Questions Received at
May 2004 Risk Management and License Law Forum
1.
(a) Is a buyer representative entitled to a commission if her buyer-client went back
to the seller on her own, not at the urging of the buyer’s representative, and
attempted to leave the buyer representative out of the transaction? (b) What if all
the buyer representative had done was tell the buyer-client about a property that
was listed in the MLS?
(a) The answer to this question turns on the specific facts involved. The traditional
procuring cause analysis should be used to determine whether the buyer representative’s
efforts were responsible for the buyer making the decision to consummate the sale on
terms that the seller found acceptable, and otherwise satisfied the criteria for being
deemed procuring cause of the transaction. If so, the buyer representative is entitled to
a commission even if the buyer attempted to exclude him. (b) If the buyer representative
merely introduced the buyer to a property by referencing it on an MLS listing, his efforts
probably would not merit a determination that he was the procuring cause and he would
not be entitled to a commission, but as noted, an analysis of the facts and circumstances
is necessary.
2.
(a) If a buyer representative brings a buyer to see a property listed on an entryonly/limited service basis and the seller agrees to compensate the buyer
representative, does the buyer representative become a dual agent? (b) Would this
be different if the buyer representation agreement says the buyer is responsible for
the buyer representative’s compensation?
(a) Not necessarily. Receiving compensation does not in itself establish an agency
relationship. You must look at the conduct of the buyer representative, as well as any
written representation agreements. (b) No. The buyer representative’s conduct and the
language in the buyer representation agreement are determinative.
3.
(a) What can a buyer representative do when he calls the entry-only or limited
service broker to ask what type of relationship that broker has with a seller and the
limited service broker is not cooperative? (b) Can the buyer representative file a
grievance against the limited service broker?
(a) The buyer representative can call the seller directly, but the Code of Ethics requires
that he only ask whether the relationship is exclusive and when the relationship will
expire (SOP 16-3 and 16-4); (b) The limited service broker does not violate the Code of
Ethics by declining to advise the buyer representative about the nature of his relationship
with the seller, and the buyer representative can therefore not file a grievance against
him.
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4.
Can a buyer representative ask to see a listing contract?
The buyer representative can ask, but has no right to see the listing contract.
5.
(a) Can one broker solicit a seller, who has an entry-only listing agreement with
another broker, to provide other services? (b) Does this change if the first broker is
representing a buyer-client?
(a) A cooperating broker may not solicit the seller to provide other services except if the
seller independently asks the broker to provide such other services. (SOP 16-3 and 164)(b) A cooperating broker representing a buyer-client interested in the seller’s property
should confirm that her buyer-client has no objection to her doing so before offering to
provide any services to the seller.
6.
Can an agent solicit a client of an MLS entry-only broker, who does not represent
buyers, for the purpose of helping him purchase a home after he has sold his present
home?
An agent may not solicit a seller represented by an entry-only broker to provide buyer
representation services if he became aware of the client through the MLS or another offer
of cooperation. The agent may provide such services if the client affirmatively asked him
to do so. This circumstance may also arise where the listing broker is not “entry-only,”
but instead is a “full service” broker, and the result is the same in either case.
7.
How should an agent handle a situation where a seller asks her, in front of her
buyer-client, to provide services the seller’s limited services broker is not providing?
How should the agent ask the seller for compensation for those additional services?
Since the seller is asking the agent to provide these services, it is permissible for the
agent to agree to do so, provided the agent’s buyer has knowledge of this and has
consented. We suggest that the buyer representative discuss the possibility of this
occurring – and that the agent will ask the seller for additional compensation – with her
buyer at the time well in advance, preferably prior to showing the buyer a property that
is an MLS entry-only listing.
8. (a) When a buyer representative provides services to a seller represented by an
MLS entry-only broker, what may or may not be done without becoming a dual
agent? (b) How can the buyer representative protect himself?
(a) State law, which varies, determines what activities constitute the conduct of a dual
agent and what activities are ministerial in nature and do not constitute the conduct of a
dual agent. (b) To protect himself, the buyer representative should be familiar with state
law and always secure his buyer’s approval before providing any services to the seller.
9.
(a) When a sales associate is working with a buyer who wants to make an offer on
an MLS entry-only listing, it appears, under license law, that the sales associate
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must advise the seller of the costs the seller will incur. Doesn’t this put liability on
the sales associate as to the accuracy of these figures?
(a) It is generally the listing agent who has responsibility for apprising the seller of the
costs he will incur, and the sales associate representing the buyer has no liability for the
accuracy of any figures provided by the listing agent. If, however, the law requires or the
sales associate elects to assist a seller (whose listing agent is not providing these
services) by providing such information, the sales associate can be held liable for any
errors.
10.
What can a buyer representative do if the seller says he will not pay a commission to
her because the offer she presented on behalf of her buyer-client was not the full
price offer stated in the MLS?
By the act of submitting the listing to the MLS, the listing broker makes an offer of
cooperation and compensation to other participants in the MLS. Thus, the buyer
representative should seek compensation from the listing broker, and may require the
listing broker to arbitrate if he declines to do so.
11.
Can a third party be brought in for an additional fee to provide negotiation services
on behalf of the seller for an additional fee or on a fee-for-service basis?
Yes, the seller may retain a third party to provide, on a fee basis or otherwise, any
services he may find necessary.
12.
At settlement, there is a dispute about the amount of the compensation stated in the
MLS. Is the listing broker responsible for the amount of the stated compensation?
The listing broker is responsible for the amount of compensation stated in the MLS,
assuming that the MLS correctly reflects that amount offered by the listing broker as
submitted for inclusion in the MLS. It is possible that the MLS may have liability if the
information published in the MLS compilations is different than that offered by the listing
broker in his submission for inclusion of the listing the MLS
13.
How can a buyer representative make a competitive offer on a property, on his
buyer-client’s behalf, where the MLS states that the co-broker fee offered by the
listing broker, who offers only limited services, is for as little as $1.00?
The buyer’s representative has at least four choices that he should think through before
showing the property: (i) He can request, preferably at the time they enter into a
representation agreement, that the buyer compensate him,; (ii) He can contact the listing
broker and attempt to negotiate a larger fee; (iii) He can request that the seller
compensate him and negotiate accordingly, but subject to any ethical obligations on such
negotiations; or (iv) He can remove himself from the potential transaction and suggest
the buyer proceed on his own. In any event, the buyer’s representative should think
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about these options in advance and prepare himself and his buyer for the above
solutions.
14.
If the seller (who is represented by an MLS entry-only broker) isn’t familiar with
required disclosures (lead, FIRPTA, TDS, etc), how does the cooperating agent
protect his buyer-client?
The cooperating agent has a duty to his buyer-client to ask for all of the disclosure
documents and to advise the buyer that he is entitled to these documents, as well as to
satisfy any other disclosure obligations that might be imposed on the broker/agent by
state or local law.
15.
(a) Does an MLS entry-only broker have any responsibility for advising her client
regarding mandatory disclosures or can that duty be eliminated as a part of the
contract between the broker and the seller? (b) How does this change if the licensee
working with the buyer is a transaction broker or is working in some other nonagency capacity?
(a) If disclosure duties are placed on the listing broker by state statute or regulation, they
cannot be eliminated unless the law permits them to be waived, even when the listing
broker provides only an MLS entry. (b) Nothing changes if the licensee working with the
buyer is a transaction broker since these duties are the listing broker’s statutory or
regulatory responsibility.
16.
What about the limited service or entry-only listing taken in Florida for a property
in New Jersey? Must the broker be licensed in Florida?
State license law, which varies, governs this circumstance. Generally, where the
property is located is not determinative of the license obligations of a broker listing the
property for sale. A broker must be licensed in the state where he provides services to
consumers. Thus, for example, if the owners of the property are located in Florida, there
is no problem with the property being located in New Jersey.
17.
(a) May an MLS require that limited service or MLS entry-only listings be
submitted with a form indicating what services are or are not included by the listing
broker? (b) Can that be published in the MLS (for example in a pull down menu or
remarks field)?
Yes, but only if the MLS has adopted carefully and objectively adopted stated criteria
identifying those listings to which this requirement applies. The MLS may (a) require that
the limited service broker submit listings with a form that indicates what services he will
not provide, and (b) include this information in the listing.
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18.
Can the MLS require that entry-only or limited service brokers use only exclusive
agency contract forms?
No, the brokers may also use exclusive right-to-sell forms.
19.
Can the MLS limit the posting of properties on its public website to those that are
exclusive right-to-sell listings?
No. MLS Policy Statement 7.87 provides:
MLSs are not required to transmit participants’ listings to third party aggregators
or to operate a public website displaying listing information. If an MLS transmits
participants’ listings to third-party aggregators and/or operates a public website
displaying listing information, all exclusive listings, regardless of type, will be
included in the data feed (unless a participant withholds consent for such
transmission), except that MLSs may exclude from such data feed any listing
where both of the following conditions are present:
a.
the listed property’s street address or a graphic display of the property’s
specific location will be displayed to the public; and
b.
the seller displays on the property a “for sale by owner” sign or other
sign or notice indicating that the seller is soliciting direct contact from
buyers.
(Updated 7/11)
20.
Can an MLS refuse to accept entry-only listings in its system?
No.
21.
Should sellers who have chosen only a few items from a menu of services or entryonly be referred to as clients or customers?
Just as in the case of brokers providing more, or “full” service, such persons are clients
of “their” limited service or MLS entry-only brokers.
22.
Is there any liability for advertising that a property is for sale when the party so
advertising doesn’t have a valid listing agreement?
State law generally requires a seller’s consent to advertise that a property is for sale.
23.
Can a seller “shop” an offer to buyers or buyer representatives?
Yes.
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24.
Where limited service brokerage is involved, are the listings exclusive agency or
exclusive right-to-sell or other?
This is determined by state law and the specifics of the listing agreement, both of which
vary.
25.
Can a full service listing broker offer a lesser commission to a limited service buyer
broker?
Yes, if the listing broker independently makes this decision, which should be consistent
with the interests of his sellers.
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