The new Coming Soon feature in our MLS has been available since Tuesday.
Since then, there have been 32 new listings of houses between La Jolla and Carlsbad. Eight of the 32 have been inputted as Coming Soon (not active listings).
The common reason for having Coming Soons is to try out the price, and to build anticipation among realtors like a movie trailer does with moviegoers.
My random thoughts and observations:
Because the policy forbids any showings of the homes, the MLS agents will want to know when showings will be available. But the MLS doesn’t provide a box for that date, and none of the eight agents mentioned a date either. We know that Top Gun 2 is being released on December 23rd – which builds anticipation.
Four listings include the showing instructions as if they don’t know the policy, or are openly flaunting it. Will they allow showings today while listed as Coming Soon? I don’t know, but it looks like it.
Three listings had no photos, which would be expected of a listing that is in the works – it would be natural to follow with photos once the listing is ready. But it’s hard to build anticipation without visual aids. The movie trailers come with photos and video:
But the big question is what will the listing agents do when an offer is submitted during the Coming Soon period, subject to inspection? There are no written rules in the policy, so it is an individual choice.
Do you tell the buyer’s agent to wait until it’s active? Or do you take it to the sellers and negotiate a deal?
When do you let the buyer see the interior? Do you show before coming to an agreement, which would be smart but against the rules? Or do you make the deal, and then show them the interior and stay within the rules (it would be a pending listing now, not coming soon). Or once you receive an offer, do you flip the listing into active status so every agent and buyer can have a shot?
We have no rules, and no precedent.
We should ask the listing agents to answer these questions in the listing, so agents know what to expect.
If we don’t, here’s what will happen.
Buyer: Thanks for that coming-soon listing, it’s exactly what I want. Can I see it?
Buyer: Can I buy it?
Agent: I don’t know.
Buyer: Send them a full-price offer.
Agent: Ok, but I’m not sure what will happen.
Is that sequence good for anyone involved?
While the MLS was cordial to respond to requests from brokerages to create a Coming Soon category, we need to go further. Let’s clearly define the rules of engagement, for everyone’s sake.
Yesterday, we closed our fourth off-market buyer sale of the year (Richard, 1 and Jim, 3).
Here’s how they happened:
Reaching out to other agents working the neighborhood.
Saw one in the Compass Coming Soon section (which was public).
Saw one on Zillow as a Coming Soon.
I haven’t been a proponent of this method for my sellers. But pursuing off-market inventory is a good way for buyers and their agents to increase their choices.
One challenge to completing an off-market sale is that the seller will use the idea of going on the open market as a negotiating tool, and they are prone to beating you over the head with it. But at least the chances of getting into a bidding war are greatly reduced.
The new Clear Cooperation policy allows for in-house sales, which is legitimizing the off-market sale. Brokerages everywhere are being forced to develop their own exclusive off-market platforms.
Now we have Coming Soons being uploaded to our MLS only (and not to the search portals).
Our MLS is going to provide a Coming Soon feature, which will fluster the agents who say that the Coming Soons build anticipation (like a movie trailer) and test pricing, but who then use the concept to circumvent the MLS and instead advertise directly to the consumer in hopes of double-ending the commission.
The Coming Soon status launches in San Diego Paragon Tuesday, May 19th. From that day forward, when entering listings for sale in San Diego Paragon, you may choose between Active and Coming Soon.
To prepare for this launch, Paragon will undergo scheduled maintenance from 10:00 PM PT Monday, May 18th to 6:00 AM PT on Tuesday, May 19th – a total of eight hours. Paragon will be unavailable during this time. Below is a brief video to help you understand the details of this status.
How does Coming Soon work?
Coming Soon allows listing agents to take up to 21 days to stage the property, take interior photos, prepare it for showings, and so on, without Days on Market accruing.
How is Coming Soon similar to Active?
– Marketing is allowed in both statuses, so long as Coming Soon listings are clearly marked as Coming Soon.
– Both Coming Soon and Active listings are fully displayed to other professional users of MLS systems.
– The listing agent offers a commission on both Coming Soon and Active listings.
How is Coming Soon unique?
– Coming Soon listings have limited distribution: they will not go out from the MLS to portals like Zillow, Trulia, and Realtor.com, or to IDX broker and agent websites.
– Showings are not permitted in Coming Soon.
– Because of these limitations, Days on Market do not count in Coming Soon.
It has never been made clear to realtors why the Clear Cooperation policy is needed in the first place – or agents didn’t understand or agree with its purpose. The new way to get around the rule is for agents to advertise their coming-soon listings with no address – instead, they just include the neighborhood or tract.
From the wsj.com:
The real-estate industry’s largest trade association, the National Association of Realtors, and two of its affiliates are facing a federal antitrust lawsuit challenging a new rule that effectively bans NAR members from marketing homes privately, or “off-market.”
The lawsuit was filed Monday in the U.S. District Court for the Northern District of California by Top Agent Network, a San Francisco-based, members-only platform for real-estate agents. The suit names as defendants the NAR, the California Association of Realtors and the San Francisco Association of Realtors. It seeks unspecified damages and to reverse NAR’s newly enacted “Clear Cooperation Policy,” which went into effect May 1. The new policy requires NAR members to share their listings through the local multiple listings service rather than shopping them privately to a few contacts, a practice increasingly preferred by wealthy and high-profile sellers. Members who violate the policy face punishment, including fines.
TAN, launched in 2010, is a members-only networking and communication platform for real-estate agents who can show that they are in the top 10% of producers in their geographic area, according to founder David Faudman. Its roughly 10,000 members, who pay between $475 and $675 in annual dues, frequently use the platform to share information about off-market listings, which are for sale but not in the MLS. That function is now against NAR rules, said Mr. Faudman. “We’re concerned that this could put a huge damper on TAN, to the point that it destroys the business,” he said.
Since the Clear Cooperation Policy was enacted, Mr. Faudman said some TAN members—most of whom are also NAR members—have told him they don’t plan to renew their TAN memberships for fear of penalties from NAR. He claims the new policy is an attempt by NAR to quash alternative marketing platforms like his. “It’s quite clear to us that they’re trying to eliminate competition,” he said.
In some markets, like the San Francisco Bay Area, off-MLS listings make up a significant portion of business, agents said. Silicon Valley real-estate agent Billy McNair of Compass said that in any given year, roughly one-third of his sales takes place off-market. Some buyers pay a premium to buy a house that hasn’t yet hit the market.
The new N.A.R Clear Cooperation Policy takes effect on May 1st.
Next Monday, the CRMLS will begin a Coming-Soon category in the MLS for agents only. The listings can only be in the coming-soon category for 21 days, and no showings are allowed.
But the feature won’t be part of the San Diego MLS.
Realtors in San Diego County are split between one faction that wants to join CRMLS (which is the MLS provider for most of Southern California), and the other association of realtors who wants to be on their own. The compromise was a data-sharing agreement that allows both MLS systems to facilitate agent access to the county-wide inventory. But because the SDAR won’t cooperate, there won’t be a Coming-Soon category developed in the San Diego MLS. But it is coming to the rest of Southern California next week – but for agents only, and no showings so I guess it’s an FYI to the realtor community.
So there won’t be much change to the casual observer in San Diego County.
Multiple agents asked the question, “How can I sell my Coming-Soons if I can’t show them?”, demonstrating how oblivious some realtors are on why the new rule was created in the first place – to stop agents from doing off-market deals, and, instead, share all their listings with every realtor.
I sell yours, and you sell mine!
But realtors do have the option to take the listing as an office exclusive and distribute it among agents within their brokerage for days or weeks before putting it on the open market. It is inevitable that 20% to 30% of our listings will be sold off-market, and they will be the choice properties that don’t need mass exposure to find a buyer.
Why will these off-market deals persist, when NAR is trying to prevent them?
Because the industry looks the other way.
As long as the inventory is tight, agents will be motivated to keep their listings within the club – at least for the first few days or weeks while they get it ready for market. If it sells prior to going onto the MLS, then great – and no risk of getting the corona from all those strangers coming around.
Wells Fargo is ‘suspending’ their jumbo-loan funding of all correspondents today, and the others (like Chase) are sure to follow. It’s one thing to stop funding loans for mortgage brokers, but to shut down the credit lines to the big players like Loan Depot, Quicken, and Guaranteed Rate is going to effectively end the jumbo-loan market as we know it.
Expect that this will become the industry trend, and blamed on the corona.
But the root cause is the industry contraction that has been going on for a couple of years now as sales decline and there isn’t enough business to go around.
Wells Fargo will still be funding jumbo loans. You’ll just have to get them directly from Wells Fargo.
You’ll be able to purchase the best homes for sale. You’ll just have to buy them from the listing agent.
The Clear Cooperation Policy is still scheduled to begin on May 1st, and listing agents will either have to input their listings directly onto the MLS within 24 hours of any public advertising, or sell them in-house.
In a desperate, fearful environment, take a guess at which will be the favorite.
We can predict how the real estate market will behave as this country gets a grip on handling the coronavirus (we’re not close yet). During the last crisis, the first buyers to jump in were those who weren’t concerned about timing the market, they just needed a house – and the 2013 market exploded well before the data said it should have.
The first-timers will be fueled with down payments from parents or grandparents, and with very few comps available to the contrary, they will just pay the seller’s price to get ‘er done this summer. It is certain that the corona fright will be the latest reason to hurry up and hunker down in a better home, and if the Fed can goose the MBS market and keep mortgage rates in the mid-3s, the market will come out fast. If rates are in the mid-4s, then it will be a slower ascent.
Broker management will encourage agents to keep those hot new listings in-house. Listing agents will want to be a hero within the office and get acknowledged at the next sales meeting for selling off-market. Office Exclusives will be sold to sellers as a price-discovery device, but when a few agents in the office want to give their waiting buyers an early preview, sellers will oblige. Surprise – we have an offer! The next thing you know we have a deal – and the sellers are grateful that they didn’t have to be bothered with open house or strangers prancing through with little or no notice.
Civility, and fiduciary, in our society was crushed by the quote in the movie Wall Street.
‘Greed is Good’.
Expect it to be on full display once the corona is over. Or sooner:
When we joined Compass in the summer of 2018, it was clear that the evolution of residential resales was trending towards off-market sales. I said then, “we have to make sure that we’re on the right team”.
The National Association of Realtors tried to affect the outcome with their Clear Cooperation policy by making off-market sales acceptable as long as they are done in-house with no public marketing. Like all policy-making done by ivory-tower types who don’t relate to the reality on the street, they have legitimized a new opportunity for gaming the system.
I think the intention of NAR was to allow for the occasional private sale by celebrities. What they must not have considered was that all brokerages would design their own in-house system to provide privacy for anyone who wants it.
Then the coronavirus starts sweeping the country – won’t every seller want their privacy today? Are you going to let dozens of strangers into your house? You and your family could die! You need to sell your home privately.
The NAR policy makes sellers and listing agents pick a path – either the property gets listed on the MLS within 24 hours after public marketing begins, or you sell it off-market. If the private sale doesn’t work, sellers can opt for the more-public MLS sale later, so trying the safer route will be an easy choice for many.
Who do you list with?
What brokerage has the best chance of selling your home for top dollar now?
Compass has the in-house system, over 800 of the top agents in San Diego County, and we are ranked #1 in market share in Carlsbad and Encinitas. We are ideally suited to serve the private-sale market, and now we’re advertising it publicly.
Eventually, the MLS (and Zillow) will become the online marketplace of last resort like Loopnet, and buyers will be forced to work with an agent in every brokerage if they want to see all the inventory.
A broker from The Agency is hoping to mobilize support against the National Association of Realtors’ controversial ban against pocket listings, drafting a new petition to urge the repeal of a policy that many agents feel will disrupt the market and hurt their livelihoods.
“It feels as if it was done without a whole lot of thought for the person impacted the most, which is the seller,” said Jamie Waryck. “I, along with several colleagues, find that very frustrating.”
NAR’s policy, which was approved in November and is scheduled to take effect May 1, requires brokers to submit a listing to the Multiple Listings Service within one business day of publicly marketing a property.
NAR argues it will help make the business more transparent, but brokers, particularly in high-end markets like Los Angeles, Miami and New York, argue that pocket listings help protect sellers’ privacy and allow agents to be more flexible with asking prices.
“A homeowner should have the right to work with a realtor and decide for him or herself whether the home is sold with full exposure to the public, with limited access to the public, in total privacy or through a combination of any of these based upon the homeowner’s personal wants and needs,” the petition reads. “The National Association of Realtors has decided to remove this right from you.”
Top L.A. agents have previously spoken out strongly against the policy, including Agency CEO Mauricio Umansky and Hilton & Hyland’s Gary Gold.
“I think we should be policed somewhat,” Gold said in October, “but not treated like children.”
Let’s touch on this topic one more time as a new season opens up.
While our 2020 market should be promising, the actual results won’t be as obvious.
Reasons to be optimistic about this year:
Rates are really low, though we expect that now and it won’t set off a frenzy.
Prices have been moderating, which gives the buyers some confidence.
We are overdue for more boomer inventory.
But don’t expect to see a bunch of hot buys hitting the MLS.
Now that the N.A.R. has laid down specific rules for off-market sales, agents are going to take advantage.
While every brokerage will have an internal network to promote new listings within the company prior to MLS-input (which is allowed), the individual realtor teams will run their latest hot listings through their stable of buyers first, before giving the rest of their company a crack at it. Only when those attempts have been exhausted will a listing find its way to the MLS.
It may only be 5% to 10% of the market, but it will be the very best 5% to 10% – those listings that every buyer wants. Without seeing those hot buys flying off the MLS within days, there will be less urgency and a false malaise setting in with those who are judging the market just based on the MLS activity.
The public won’t have a clue, either. They will be forming their own opinions about the market based on what they see on Zillow, never knowing there is a secret pre-marketing – and selling – of the best listings. It will only be those who attend open houses who will get pitched to leave their contact info to receive their off-market buys (it will be the most-heard pitch of the year at open houses).
Don’t sellers object? Not really, not when it is presented as a better alternative to having strangers traipsing through their house at all hours with little or no notice. It also becomes the happy option in between selling to Zillow for less and taking a chance on the open market.
Are the off-market sales valid comps? Everyone is going to assume they are, so let’s include them and figure they may have fetched a little more on the open market.
The rest of what happens in 2020 should look similar to what we had in 2019 – with the amount of inventory dictating the outcome. Even though buyers may be more active early on, as Diana claimed today for a second time, the higher-end areas should find the buyers being more deliberate, especially if they can’t get their hands on those prime listings.
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