Avoid Exclusive Listing Conflict

Not sure if sellers already have an exclusive listing agreement? You should always try your best to find out.

March 15, 2013

Question: What happens when you take an exclusive listing without knowing there’s already an exclusive listing with another company in force and the seller doesn’t make that known to you?

Answer: The Code of Ethics, as interpreted by Article 16 of the Standards of Practice, minimizes this from happening inadvertently. Standard of Practice 16-9 says “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.”

For starters, then, you should check and see if there’s a For Sale sign or a listing in the multiple listing service and ask sellers if they are subject to a current exclusive representation agreement with another real estate broker. Some sellers might be unsure or confused about the status of an earlier listing agreement or for some reason might not disclose the existence of a current, valid exclusive representation agreement, but you still have the obligation to try to find out.

The second paragraph of Standard of Practice 16-13 also applies. “Before providing substantive services (such as writing a purchase offer or presenting a CMA) to prospects, REALTORS® shall ask prospects whether they are a party to any exclusive representation agreement. REALTORS® shall not knowingly provide substantive services concerning a prospective transaction to prospects who are parties to exclusive representation agreements, except with the consent of the prospects’ exclusive representatives or at the direction of prospects.” In sum, Article 16, as interpreted by Standard of Practice 16-13, obligates you to make reasonable efforts to find out if sellers have an existing exclusive listing before going forward.

Bruce Aydt

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.