI don’t think they do. Their goal is to make money. Basically all the sites make money by selling advertising to realtors, mortgage lenders, and credit people. They want to generate as many page views and clicks as possible, since that’s what translates into revenue. Buyers are heavy users during their search, but once they get a home under contract they no longer need to keep their preferred site open in the browser tab all day at work.

It comes down to an alignment of incentives. The public websites need to be engaging enough to capture a buyer’s interest, but not so helpful that they find a home immediately and are no longer a user (potential source of revenue). They benefit from extended home searches.

There are a few different ways that sites disrupt the search process, whether it’s intentional or unintentional:

Data Lag: Listing information is updated on different schedules for different sites. In all honesty, this could be related to how the different MLS systems (realtors) around the country make their data available. All I know is that some sites are faster than others.

Not Clearly Marking Homes Under Contract: We get a lot of calls about listings people see online that are already sold. They’re not closed yet, but the seller has already accepted a bid from a buyer. Getting distracted, or even emotionally hijacked, by a property that’s not really available causes buyers to miss out on legitimate opportunities.

Suspect Valuation Estimates: One site in particular touts their ability to value any property in the Country. Our experience is that buyers who take these valuations too seriously are unable to make realistic bids and have trouble buying a home. The estimates are inevitably too low, and the buyer isn’t going to “overpay,” so they keep lowballing sellers and never get a home.

Distressed Properties: Introducing distressed properties into the mix makes buyers more uncertain. Some try to use foreclosure pricing to support bids on non-distressed properties, which is generally not effective in this area. Others decide they want to pursue a foreclosure, not realizing that the process can be very different and it may take months to get a response.

Despite these concerns about the public real estate sites, I think they’re entertaining and provide a valuable service. They each have their own angle, and generally do a nice job presenting their data. As long as home buyers recognize the motivations and potential weaknesses of each site, they should definitely feel comfortable using the one they like best.

In the comments of yesterday’s post, Michael suggested that the realtors offer the general public the opportunity to subscribe to the actual MLS. It’s an interesting idea, and could be a way to reduce the (modest) annual fees that agents pay to support the existing system. I wonder if the local board has considered that possibility? Anyone from GHAR reading today? In some ways the site is just that … the data is updated very frequently and comes directly from the MLS. However, it’s also like all the other sites in that there are ads and attempts to collect contact information.

Even this site has an agenda, though our incentives are much more aligned with our clients. We only benefit when someone successfully completes their transaction … so hopefully the GHREB can still be your friend.