Tuesday, May 11, 2010

How soon is soon when "coming soon"?

Without getting tongue-tied, the question is how early is is reasonable to put up a coming soon sign. This is a big issue in California and in my local area as well. The controversy comes from agents who put signs up weeks or months in advance, thus disrupting the flow of the market.

In discussions with the managers of major brokerages in Los Altos and Mountain View, the consensus is that signs should be up no more than 2 weeks in advance. I can live with that. However, we do see agents who put signs up a month or more in advance. While the client and listing agent for that property may think it's great to build interest in their home, it can hold up buyers of other properties.

Often times the intent is to build a fervor for the upcoming property. However, it keeps buyers from bidding on nearby properties. This can be bad for several reasons including lack of comps and lower sales prices. The lack of comps is an issue for appraisers which might impact closing the deal.

The potential for lower sales prices, in my opinion, comes from having buyers be able to choose which property to go after. With more inventory on the market, buyers are in control. However, if homes become "pending sale" or "sold" then there is less inventory, more competition for buyers, and prices trend up.

So, keep the coming soon signs to within a couple of weeks of coming on the market and be reasonable when bringing on competing properties. A fair free market will benefit buyers, sellers, and agents in the long run.

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