Although it’s not pointing a finger directly at Zillow, the National Association of Realtors is warning that brokers who do not act in the best interests of their clients and fail to disclose the pros and cons of marketing strategies such as “coming soon” advertising may be exposing themselves to legal and professional liability.
In an article posted on the trade group’s website, NAR General Counsel Katherine Johnson listed the steps that brokers and agents should take to ensure that their clients are able to make an “informed determination” of whether a “limited” marketing campaign is in their best interests, and that they are in compliance with state real estate license laws and regulations, MLS policies and the Realtor Code of Ethics.
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Real estate listing portal giant Zillow launched a new feature last week allowing certain agents, brokers and MLSs to market homes on the search site as “coming soon” up to 30 days before they hit the MLS.
Zillow’s “coming soon” feature has sparked a debate in industry circles about whether it could undermine the role of the MLS, and about potential legal and regulatory implications.
When asked whether Johnson’s “coming soon” article was prompted by the launch of Zillow’s new “coming soon” feature, NAR spokeswoman Sara Wiskerchen said, “We simply wanted to provide information to our members on this timely topic.”
At least one brokerage, Indianapolis area-based F.C. Tucker Co., on Tuesday warned its 1,500-plus agents that participating in Zillow’s “coming soon” feature would result in a violation of Indiana licensing law and is subject to fines of $600. The warning was based on policies put in place last year by the Metropolitan Indianapolis Board of Realtors (MIBOR) to address “coming soon” and “pocket listings,” the brokerage said.
Zillow requires agents to certify when uploading a “coming soon” listing that they are complying with the rules and regulations of their local MLS, local association of Realtors, their brokerage and their state’s licensing laws. Agents also certify that they have their seller’s permission to market the home before putting it in the MLS. Zillow has said it has a compliance system in place to monitor possible violations and keeps an audit trail of each “coming soon” listing.
Commenting on a June 11 Inman News story, Zillow spokesman Jay Thompson said that “coming soon” listings “are another way to expose your listings to a large local and national audience. Your local rules and regs must be followed, participation is voluntary and of course you should discuss this with your sellers, just as you do with all of your marketing plan.”
Thompson said that Zillow’s “coming soon” feature may not be the right marketing tool for every situation, “but could be a powerful way to gauge interest, ‘feel out’ the market and get a leg up in a competitive marketplace.”
Premarketing has become more common as inventory shortages in many markets have created an imbalance of buyers and sellers. That’s made it easier for brokerages to market listings to buyers they’ve already lined up, rather than offering to split commissions with other brokers who can bring a buyer to a sale. Homes that are marketed outside of the MLS, and publicized only within a brokerage or on private networks, are often referred to as “pocket listings.”
Zillow Chief Industry Development Officer Errol Samuelson has said that that Zillow is out to “co-opt” pocket listings, by allowing homes to be premarketed to millions of visitors to the site.
Johnson’s article on NAR’s website noted that there are many definitions of “coming soon” marketing strategies.