By Alvin C. Monshower, Jr., Esq.
A seller contacts you to make a listing presentation and makes it clear to you that the seller is interviewing other REALTORS®. Your presentation is well received and you are confident that you will get the listing. Subsequently, you learn that the property has been listed with another broker and is now being marketed through the multiple listing service.
Naturally, you are curious as to why the seller selected another REALTOR® other than yourself and, if nothing else, you would like some feedback from the seller as to why you were not selected and, perhaps, to fine tune your presentation to future sellers. As a consequence, you decide to contact the seller directly to inquire as to why the seller did not select yourself as the listing agent and as to why another REALTOR® was selected.
Standard Of Practice 16-13 of the NAR Code of Ethics provides as follows:
- “All dealings concerning property exclusively listed, or with buyer/tenants who are subject to an exclusive agreement, shall be carried 011 with the client’s representative or broker, and not with the client, except with the consent of the client’s representative or broker or except where such dealings are initiated by the client.”
Effective January 1, 2012, the National Association of REALTORS® has adopted a new case interpretation #16-20, captioned as “Continued Contact With Potential Seller Who Enters Into an Exclusive Listing With Another REALTOR®.”
The new case interpretation, which he came effective January 1,2012, reads as follows:
- At the conclusion of a detailed listing presentation, REALTOR® B asked the sellers whether they had any questions. “No,” said Seller Z. “Your presentation was professional and complete and we very much appreciate your time. We have appointments with two other realty firms and after we talk to them we’ll make our decision.” REALTOR® B thanked the sellers and encouraged them to contact him with any questions they might have. “I really look forward to being your broker,” he added.
Several days later, REALTOR® B noticed that Seller Z’s property had come on the market, listed with REALTOR® A. REALTOR® B and REALTOR® A were friends, but were also quite competitive, both frequently pursuing the same potential seller-clients. “I wonder why Seller Z decided to list with REALTOR® A,” mused REALTOR® B. “It won’t matter if I just call and ask why they decided to list with my friend REALTOR® A instead of me.” REALTOR® B called the sellers and left a message on their answering machine asking for a return call at their convenience.
That evening, Seller Z returned REALTOR® B’s phone call. REALTOR® B started the conversation by thanking Seller Z and his wife for their time. “What I’d like to know is why you chose to give your listing to REALTOR® A instead of me?” he then asked. “Don’t get me wrong. REALTOR® A is a good broker and will do a good job for you, I’m not suggesting you cancel your listing with REALTOR® A but if your listing expires and REALTOR® A hasn’t sold it, I’d be pleased to talk to you about listing with me.”
Seller Z did not follow up on REALTOR® B’s offer and the following weekend at REALTOR® A’s open house Seller Z and his wife recounted REALTOR® B’s follow-up phone call. Over the next few days REALTOR® A debated filing an ethics complaint. He weighed his friendship with REALTOR® B against what he saw as his duty to bring potentially unethical conduct to the attention of the association of REALTORS®. Somewhat reluctantly, he filed an ethics complaint alleging a violation of Article 16, as interpreted by Standard of Practice 16-13.
At the hearing, REALTOR® A called Seller Z as a witness. Seller Z faithfully recounted the substance of REALTOR® B ‘s conversation with Seller Z and his wife, commenting that while REALTOR® B had said he was only trying to understand why he hadn’t been given the listing, it appeared to Seller Z that REALTOR® B wanted Seller Z to cancel his listing with REALTOR® A. Then REALTOR® B testified in his own defense. He acknowledged he had been aware that REALTOR® A had already exclusively listed the property when he contacted Seller Z and asked for a follow-up appointment. He defended his actions stating he was not trying to induce Seller Z to cancel the listing, he was simply trying to find out what he had said–or failed to say–that led Seller Z to list with REALTOR® A instead of with him, and wanted Seller Z and his wife to be fully aware of the services he would provide if their listing with REALTOR® A expired.
The Hearing Panel did not agree with REALTOR® B’s defense, noting that REALTOR® B’ s curiosity or desire to enhance his listing presentation skills did not justify continued contact with a potential seller-client after that seller had entered into an exclusive representation agreement with another broker. REALTOR® B was found in violation of Article 16 as interpreted by Standard of Practice 16-13.
As the above case interpretation makes very clear, your curiosity as to why you were not selected as the listing agent or your desire to enhance your listing presentation skills do not justify continued contact with a potential seller-client after the seller has entered into an exclusive representation agreement with another broker and for which you have actual knowledge. The key fact is that you, the REALTOR®, directly initiated such contact with the seller with the full knowledge that the seller engaged another REALTOR® to list the property and that the property is actively marketed.
Consequently, as a risk-reduction rule, do not contact a seller who has interviewed you and subsequently selected another REAL TOR® to represent the seller in the sale or lease of their property.
(This article is intended to be a general discussion of the topic. As with all legal matters, the reader should consult with competent legal counsel regarding any actual situations or questions.)
©2011 – Alvin C. Monshower, Jr., P.A.
All rights reserved. This article may not be duplicated, copied or distributed without the express written consent of Alvin C. Monshower, Jr., Esq., nor may it be used in connection with any educational program without such prior consent.