Equal Service for All

Limited-service listings need full treatment.

August 1, 2005

Q. I’m not sure how to act when I see listings from a limited-service broker in the MLS. Can I contact the seller directly for showings and contract negotiations?

A. Standard of Practice 16-13 of the NATIONAL ASSOCIATION OF REALTORS® Code of Ethics provides the short answer to your question. The first paragraph states, “All dealings concerning property exclusively listed 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.

With that in mind, determine first whether the seller has an exclusive agreement with the listing broker. A limited-service listing can be an exclusive listing even if it doesn’t provide the range of services you define as full service. In fact, some MLSs have rules that only exclusive listings may be submitted to the MLS.

In addition, many limited-service listings give specific direction in the MLS that a cooperating broker should contact the owner directly for showings and negotiations. If there isn’t any statement to that effect in the MLS, contact the broker first and obtain permission before you call the seller.

There’s no requirement in the Code of Ethics that a listing broker must provide showing and negotiation services, though some states have or are considering legislation that requires a broker to pro vide certain minimum services. Illinois recently enacted amendments to the license law requiring that brokers under exclusive brokerage agreements provide such services as presenting offers, assisting in negotiating offers, and answering questions about offers and counteroffers.

Q. In arbitration cases, hearing panels often want to split the commission or fee to resolve the case. What does NAR say about splits? How does a split award impact the mediation process?

A. Most often, hearing panels in arbitration cases are called on to decide monetary disputes between two REALTOR® principals regarding which one is entitled to the co operative commission offered by the listing broker. In deciding those cases, hearing panels make their decision on the basis of which REALTOR® was the procuring cause of the sale.

Procuring cause determinations are often difficult because each case is different and no one rule applies in all cases. A panel may choose to simply divide the commission in half between the two parties or to split the fee on the basis of each REALTORS® contribution to the sale. However, panels shouldn’t take this approach.

The NAR Code of Ethics and Arbitration Manual’s Arbitration Guidelines (Appendix II to Part 10 of the manual) make it clear that splitting an award should be the exception rather than the rule: “Although awards are generally for the full amount in question [some states require that only one party can be determined to be the procuring cause], in exceptional cases, awards may be split between the parties (again, except where prohibited by state law). Split awards should be used only when hearing panels determine that the transaction would have resulted only through the combined efforts of both parties.” It’s the hearing panel’s job to make the often difficult decision about which party is the procuring cause and is thus entitled to the entire commission.

Mediation is NAR’s alternative to arbitration for dispute resolution. Mediation empowers parties to mutually agree on a solution to their dispute rather than having a decision imposed on them by a hearing panel. If it’s common knowledge that an association’s hearing panel routinely splits awards, brokers may see little point in investing the time and energy needed to work out a mediated solution.

Bruce Aydt
columnist

Attorney Bruce Aydt, ABR, CRB, SRS, is a national real estate educator, a Missouri real estate broker, and past chair of the National Association of REALTORS® Professional Standards Committee.

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