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.
We’ve touched on two differences that the coronavirus is causing in residential real estate sales; the cumbersome arrangements now required just to see a house for sale, and how wearing masks will help buyers hide their interest in a home.
What else is changing?
The real estate flyers are gone now, and public open houses are heading for extinction too – and the 3D tours are being heralded as a worthy substitute. It’s too bad too, because the industry never fully grasped the biggest benefit of open houses – helping to create urgency in the buyers, especially when the home is fresh on the market.
The 3D tours are very crafty, and buyers should love them for offering maximum convenience within minutes – or seconds. Sellers don’t have to leave their house every Sunday afternoon, and agents won’t have to work weekends any more.
What’s wrong with that?
Have you ever seen a perfect house? Me neither.
The 3D tour allows the viewer to scroll around the home at their own pace, which is a plus. But it’s too easy for viewers to give up when they see something unusual or have trouble navigating.
You gotta give the house a chance.
Rather than relying on a thorough walk-around with an agent who is explaining every nuance, the home-buying decisions will be based on fancy imagery on a computer screen.
Won’t the interested parties pursue an in-home visit? Yes, and they are the most likely real buyers.
But it’s the internet viewers who click out too quickly who will miss out – and fewer buyers relying on less information isn’t a positive for home sales. Instead, the sales process gets dumbed down further, and those who support the 3D tours as an adequate substitute for agent advice are contributing to the downfall.
It’s all going that way anyway, but at least you can say you saw it coming!
We should take precautions during the coronavirus era, so let’s inform the buyers and sellers what to expect before showing a house. Here we go:
As you may know, the industry recently received guidance from the California Department of Health and Cal/OSHA (the “Guidance”) regarding the handling of real estate transactions, especially the showing of properties for sale. Pursuant to that guidance, we have created a Compass “Shown Property COVID-19 Prevention Plan,” (the “Plan”) attached below, which is to be used as follows:
1. The Plan is to be posted at the door of every property we show or enter, for each showing or entrance.
2. The Plan is to be forwarded to every person entering the property, including prospective buyers or inspectors, by email prior to the entrance. It should be emailed with the PEAD and the person entering should be required to both sign the PEAD and acknowledge the Plan, promising to comply with its requirements while at the property. Your cover email should state that entry to the property constitutes an agreement to comply with the Plan.
3. The Plan, or a link to the Plan, must be included in all online public and MLS listings of the Property.
Furthermore, the Guidance outlines certain other practices that should be followed at all showings and inspections.
1. Commonly used surfaces, like door and cabinet handles, counter tops, toilet and toilet handles, sinks / faucets, and light switches should be wiped down, preferably by the seller, before and after every visit.
2. Open doors, windows, and ventilation systems prior to each showing to introduce outside air to the property.
3. Open all interior doors and turn on all lights before showings so as to minimize the need for touching.
4. Wipe down any item you get from the seller, such as keys, after each use.
5. Schedule appointments with sufficient time in between to conduct the necessary cleaning.
6. If you provide sanitary wipes, face coverings, gloves, etc., place them at the property’s entrance so they can be used or put on prior to entry.
7. Require each person entering the property to wash their hands with soap and water at the sink closest to the property’s entry prior to touring or inspecting the property.
8. No flyers or paper are to be handed out or left at the property for circulation to prospective buyers.
I hope we don’t get so engrossed with adhering to the rules that we forget about selling the home! Here’s the form so you can read it in advance:
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.
I had another case where the sellers had inherited the property, and their realtor thought they would be exempt from having to disclose. But all the law states is that they don’t have to use our form:
Under California Law, whether or not a seller is exempt from providing a Real Estate Transfer Disclosure Statement (“TDS”) based on Civil Code Section 1102 and the Seller Property Questionnaire (“SPQ”) pursuant to the Purchase Agreement, they are nonetheless required to make full disclosure of any known defects or material issues that may influence the Buyer’s decision to purchase the property or the price they are willing to pay in other words would the information impact the value or desirability in the eyes of the buyer.
The obligation to disclose known material defects or matters impacting the value or use of the property would apply to all exempt transactions such as Real Estate Owned (“REO”), Bankruptcy, Probate, Trust Sales and the like. Such disclosures may be made on the SPQ or a word document, the key is disclose, disclose, disclose! As licensees, we are also obligated to disclose regardless of any seller exemptions.
Make it easy on yourself – just use our disclosure form for all transactions.
New listings, new pendings, and more showings are happening everywhere. Regardless of what you think about it, there are people who are proceeding with their plans to buy and sell homes.
The industry is cautious, and you see it in the showing instructions. I haven’t seen a listing agent who wants to take your temperature (yet), but other demands are increasing. The basics include signing a Coronavirus disclosure, plus wearing gloves, mask, and shoe coverings to see a home. Some are taking the opportunity to load up, and insist that buyers furnish their loan approval and proof of funds just to SEE the home.
At least we are screening! Not sure if it will encourage or discourage buyers though.
Next will be the happy talk. The California Association of Realtors got started here with a heartfelt message that doesn’t flat out tell you to go buy a house yet, but you can feel it coming:
Are there buyers out there? Retail buyers?
This home listed on Friday, and already has 22 offers!
Hopefully there will be a vaccine, and/or testing for all at some point. It would be great if we had proof of wellness on our phone! But in the meantime, the market is forming.
This is the Compass action across the country – the new pendings are out-pacing the new listings:
We noted last week how the jumbo mortgage market is back-pedaling in two ways. Banks stopped funding jumbo loans with 10% down payments, and the program that qualified the self-employed borrowers by using their last 24 monthly bank statements was also terminated.
The actual impact is hard to gauge, but we can say the buyer pool is quite a bit smaller today than it was a month ago….and those loan programs won’t be coming back anytime soon.
For the remaining buyers left in the hunt, won’t they have their way when negotiating. How many other buyers are competing to buy that house? Any?
Doesn’t that mean the sellers have to come down off their price? Shouldn’t there be a correction?
The reason that sellers hold out for their price is because they have other options. They have plenty of equity so they can get additional financing if they need money, instead of moving. They can also rent their house for a ridiculous amount if they don’t need to tap their home’s equity. The majority of sellers need to leave town to make the move worth it, so there is a natural reluctance to give up the familiar – unless they get their price.
Today we hear agents say they don’t know when the market will come back.
Let’s identify which market. They don’t know when the sellers’ market will come back.
It’s going to be a buyer’s market for the next 2-4 months, and the vast majority of agents have never seen a buyers’ market, let alone know how to navigate it. Over the last ten years, listing agents have gotten away with doing little or nothing to accommodate the buyers – their mantra has been, “hey, if you don’t like it, then cancel and we’ll get someone else”. But will there be any other buyers today? If so, at what price?
Buyers might get talked into escrow at a price close enough to list to make the sellers happy, but getting them to the finish line will be a major challenge today.
Here are my tips for sellers in a buyers’ market:
Get a pre-listing inspection, and fix as many issues as possible before going on the market.
Have specific quotes available for other issues that aren’t fixed yet.
In spite of furnishing this data to the buyers, expect that they will want to re-negotiate.
Build a defense in advance.
You may still need to do a little something for them to get the deal done, but at least being prepared will keep it to a minimum.
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:
One of the most insane MLS rules prevents agents from including videos in the remarks. The MLS police is afraid that agents will slip in their contact information, and buyers will rush to purchase direct from the listing agent – but they can do that anyway. How hard is it to find a listing agent’s phone number in 2020?
Our MLS is temporarily allowing virtual tours and virtual open houses, but let’s hope it will be a permanent change. The real estate world is well on the way to eliminating the buyer-agents that provide no value, and those that give good advice don’t have to worry about losing a client to a video message.
In addition, allowing video tours in the remarks would cause more agents to do them!
You better be an all-around expert at fixing stuff in this environment – and be able to present a reasonable case to the buyers that’s easy to digest. We’re not out of the woods yet, but this video kept a situation from turning into a problem:
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