BARRISTER'S BRIEFING: ‘Coming Soon’ and ‘Office Exclusives’: Marketing Genius or Violation Bonanza?
Brian Levine | September 2019
As Realtors, you have a duty to do what’s in the best interest of your clients. This includes marketing a client’s property to the best of your ability. This has created the trend of “Coming Soon” and “Office Exclusive” marketing. Although these may sound beneficial to the client, they create challenges that can quickly get a Realtor in hot water.
Coming Soon… Means Coming Soon
As inventories tighten, some agents have resorted to marketing properties as “Coming Soon.” A reasonable interpretation of this term means the property will be coming on the market in the near future. “Coming soon” marketing should only be used for legitimate purposes in order to permit the homeowner time to prepare the house for showings and, ultimately, sale. This includes giving the homeowner time to repair, pack, paint, stage, photograph and do other things to maximize the property’s value. When done for legitimate reasons, “Coming Soon” marketing may be beneficial to the homeowner because it gives them time to get ready. It’s beneficial to the agent because it creates a buzz in the market about the property before it hits the market.
How to Establish a ‘Coming Soon’
To legitimately set up a coming soon, a Realtor would meet with the homeowner and execute an Exclusive Right to Sell (or Rent). On the contract, they would both agree to put the property on the MLS at a date certain in the future (example: “to go live on 10/21/19”). The contract would be signed and dated on the date it was executed. From that point on, the agent can market the property as “coming soon.” However, there is one important rule: YOU CANNOT SHOW THE PROPERTY TO ANYONE. Because a Realtor has a duty to treat all parties honestly, and because the property is not “active” to show, no one can see the property prior to it going active.
The Office Exclusive
Some Realtors have become creative trying to make a bigger buzz about a property. They want to give the property a feeling of excitement and exclusivity. To do this, Realtors often establish an “Office Exclusive.” With an Office Exclusive, the property does not go on the MLS and the Realtor is free to market the property however they desire within the guidelines of MLS, local and state regulations and laws. An Office Exclusive creates a private, stylish feel to the listing and gives the listing Realtor more control in the marketing.
How to Establish an Office Exclusive
To establish an Office Exclusive, a Realtor must sit down with the homeowner and explain the benefits of the MLS. This includes explaining to the homeowner that placing the property on the MLS will expose the listing to the largest market available, maximizing the opportunity to obtain the highest price. These factors are certainly in the “best interest” of the homeowner. The Realtor will then explain that with an Office Exclusive, the homeowner will not have these benefits, as the property will not go onto the MLS. Exposure will be much smaller and access will be limited. These factors may not be in the client’s best interest. Therefore, in order to have an Office Exclusive, a homeowner must execute a disclaimer that confirms that these things have been explained and that they are agreeing not to list the property on the MLS.
With “Coming Soon” marketing, there must be a legitimate purpose for holding back on showing the property. If there is no legitimate reason, then a “Coming Soon” would not be in the best interests of the client. Placing a “Coming Soon” sign on the front lawn and holding a property off market so the Realtor can obtain buyer inquiries would be a prime example. This activity could expose an agent to a Code of Ethics violation and possible Department of State licensing inquiries, as this is self-dealing and not in the client’s best interest. Another example would be having the listing Realtor show the property only to agents of their office, but not show the property to other agents. This would be a violation of the Code of Ethics and the HGMLS Rules and Regulations.
With “Office Exclusives,” simply getting a disclaimer signed may not stop a homeowner from filing a complaint or filing a lawsuit after they realize that there were strongly competing interests between the homeowner and the Realtor that may or may not have been clearly explained. This often occurs after the homeowner doesn’t get the price they want, there is slow activity or the property sits on the market.
Second is the use of “Coming Soon” marketing with an “Office Exclusive.” The Code of Ethics requires agents to be honest and not misrepresent facts related to the property. If the property is an “Office Exclusive” and the Realtor is actively trying to sell it, it is not “Coming Soon”. It is an active listing. To claim otherwise, is a violation.
Third, pursuant to Real Property Law § 441-c(1)(a), licensees are prohibited from placing misleading and/or untruthful advertisements. This applies to “Coming Soon” ads. If it’s not “Coming Soon,” then it’s false advertising.
Finally, although a property may be an “Office Exclusive,” that does not relieve the listing Realtor from cooperating with other Realtors. If a Realtor calls on the property, the listing Realtor must make it available to be shown. An “Office Exclusive” does not permit the listing Realtor to pick and choose who he wants to deal with.
Realtors are creative. Use of “Coming Soon” and “Office Exclusive” marketing does create a buzz in the market, but Realtors should be cautioned to use them for legitimate purposes and to always put their client’s interests above their own.