Craig Franklin Chambers, Attorney at Law

May 1, 2016

Colorado Real Estate Transactions: What is a “Coming Soon” Listing?

Littleton Real Estate and Family Law Blog

Vol. 1.74  May, 1, 2016

By Craig Franklin Chambers, Esq.

The Littleton Lawyer

A “Coming Soon Listing” is a listing that is not available to be shown but the Seller has signed a listing agreement and wants to announce that the listing is coming on the market soon. “Soon” could be a few days, or a few months, there is no industry standard; but the sign rider announces that the home will be coming on the market.  Usually, the Seller is prepping the house for showings and the delay is a week or more.

The concept is not new. A Coming Soon Listing is traditionally called a “pocket listing” and it is a listing that is not open yet to the real estate community but is for sale only through the listing broker.

To understand the problem with the Coming Soon Listing, keep in mind that in a Colorado real estate transaction the traditional real estate commission is conceptually divided in two parts: a total commission paid to the listing broker’s company, of say, 5-6%, usually 2.8% of that is reserved to be paid to the broker who brings the buyer, the selling broker, the remainder being paid to the listing broker.

Both the listing broker and selling broker real estate commissions are paid by the Seller. Some listing brokers offer a discount if they also bring the buyer because they are receiving both commissions; others simply make more money if they “double-end” the deal.

While buyers working with real estate brokers are instructed to wait until the listing comes on the market, buyers without brokers can contact the listing broker and possibly view the home. The listing broker then will earn both commissions and sell the home before it ever hits the market.

In a market like the current one, in which inventory is tight, and listings are rare, A Coming Soon Listing allows the listing broker the opportunity to market the home before it even goes on the market .

Sounds good? Well, it’s not fair to the buyers working with a real estate broker. And its not fair to the Seller, unless the Seller agrees with the strategy in writing.

In fact, the Colorado Real Estate Commission urges brokers to refrain from the practice unless the Seller is fully apprised of the risks associated without withholding the home from the open market.

A wiser strategy is to put the home on the open market and see what the market will bear. A Seller can price his home at any price point he chooses, but only the market can speak to the fair market price of the home.

If the home is priced too high, it will sit on the market. If it is priced to low, the Seller will get multiple offers, and the broker can bid the home up in price.

A coming Soon Listing or Pocket Listing denies the Seller that possibility, usually benefits only the listing broker, and it denies access to all of the other brokers who may have a potential buyer.

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    Denver Real Estate and Family Law Attorney

    Licensed to practice law in Colorado since 1997, I have a B.A. from Vanderbilt University and a law degree from the University of Denver.

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