How to Buy a Coming Soon Home Not Yet For Sale
A Coming Soon Home Doesn't Always Bring Multiple Offers
In real estate markets with limited inventory, sometimes sellers and their listing agents try to stir up a little pre-market excitement by listing a home as Coming Soon. The sentiment is since there are very few homes for sale, a new listing that is not yet available will not only whet appetites but it could generate a bidding frenzy when it is finally for sale. Good news for the seller but bad news for a potential buyer.
How can an eager home buyer compete and win the home when so many other buyers are drooling over the Coming Soon home?
What is a Coming Soon Home?
A Coming Soon home is generally a new listing that is not yet available in MLS. The listing agent might, for example, place a "coming soon" sign on the property itself. The listing agent, unless prohibited by its MLS, could also place a pre-advertisement on a privately-owned website that allows direct listing submissions by real estate agents and property owners and which may encourage Coming Soon listings.
Typically, an agent is not allowed to directly market nor advertise a Coming Soon listing, which is often interpreted to mean no solicitation of purchase offers, no showings prior to on market, nor private back-door dealings.
A Coming Soon home listing can also be listed for sale in MLS but is not yet available to show. Perhaps the seller is still preparing the home for sale but wants to generate a bit of interest beforehand.
Why Do Private MLS Systems Discourage Coming Soon Listings?
First, understand that some MLS's across the country are not in favor of Coming Soon homes as a way to market a home that is not yet for sale because the MLS board may believe it gives an unfair advantage to not only the seller but also to the agents who advertise these homes.
A multiple listing system tries to be fair to all of its members.
Since the only way to gather more information about the home is to call the listing agent, a Coming Soon home might lead buyers to call the listing agent directly instead of calling a buyer's agent. This sort of behavior can lead to dual agency, which is not even legal in all 50 states.
Not to mention, MLS prides itself as being the sole true source of property listings and maintains an enormous monopoly, what I like to call the Mother Ship of home listings.
How to Win a Coming Soon Home
Many home buyers, including most first-time home buyers, do not really enjoy negotiating for a home, believe it or not. They just want to buy a home. Not everybody is good at negotiating nor do they care for the pressure and tension that some negotiation strategies seem to require. Throw into that mix the possibility of multiple offers, and it can truly intimidate buyers. Some will openly state that they do not, under any circumstances, want to be involved in a multiple-offer situation.
The way around that is to make a strong offer upfront and then let it rest. For starters, a listing agent with a Coming Soon listing might not allow any showings until the home is on the market.
The zero showing policy is for a variety of reasons, one of which is to try not to violate any MLS regulations. Many listing agents believe the best day to list a home is on Friday, so let's take a look at how that type of Coming Soon listing would be handled.
- Home goes "live" in MLS at midnight on Thursday, downloading all photos and is ready for early morning Friday viewing, generally when listings are automatically delivered to buyers from their agents.
- The seller has an open house scheduled for Sunday.
- Most sellers will not want to accept an offer until after the home has been exposed to the market for at least a couple of days, including the open house, so it is not unreasonable to respond to all offers on a Sunday, for example.
A good way to handle this situation, then, is to write an offer on Friday and give the seller until the evening on Sunday to respond to the offer.
You might be saying to yourself right now, wait, that's nuts. That's giving other buyers time to make an offer that is better than my offer. And you would be right in that assumption. However, what you're not thinking about is how to make your offer the strongest and most aggressive offer at its inception.
With your buyer's agent's assistance, you can probably come up with a price that is agreeable to you, and is also strategically sound. Spend time with your agent to ensure the offer is clean, without mistakes, and that you have offered to pay settlement fees that are customary for your neighborhood and maybe some that the seller would ordinarily pay. You should include all the documentation most sellers want to see such as a preapproval letter, proof of funds and perhaps a copy of your earnest money.
When the seller receives your very generous and remarkable offer, you can bet your bottom dollar that the seller will be thinking about your offer all weekend. The seller might even be tempted to accept your offer right there on the spot and, if so, all the better. But if the listing agent advises the seller to wait, and the seller elects to wait through the open house, your offer will still weigh heavily on the seller's mind.
Your offer will be the first thing the seller thinks about in the morning and the last thing before the seller retires for the evening. It's human nature. The longer the seller thinks about your offer, your proposal, the stronger that offer will become in the seller's mind. The seller will worry what will happen if there are no other offers and then feel relieved when the seller realizes you are still waiting and patiently at that. Your offer, believe it or not, can almost reach sainthood status by the time Sunday night rolls around.
Even if another buyer offers more, the likelihood is the seller will accept your well crafted offer because it originated from such a patient and dedicated home buyer. You can take this tip to the bank.
At the time of writing, Elizabeth Weintraub, CalBRE #00697006, is a Broker-Associate at Lyon Real Estate in Sacramento, California.