Throughout the pandemic, record-breaking home prices and lightning-fast sales have become the norm in California. For some agents, it can feel as though homes are being sold as soon as listed.
Now, properties may be snapped up before they even hit the market.
Coming Soon: teaser property listings
The California Regional Multiple Listing Service (CRMLS) is one of the latest multiple listing services (MLSs) to adopt the controversial new “Coming Soon” feature to its listing status options. A property registered in an MLS as Coming Soon is not yet available for showings or purchase. It simply helps sellers drum up some pre-market buzz while allowing extra time to prepare the property.
The Coming Soon status also allows brokers and agents to circumvent the dreaded Days on Market (DOM) counter for up to 21 days. After 21 days — or on the Start Showing date, whichever is earlier — the listing automatically updates from Coming Soon to Active.
This is an important draw since prospective homebuyers tend to become disinterested in properties that have been on the market for a while, as they wonder whether something is secretly wrong with it. With the new Coming Soon feature hitting the nation’s largest MLS, the CRMLS, agents will be able to list properties with weeks of feedback and zero days on market.
Rules and restrictions for Coming Soon listings
Coming Soon listings can yield a critical advantage, so MLSs place strict rules around them. Since the feature is relatively new, your local MLS’s rules may vary.
First and foremost, performing tours and soliciting offers are strictly prohibited during the Coming Soon phase. When the seller’s agent accepts an offer, they are required to change the status to Active Under Contract or Pending.
The Coming Soon status cannot be extended beyond the initial 21 days. Should the seller need more time to prepare the property, their agent may change the listing’s status to Hold.
In addition, marketing for a Coming Soon property needs to clearly state “Coming Soon.” This requirement includes flyers, “For Sale” signs, social media posts and other marketing tools.
While in the Coming Soon status, the listing information will not be sent out from the MLS to any public facing real estate portal websites. Rather, the listing will be available on cooperative broker and agent-controlled websites.
Lastly, the Coming Soon feature does not apply to new construction listings. Any residential property listed in an MLS requiring the disclosure of a Subdivision Public Report or requiring a new construction building permit is classified as a new construction listing.
Pocket listing and potential for abuse
Do these restrictions ring any bells? That’s because they’re meant to discourage the same kind of behavior that leads to pocket listing.
Pocket listings are real estate listings retained by brokers or agents and not made available to other MLS members. The seller’s agent might only share these with their chosen network, making them exclusive. Because MLSs thrive on complete information and cooperation, pocket listings hurt the quality of an MLS.
Quality MLS results depend on complete information and cooperation.
Ultimately, pocket listings are harmful to the industry because:
- for sellers, their listing receives fewer views, and thus their home is more likely to sell for a lower price, with less favorable terms than when they open it up to all buyers;
- for buyers, most pocket listings are not available to them, resulting in a lower MLS inventory; and
- for agents, their pocket listing is likely to sell for less, resulting in a lower fee.
Off-MLS listings present a unique challenge because of limited enforcement options. There isn’t much to stop a seller’s agent with a Coming Soon property from privately negotiating offers within their own personal network. For instance, an unscrupulous agent might use the 21-day Coming Soon period to capture an unrepresented buyer and double-end the transaction.
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In response, the National Association of Realtors® released guidance on this issue, in the form of the Clear Cooperation Policy. It stipulates that any property publicly promoted needs to be registered with the MLS within one day of that promotion. The policy went into effect May 1, 2020.
High prices and low inventory call for desperate measures
Agents abusing the Coming Soon system is a symptom of a greater problem. Underhanded approaches to listing do not address the underlying issues contributing to this recession’s high prices and low inventory.
California agents saw rising home prices throughout the first quarter (Q1) 2021 and uncharacteristically strong sales volume during the recession. Encouraged by record-low interest rates and stimulus boosts, many homebuyers simply delayed their relocation plans rather than cancelled altogether.
As if to mirror these highs, California’s housing market set record lows as well — in terms of active listings and new listings. The number of active listings fell a record 42% year-over-year as of March 2021, and new listings were down 12% from a year ago. So, although homes are fetching a high price for now, there is increased competition due to the relatively low inventory.
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In such a tight market, Coming Soon serves as a life jacket for some agents — and an anchor for the rest. To truly meet housing demand, licensees can be vocal supporters of legislation that increases residential construction of low- and mid-tier housing.
With the endorsement of the nation’s largest MLS, “Coming Soon” is coming soon to an MLS near you — if it hasn’t already. Be sure to check your local MLS rules before taking advantage of this strategy.
