“COMING SOON” A sign of the times
June 20, 2015 |
Written By: P.R. ‘Randy’ Cooney
Publisher, Arizona Journal of Real Estate & Business
I recently went down to the “Realty Sign” store to purchase a few items. I happened to ask the manager this: besides the customary “SOLD” or “PENDING” sign riders, what is the most popular sign rider requested right now? With no hesitation he pointed to a sign on the wall that read “Coming Soon.” He added that this particular sign has gained a lot of popularity among real estate agents over the past couple of years. His comment was not surprising to me – when driving through nearly any subdivision these days it’s common to come across at least one “COMING SOON” sign in front of a property.
The “COMING SOON” sign has become an agent’s and/or owner’s way to draw attention for those driving by to highlight a property about to go on the market. From an agent’s perspective, this strategy gives the property some exposure to the market and creates a possibility that a buyer may come forward prior to the home officially hitting the market. In addition, it serves as a shortcut to the accumulation of those critical and sometimes detrimental “Days on Market” (DOM) from the MLS.
It was a number of years ago when the Arizona Regional Multiple Listing Service (ARMLS) mandated a property owner, via the services of a Realtor®, disclose exactly how many days a property had been listed on the MLS. Initially, when agents realized how the posting of DOM effected the perception of the value of a property, they responded by creating methods to avoid lengthy accumulation of DOM. The most popular strategy was to simply relist the property every thirty days in order to reset the DOM counter. ARMLS reacted to this strategy with a new set of rules making DOM reporting retroactive. In other words, DOM would accumulate beyond just the current listing and go back to previous listings – and even previous listing brokerages. This means that even if the listing expired and been relisted with another broker, the total numbers of days that a property has been on the market was available to a buyer’s agent. OUCH! It’s my understanding that the only way to reset the DOM counter to zero today is for a seller to completely take the home off the market for 91 days.
Agents now commonly advise sellers, or take it upon themselves, to place “COMING SOON” signs in front of a property in advance of the listing in MLS. This strategy allows an agent to get a jump start on marketing, or test the market, without accumulating costly DOM. The strategy helps with a problematic factor: once a property goes north of a certain number of days on the market, a buyer or buyer’s agent will frequently question what might be wrong with the property simply because it’s been on the market for an extended period of time. An honest buyer’s agent will acknowledge that the availability of DOM can become material as it relates to perception of value.
Home sellers pay agents significantly for their services and trust their agent will use the best strategy. This may be the only time in the history of mankind that a seller of a privately-owned item is required, NOT by law, but by an arbitrary rule, to disclose how many days it has been up for sale. Given a choice, listing agents would seldom disclose DOM – knowing it may have a negative impact on the perception of value.
Recently, good friends of mine were advised to take their home off MLS for 91 days simply to remove the stigmatization of DOM exceeding 100 days – they elected to do it and wait to relist in September. In their case, it seemed to be a material detriment to have their home north of 100 days on MLS.
The bottom line is this: the relatively new hot trend of the “COMING SOON” strategy would be minimized if the mandatory requirement of posting DOM on the MLS went away for a specific property. Posting average DOM statistics is interesting as well as valuable information for the purpose of looking at property market trends and should certainly be tracked. DOM posted on individual properties is also interesting; however, in time can become material and may ultimately impact offers as well as sales prices.
I look forward to the day when the esteemed members who serve us on the ARMLS committee reevaluate and reconsider the mandatory posting of DOM.
Hopefully that’s “COMING SOON.”