Listing "Coming Soon" to Your Neighborhood
The latest fad in the real estate brokerage business is the use of “coming soon” signs announcing that, at some date in the not too distant future, a property will be listed and available to be previewed. As fast as desirable homes are selling in our market, it is a wonder that there is a need to give advance notice that a home is soon to be listed. Is the use of such “coming soon” signs a good or bad idea? There is much debate at present regarding “coming soon” signs. One issue being discussed is when must a property be listed in a multiple listing service (“MLS”). Certainly, members of multiple listing services are generally required to list all exclusive listings in the MLS within a short period after the listing agreement is signed. Therefore, if a listing agreement is signed by the property owner and the property is not listed in an MLS, the listing broker is likely violating MLS rules. Some brokers have discussed trying to get around MLS rules by entering into a nonexclusive listing for the “coming soon” period. While this may work legally since an MLS will generally not accept a non-exclusive listing, such a practice, as discussed later in this article, puts the listing broker’s commission at much greater risk of not being collected. Therefore, listing brokers have to ask themselves what exactly is the client gaining through the use of “coming soon” signs that is worth putting the listing broker’s commission at risk?
Some listing brokers putting up “coming soon” signs are apparently not entering into any listing agreement and are simply getting permission to put up a “coming soon” sign. Another issue that is being debated is whether if no listing agreement is entered into, exclusive or non-exclusive, does a “coming soon” sign violate the rules of the Georgia Real Estate Commission (“GREC”)? The answer to this question is maybe. In discussions with GREC staff, they have indicated that this would be a violation of the GREC’s rules against misleading advertising because it is advertising a property as being listed soon when in fact, no listing agreement has been entered into. Many REALTORS® dislike “coming soon” signs because they can result in the REALTOR® looking bad in front of a client. So, for example, let’s say that a REALTOR® has been asked to investigate available homes for sale in a large subdivision. In visiting the available homes, a buyer sees a “coming soon” sign on a property and turns to the listing agent and says, “If you are such an expert, why didn’t you know about this property that is about to be listed?” While the REALTOR®’s answer is that it is not yet listed in MLS, the REALTOR ® ends up looking less than knowledgeable regarding what homes are available in the market. While there is much debate over whether “coming soon” signs violate MLS or GREC rules, there is also a question regarding whether a REALTOR® who puts up such a sign is fully protected for a commission if the property goes under contract prior to the listing period. Let’s look at the following example to better understand this risk.
A listing broker enters into a non-exclusive listing agreement with the seller and puts up a “For Sale” or “coming soon” sign on the property. A buyer sees the sign, knocks on the door and the seller shows the buyer the property without the listing broker knowing about it. The buyer then makes an offer to purchase the property, and the buyer and seller claim they met recently at a party and that the listing broker is not entitled to a commission.
Does the listing broker have a strong claim to a commission?
The answer to this question is no. In an exclusive listing, the listing broker merely has to prove that the property was sold or went under contract during the term of the listing. However, with a non-exclusive listing, the listing broker must prove that he or she is the procuring cause of the sale. With the buyer and seller working in cahoots to deny the listing broker a commission, the listing broker may have a difficult time proving that he or she was the procuring cause of the sale.
Entering into a one-time listing agreement with the seller would also require the listing broker to prove that he or she is the procuring cause of the sale.
The one other issue to consider in putting up a “coming soon” sign is whether the seller has given written authorization for such a sign to be placed on the seller’s property. Georgia license law provides that a licensee can be sanctioned for “Placing a sign on any property offering it for sale or rent without the written consent of the owner, or the owner’s authorized agent.” Therefore, if the listing agreement has not yet begun, the broker would still need to get separate written permission from the owner to put up the sign for the time period prior to when the listing agreement begins.
Are there benefits of putting up a “coming soon” sign? If there are any benefits, they are unclear at best. Such signs may generate some urgency to act on the part of buyers in the immediate vicinity of the property who may see the sign and decide to make an offer before the property is listed. Of course, wouldn’t a “For Sale” sign create this same sense of urgency in a market where houses are now selling quickly? Moreover, since such “coming soon” signs will likely only be seen by people driving by the house, the limited exposure of such “coming soon” signs may not result in the highest offer being made for the property that would have resulted from a broad based listing of the property. This could result in a seller claiming that the agent did not fulfill his duty to the seller to always act in the seller’s best interest.
With our housing market recovering as quickly as it is, and with there being controversy regarding the legality of “coming soon” signs, “coming soon” signs are an approach to selling property where the benefits to the seller are negligible and the risks to the listing broker are great. As such, expect this fad to be short-lived.