A few weeks back, I mentioned with some level of disgust
that amount of gamesmanship and bad behavior that was taking root in our
market.
Front and center in this controversy - the dreaded
epidemic of "Coming Soon" signs popping all over town on pre-market
listings.
On Monday, for the second consecutive week, the Colorado
Real Estate Commission (CREC) sent out a warning to agents: Be prepared to answer for your 'Coming
Soon' signs.
Why is this an issue?
As I wrote previously, MLS rules require that
properties be listed for sale in the MLS within 48 hours of a seller signing a
valid listing agreement. Agents can
withhold listings only with the seller's written consent.
Sometimes, as in the case of a house that's getting
"freshened up" prior to hitting the market (think paint, carpet, new
appliances, etc.), the Coming Soon sign might be a logical strategy to generate
pre-market interest.
But what's happened far more often in 2014 is the bad
behavior version of Coming Soon. Here
are two abuses of the Coming Soon sign:
1) Agent lists property for a 6% commission. Agent tells seller, "if you let me hang
a 'Coming Soon' sign on the property and I find the buyer, I will lower my
commission to 5.0%" (or 5.5%, or whatever). Agent never puts property in the MLS, agent
finds buyer, agent double ends the deal.
The question here, from the CREC's perspective, is
whether or not the seller knew his property was never going in the MLS, and
whether or not the seller is served by having one agent have exclusive control
over the buyer pool when there are thousands of other potential buyers who miss
the home altogether because it never hits the MLS.
2) The second version of abuse is more insidious, because
there is no disclosure at all. Let's say
someone lives in a house for 40 years and then dies. The home is to be sold as part of an
estate. The kids are scattered over the
country, the property is in Denver.
The kids hire an agent who promises to do his or her best
to get the home sold. A listing
agreement is signed, but the agent never lists the home in the MLS. Instead, in our red-hot market, he or she
hangs a 'Coming Soon' rider on the sign and suddenly the phone is ringing.
Agent tells heirs he has a buyer, agent double ends the
deal and the out-of-state family never even finds out the home was never listed in the MLS.
Is this bad behavior?
Of course it is, and agents who breach their fiduciary responsibility to
their sellers should have their licenses suspended or revoked.
There is both greed and despair on full display in this
market. Many sellers (and their agents)
are getting greedy while many buyers (and their agents) are becoming
desperate. It's a bad mix, and the CREC
is hearing it from all sides.
The message from the CREC is clear: "Clean things up, agents, or we'll step in and clean things up for you."
