Agents showing properties without permission

The lender has listed a real estate owned (REO) property with the listing broker. The listing broker just received a call from the neighbor saying there was a broker there showing the house to buyers. Can the cooperating broker conduct a showing without the permission of the listing broker?

REALTORS^® must have authority to access listed property and conduct showings. Standard of Practice 3-9, which was recently updated, states, “REALTORS^® shall not provide access to listed property on terms other than those established by the owner or the listing broker. (Adopted 1/10).” Regardless of whether the home is occupied or vacant, individually or REO owned, consent to show must be obtained. A broker may be found in violation of the Code of Ethics and the potential for broker liability also exists, for example, if a buyer is injured on the property or anything is stolen or damaged during an unauthorized visit.

Listing broker refusing access

The agent has been calling the listing broker requesting a showing of the property. Can the listing broker refuse to allow the agent to schedule a showing?

In the Cooperation, Access to Property and Offer Presentation section on page 1 of the WB-1 Residential Listing Contract, the seller agrees that the broker will cooperate and work with other agents in marketing the property, except as specified in the blank line near the end of the section. This section is consistent with Article 3 of the Code of Ethics, which provides that REALTORS^® shall cooperate with other brokers unless cooperation is not in the seller’s best interests.

“The Parties agree that Broker will work and cooperate with other brokers in marketing the Property, including brokers from other firms acting as subagents (agents from other companies engaged by Broker, see lines 138-141) and brokers representing buyers. Cooperation includes providing access to the Property for showing purposes and presenting offers and other proposals from these brokers to Seller. Note any brokers with whom Broker shall not cooperate, any brokers or buyers who shall not be allowed to attend showings, and the specific terms of offers which should not be submitted to Seller __. ”

In addition, Wis. Admin. Code § RL 24.13(2)(a) provides that listing brokers shall permit all buyers and their agents access to a listed property for showings unless such access is contrary to the seller’s specific written instructions. § RL 24.13(1) indicates that licensees should draft and submit all offers to the seller unless “contrary to the specific instructions of the owner.” These Administrative Code provisions allow a broker to refuse access and refuse to submit offers to purchase if contrary to the seller’s instructions. Although the seller may deny access to certain persons, the seller may be informed that the decision may impact marketability of the property. If the seller wants to deny access for showing purposes, this directive must be in writing. See Wis. Admin. Code § RL 24.13(1) & (2)(a) at www.legis.state.wi.us/rsb/code/rl/rl024.pdf.

Advertising other broker’s listings

The listing broker received a call from the seller saying another broker was handing out fliers advertising the seller’s property. The fliers included the contact information of the agent who prepared the flier, not the agent who listed the property. Can an agent advertise another broker’s listing without having the permission of the listing broker?

Generally only the listing broker has the authority to advertise the seller’s property. A real estate licensee may not advertise another broker’s listing without the consent of the owner and the broker. Wis. Admin. Code § RL 24.04(3) provides: “ADVERTISING WITHOUT AUTHORITY PROHIBITED. Brokers shall not advertise property without the consent of the owner.” Unless there is an arrangement negotiated with the seller and listing broker authorizing other companies to advertise the property, only the listing broker may do so. If the advertisement suggests to the public that the agent advertising the listing was the listing broker, then that practice is arguably misleading advertising in violation of state license law. § RL 24.04(1) states, “FALSE ADVERTISING. Licensees shall not advertise in a manner which is false, deceptive, or misleading.” If the agent is a REALTOR®, this practice also violates the Code of Ethics and Standard of Practice 12-4, which provides, “REALTORS^® shall not offer for sale/lease or advertise property without authority. When acting as listing brokers or as subagents, REALTORS^® shall not quote a price different from that agreed upon with the seller/landlord. (Amended 1/93).” These rules apply to the advertising of another broker’s listings in print, on a website, or using other electronic media. For website advertising, the internet data exchange rules may authorize advertising of another broker’s listing. Check MLS rules for IDX compliance.

Contacting the seller directly

The second listing broker received a call from the seller saying an offer may be coming in from a buyer via the first listing broker. The second listing broker thought that the other broker should have contacted him and not the seller. There were no protected buyers listed when the seller entered into the listing. What would be the best course of action to take with the first listing broker?

The second listing broker may wish to advise the other broker that there is a new listing currently in force and according to Wisconsin license law, negotiations must go through the listing broker. According to Wis. Admin. Code § RL 24.13(5), a licensee may not negotiate a real estate sale directly with a seller if the licensee knows that the seller has an unexpired written listing contract which grants to another broker an exclusive right to sell. All negotiations shall be conducted with the listing broker - not the party. This rule is similar to Standard of Practice 16-13, which states, “All dealings concerning property exclusively listed, or with buyer/tenants who are subject to an exclusive agreement shall be carried on 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.”

It would be prudent as well for the second listing broker to double check with the seller and the first listing broker to make sure there were no protected buyers resulting from the first listing. If there are none, the new broker may ask the seller to refer all offers and inquiries from the former broker to the second broker.

Buyer’s agent fee in offer to purchase

The seller has received an offer drafted by a buyer’s agent. The offer asked for commission to the buyer’s agent. Can they do this?

Depending on how the contract provision was drafted, it could be a violation of the Code of Ethics or a legitimate request by the buyer to have the seller pay a buyer agency fee. Article 16 prohibits brokers from using the offer to purchase to modify a listing broker’s offer of compensation. Given the brokers are not parties to the offer, the offer cannot compel a broker to pay an additional or different cooperative commission. Any provision that refers to the listing broker paying commission should not be included in the offer.

A buyer’s broker may ethically suggest or recommend that the buyer ask the seller to pay some or all of the buyer’s broker’s fee pursuant to Article 16 of the Code of Ethics and NAR Case Interpretation #16-17. The buyer may condition the offer upon the seller paying the buyer’s broker’s fee on behalf of the buyer, as a seller’s expense at closing. Wis. Admin. Code § RL 24.05(1) provides that the buyer’s broker must have the prior written consent of the buyer and seller to collect the fee from the seller because the seller is not the buyer’s broker’s client. The WB-36 Buyer Agency Agreement must also authorize the buyer’s broker to accept compensation from the owner or seller.

See Legal Update 05.09, “Buyer Agency Practice,” online at www.wra.org/LU0509, and Legal Update 99.06, “Revised WB-36 Buyer Agency/Tenant Representation Agreement,” at www.wra.org/LU9906, for further discussion of the issue.

Advertising sold listings

When advertising, is it permissible for a broker to advertise a listing that the broker sold, but that was listed by another agency?

Yes. Standard of Practice 12-7 provides, in part, “REALTORS^® who participated in the transaction as the listing broker or cooperating broker (selling broker) may claim to have ‘sold’ the property.” The references to cooperating brokers in this Standard of Practice include selling brokers (subagents) and buyer’s brokers. Accordingly, there may be two different brokers claiming to have ‘sold’ the same property: the listing broker and the cooperating broker. Advertising Sold Property after Changing Companies The agent has recently changed companies. When advertising with the new company, he included a list of properties that he sold while with the previous broker. Is it a violation of the Code of Ethics to advertise these properties?

The National Association of REALTORS^® in May of 2010 adopted a new Case Interpretation #12-26 entitled “Advertising Role in Sales After Changing Firm Affiliation.” In the NAR’s interpretation of Article 12, an agent was not found to violate Article 12 when he advertised his participation in sales which occurred under the employment of his previous broker. The decision referenced Standard of Practice 12-7 and focused on the disclaimer the agent made in the advertisements. The agent disclosed the properties were sold over the last seven years, and for much of that time, the agent was affiliated with a different firm. Because a consumer would understand some of the sales occurred with the previous firm, no violation of Article 12 was found. The full case interpretation may be viewed in the Code of Ethics and Arbitration Manual at www.realtor.org/mempolweb.nsf/pages/ceam.

Tracy Rucka is Director of Professional Standards and Practices for the WRA.