Recently, Zillow dropped its latest news on the real estate industry – a new “Coming Soon” category which showcases properties that are to be listed for sale within the next 30 days but are not quite on the market yet. Zillow states: “Browse hidden inventory Be first in line to see U.S. homes not yet on the market, including Zillow’s Coming Soon listings, pre-foreclosures and homes with a Make Me Move® price. This information is found only on Zillow, for free.”
Buyers in tight markets with low inventory, fighting to find the perfect house before it’s under contract will be thrilled with the new feature. Agents across the country cry foul, afraid Zillow is trying to circumvent the MLS system. Bravo Zillow for giving the consumer what they want. Agents indeed should be concerned as the MLS “club” is being threatened.
A shifting real estate market
As the market has shifted from a buyer’s market to a seller’s market in many parts of the country, ready/willing/able buyers are finding themselves not able to find suitable housing. Some face round after round of bidding wars in desirable neighborhoods and price ranges.
At the June 2014 RETSO conference in Atlanta, Georgia, a buyer’s panel organized by Hear it Direct told stories of not being able to find the right house, and losing their first or second choice in homes to a bidding war situation. I’ll bet these frustrated buyers would love to cruise a Coming Soon listing website. And that’s exactly what Zillow is betting on.
Surfing the pre-MLS wave
For months, the real estate industry has been buzzing about “Pocket Listings” (listings that never quite hit the market, as the listing agent markets them to a select group before it ever makes it to the MLS). Whispers of pocket listings and so-called pre-listing marketing by agents have been rampant for ages, but in 2013 and 2014 it’s taken on a life of its own.
The topic has attracted the attention of respected real estate blogger Rob Hahn (so much so he addressed both buyer and seller panels at Hear It Direct at RETSO specifically about pocket listings). Hahn states that 15% of total MLS volume is not on the MLS. Six percent of transactions in the MLS have zero days on market (thus in effect are pocket listings, entered after the buyer is found).
These facts enforce the idea that a decent segment of the properties sold are sold before or without help of the MLS system.
Zillow is clearly catering
Zillow claimed 81.5 million users in May of 2014. It’s catering to what its users want – and in a tight market its users want information on houses for sale, and houses that will be for sale shortly.
A Zillow press release dated June 12 states: “In competitive markets, where inventory moves quickly and bidding wars are common, access to Coming Soon inventory gives home buyers an important leg up.” Bingo.
Zillow is catering to the buyers on the Hear It Direct panel who would have loved to have known about properties before they hit the market, and before they were in competitive bid situations.
Not exactly a new concept
While Zillow is the first major portal to offer this feature, it’s not a new concept. Agents in certain markets already plant “Coming Soon” yard signs on seller properties, trying to build interest and gain attention before a property hits the market. Large brokeragesalready distribute information to agents about listings not-quite-ready-to-market. On Inman.com, Howard Hanna’s president says his agents already enter “coming soon” info into the company’s private system to be distributed within the company, thus giving in-house agents the leg-up and advance warning necessary to possibly sell these homes.
Even agents outside of large brokerages are joining forces in private clubs to promote pre-MLS listings. A March 2014 Realuoso article describes Frank Llosa’s Facebook page devoted to Pre-MLS marketing.
And, savvy sellers themselves also market their homes in the pre-listing stage, hoping to flush out a buyer before having to deal with showings and staging and other hassles of listing. I personally have one seller now whose mission the past two weeks has been to tell everyone he knows that he is listing his house for sale with me, by July 1. He hopes that by creating his own word of mouth buzz, that he will flush out a buyer before having to deal with the actual listing and marketing process. The Zillow “Coming Soon” section is no more than a similar test drive, that a seller and his/her agent may take to test the market for a month or two before really hitting the MLS.
It’s simple supply and demand, people
The bottom line is that Zillow, a for-profit corporation, has figured out a need that exists in the market (to find soon-to-be-listed properties) and has defined a way to serve the buyer looking for such properties. Only Zillow Premier Agents and brokerages with a direct feed to Zillow will be able to use this tool. After the announcement last week, four days later there were 179 properties country-wide taking advantage of this feature. Whether or not this takes off depends on the consumers (demand) and agents (supply).
Agents may consider this feature an exciting new way to pre-market their listings, and may embrace the “Coming Soon” section, or they may fear it. The fact is that Zillow is not constrained by MLS rules and regulations, where a listing must be entered into the MLS within a certain timeframe (such as 24 to 48 hours).
This opens up the question, “When does a listing become a listing?” Agents listing “Coming Soon” may anticipate a listing date of X, but if it does not come to fruition what happens? As a broker, I’ll be asking my agents to secure a signed listing contract before using the Zillow “Coming Soon” feature, with a clause in there that states when the listing starts, and when it is to be listed officially in the MLS.
There’s even an upside
Sellers must be educated by the agents as to how the MLS works, how the new “Coming Soon” feature works, and what this means for them. In essence, I see this feature as a test run for sellers not 100% ready to hit the market, but who want to let the world know they are out there and almost ready.
It may flush out buyers who would have jumped on a different property, or buyers who always looked at that house and may be interested. It is not for everyone, but for a certain subset of sellers and buyers, it may lead to a perfect match.