New Policy Will Make Off-Market Sales More Difficult, Eliminate “Coming Soon”.
November 21, 2019
The “Clear Cooperation” Policy.
Last week, the National Association of Realtors voted to approve a policy that will have a significant impact on how your home can be marketed and sold in the future, with a particularly strong emphasis on the growing legion of home sellers that value privacy over broad-based exposure, and thus prefer to sell their home off-market.
The Clear Cooperation Policy that was just enacted will effectively end the practice of marketing a home to the general public as “Coming Soon”, and will also severely inhibit a home seller's ability to preserve their privacy by not putting their home on the MLS in order to sell it.
The heart of the new policy is as follows (verbatim from the NAR website):
Cooperation proposal calls for all MLS participants to input any listing they market publicly (via websites, yard signs, mailers, Instagram, etc.), into their local MLS within 24 hours, enabling MLS participants to share the listing with the widest possible range of potential buyers.
This policy, like other similar policies enacted in the past, is intended to prevent brokers from purposely withholding their listings from the broader market, often with the intent of being able to represent both sides of the transaction, or “double-ending” the listing, without the sellers knowledge or consent that the property was not made available to the general public.
At first blush, the Policy seems reasonable since the vast majority of home sellers do indeed employ a Realtor to be able to list their home on the MLS and expose their property to the biggest audience possible. But like any policy that is enacted, it's not possible to make everyone happy, and this one is certainly no different.
As I stated above, this policy has two major consequences that will negatively effect local home sellers. By definition, this policy will eliminate the “Coming Soon” sign, since the mere presence of that sign mandates that the property must be put on the MLS within 1 business day. (I guess it should be now called the “Coming Tomorrow” sign?) But even without a sign in the yard, the new policy prohibits an agent from “pre-marketing” the property in any public manner — including Facebook, Instagram, websites, or email blasts. (It does allow the listing to be communicated within the brokerage — a very important point that will be addressed below.)
Can you imagine if the movie industry adopted this policy? You'd never know that a movie was coming out until the day before it hit the theaters, thus eliminating the need for a “trailer”. This literally prohibits an agent from discussing an upcoming listing from anyone outside of his or her brokerage until the day before it hits the market…if it ever indeed hits the market.
That brings up the second downside — if a homeowner decides to forgo the MLS and wishes to sell their home “off-market” for the sake of keeping their home sale private, the new policy almost totally eliminates the listing agent's ability to market the listing to anyone outside of his or her brokerage. Again, once the listing is marketed publicly, it must be put on the MLS within one business day — despite the wishes of the seller.
Strongly Favors Big Brokerages.
A key point in the policy, which was most likely a concession to placate the opposing view, was that it “does not prohibit sharing within the brokerage office. Even “coming soon” listings could be permissible, depending on local MLS rules.” This has obvious implications that heavily favor large brokerages over the smaller, boutique brokerages. For example, if your home is listed with a small brokerage with 20 agents and you want to promote it as a “Coming Soon” or “Off-MLS,” then exactly 20 agents will be legally aware of your listing. That's not a good side effect.
Obviously, this gives agents that work for larger brokerages such as Coldwell Banker, Compass, and Sothebys much more latitude to expose the listing to a broader group of agents, thus discriminating against franchise-based and boutique brokerages.
Either way you slice it, the policy essentially pushes agents to sell their off-market listing “in-house.” But the smaller the “house” of agents your brokerage has, the less exposure it will gets, so I'm still scratching my head why this is a good idea.
More Details to Follow.
In the spirit of full disclosure, I work for Compass, which is the Bay Area's largest independent brokerage and has aggressively pushed “Coming Soon” as an effective way to increase the visibility of listings that will soon be put on the MLS. They have pumped millions of dollars creating a search site that encompasses both active listings and coming soon listings, and probably just as much advertising these capabilities. Other brokerages such as Redfin and Zillow obviously share the same value, as they too aggressively promote the concept of “Coming Soon” listings.
I'm a big fan of being able to pre-market a house as “Coming Soon”. In an era where everyone is bombarded with information, it's more important than ever to increase the visibility and repetition of whatever it is that you're selling. That's just Marketing 101. And taking away the ability to let the consumer know of an upcoming listing is simply not the right call.
I'm not a big fan of selling homes off-market, however, but I completely respect a home owner's right to market their property that way. Of the many San Carlos homes that I have listed, only a small fraction were sold off-market, and all of these were at the direction of the seller for reasons of privacy.
This policy will be become enforceable in May of 2020 and there are a ton of more details that need to be ironed out in the interim, so if you plan to sell your home in the first half of the year, nothing changes. After that, I'm afraid we'll be taking an unintended step backward.