As the industry changes, now on almost a daily basis, so have the processes that brokers and agents follow. With all the social media, and websites that provide owners with quick pricing, and where the owner can review their property as well as others. Any owner, at any time, might be curious as to the value of their property, as well as pricing on surrounding properties. And that often occurs while the property is listed with an agent.

Yet that is causing a new trend that hurts a listing agent, and often the seller.

Case in point. A listing agent has a listing for $765,000. That listing started 7 weeks ago and has 4+ months to run.

While listed, the seller, again, just curious, goes online to any of the websites that provide pricing, and they see that their house might be worth a few dollars more than the current listing shows. After a minute or two, the seller remembers the conversation with the listing agent, who clearly told the seller that pricing should be flexible and should be adjusted when the market dictates that.

Then, within a few days, the seller receives a communication from an agent regarding their property. Turns out, when the seller priced their home on the website, that was turned into a lead that the website sells to agents. So far, there is nothing wrong here.

However, before that agent reached out to the seller, did they follow the REALTORs Code of Ethics, Article 16, Standard of Practice 16-9? That SOP says the following:

REALTORS®, prior to entering into a representation agreement, have an affirmative obligation to make reasonable efforts to determine whether the prospect is subject to a current, valid exclusive agreement to provide the same type of real estate service. (Amended 1/04)

Thus, if that agent contacts the seller based on the referral from the website, they are still obligated to 16-9, and failing that, they would be in violation.

Then, it goes further. That agent sweet-talks the seller and convinces the seller to cancel their listing and list with them. The listing agent receives a communication from the seller that they are cancelling the listing, which usually totally surprises the listing agent.

What’s next? Some FAQ’s

The seller may not unilaterally cancel a listing agreement. The listing agreement is an employment agreement, which binds both parties, the seller, and the broker. Thus, any cancelation of that agreement must be bilaterally agreed between the parties, meaning the broker could demand compensation in exchange for cancelling the listing. That of course depends on if the listing agent wrote any language into the listing agreement allowing a one-party cancellation, meaning the seller may cancel at any time, or with X days’ notice.

This is a business decision, and sadly, many brokers and the agents do not want to fight with the seller and burn a bridge. That agent deserves to get paid, yet that too, is a business decision.

The new listing agent would clearly be in violation of SOP 16-9, unless the agent visited the property and talked to the seller only after the seller specifically reached out and asked the agent to come over and talk to them. In this case, the seller innocently input their address for pricing on a 3rd party website and did not specifically ask that specific agent and/or brokerage to contact them.

With the broker’s approval, the current listing agent could file an ethics claim against the new agent, for failing to honor the current listing on the property.

The Code of Ethics also tells us not to solicit another broker’s listing, found in Article 16, SOP 16-4, which states:

REALTORS® shall not solicit a listing which is currently listed exclusively with another broker. However, if the listing broker, when asked by the REALTOR®, refuses to disclose the expiration date and nature of such listing, i.e., an exclusive right to sell, an exclusive agency, open listing, or other form of contractual agreement between the listing broker and the client, the REALTOR® may contact the owner to secure such information and may discuss the terms upon which the REALTOR® might take a future listing or, alternatively, may take a listing to become effective upon expiration of any existing exclusive listing.

One way to avoid going to war is the current broker reach out to the new wannabe broker, and have that agent back off, tell the seller that they are better off staying with their current agent, and wait for the listing expire. If the broker digs in their heels and does not agree, then the current agent and broker should file the ethics complaint on both SOP 16-4 and 16-9.

Last thought. Business is tough enough. Let’s all work and play by the same rules and treat each other with respect. And remember, ignorance of the rules and codes is not a good defense.