States issue new guidance on what makes these listings legal or not.
By Chloe Hecht
Coming Soon listings are on the rise as housing inventory tightens in many areas, causing concern among real estate professionals and prompting real estate commissions to issue guidance on the topic. Here’s what you need to know to keep your members informed and out of legal or ethical dilemmas.
What’s a Coming Soon listing?
A Coming Soon listing refers to a property that is not available for showing or sale until a later date. “Coming soon” can be a legitimate advertising technique, allowing the owners more time to complete repairs, pack, or otherwise prepare the property for showing or sale. A legitimate Coming Soon listing should truly be unavailable for purchase or showing.
Sometimes, however, “coming soon” advertising is used to circumvent the MLS, market the property to a select group of people, or pressure a buyer to use the listing broker for the transaction, which not only breaches real estate professionals’ ethical duties to clients but may violate real estate license and consumer protection laws.
How to tell a legitimate Coming Soon listing from a nefarious one
Advertising a property before it’s ready for showing may not be a new practice. But what’s on the rise may be the nefarious intent behind the tactic.
In response to a flood of Coming Soon listings, some real estate commissions have stepped in to issue official commentary on what makes this advertising legal or not.
Most recently, the Idaho Real Estate Commission issued Guideline No. 8, “Coming Soon Listings.” The guidance warns that “coming soon” advertising that is used to market a property to a select group, such as investors or buyers represented by the seller’s agent, constitutes a misleading advertisement, which violates numerous Idaho state laws. “Too many times, ... the property is advertised as ‘Coming Soon’ for the purpose of excluding the open market from selling the property. The listing agent, or agency, believes they can produce a buyer without any additional assistance from competing licensees,” the guidance states.
The Idaho commission also highlights that misrepresenting a property as “coming soon” may violate Idaho’s Consumer Protection Act. Furthermore, “claiming that a seller accepted an offer and, therefore, they must be content with their transaction, is not a safe haven.”
The Nebraska Real Estate Commission identifies in its guidance document No. 40, “Coming Soon Listings,” four criteria for permissible “coming soon” advertising, specifically: (1) the advertising broker must have an active listing agreement in place; (2) the advertising must be done in the name in which broker does business and under the broker’s supervision; (3) the advertising must be done with the property owner’s, or his or her authorized agent’s, knowledge and written consent; and (4) the listing must in fact be “coming soon” and not currently being shown or marketed to a limited group. The state commission document also cautions real estate practitioners: “While permissible, the use of ‘coming soon’ advertising has potential to give rise to violations of the license act.”
Although new rules at many MLSs enable agents to enter “coming soon” properties under a special status, improper “coming soon” properties negatively affect the MLS and may violate its rules. MLSs facilitate transactions by creating a consolidated source of accurate property information and function at their best when information is complete. Improper Coming Soon listings compromise that accuracy. They also undermine cooperation among real estate professionals through the MLS by requiring potential buyers to use the listing broker for showings and offers to purchase.
Finally, improper “coming soon” advertising may also violate state laws and regulations. Real estate professionals owe certain fiduciary or statutory duties to clients under state licensing laws and regulations, and that duty is violated when the professional does not act solely in the client’s best interest. State laws also typically require truth in advertising, and improper Coming Soon listings are misleading and inaccurate.
Why Coming Soon listings are an association issue
It’s important to educate members on their ethical and legal duties under NAR’s Code of Ethics, their MLS’s rules and policy, and their state’s laws and regulations. Members who misuse “coming soon” advertising risk disciplinary action by their local association and real estate commission and lawsuits brought by dissatisfied clients.
Associations are welcome to reprint or link to this article or “Coming Soon – Is it in the Seller’s Best Interest?,” by NAR General Counsel Katherine Johnson, available at nar.realtor.
6 best practices for legitimate Coming Soon listings …
_ Are only for properties under a signed listing agreement.
_ Comply with all state licensing laws and regulations.
_ Have a compelling reason that this tactic is in the best interest of the client.
_ Have the client’s informed consent in a thoroughly documented written agreement.
_ Restrict showings and bids equally to all potential buyers.
_ Comply with MLS rules.
7 signs indicating nefarious Coming Soon listings …
_ Are not in the seller’s best interest.
_ Are made without the seller’s permission or consent.
_ Have no logical or reasonable reason to be marketed in this way.
_ Have no signed listing contract.
_ Are actively shown only to select groups of buyers.
_ Accept offers.
_ Compel sellers to accept offers from a buyer who is represented by the seller’s own agent.
Chloe Hecht is an associate counsel at the National Association of REALTORS®. Contact her at 312-329-8248 or