BROKER RISK MANAGEMENT
Q: I am a listing agent with many listings. I was approached by an agent from another, smaller brokerage who offered to advertise my listings to try to get buyers for those properties. He stated that it will: “Double the marketing effort at no cost” to me. He will be looking for buyers, and will turn over all broker inquiries to me. He stated that he would pay for advertising in various media and it would be a “win-win” situation. Is this a good idea?
A: You should proceed with caution. While not illegal, allowing another broker to advertise your company’s listings can create problems.
For starters, only the broker with a Listing Agreement with seller may advertise the property for sale. For example, the MLS Model rules (adopted by most MLS’s) prohibit such practices:
12.8 Advertising of Listing Filed With the MLS. A listing shall not be advertised by any Participant or Subscriber, other than the listing broker, without the prior consent of the listing broker…”
There is an exception for authorized downloads of MLS listing data per the IDX and VOW protocols approved by NAR and the MLS rules. But, IDX and VOW downloads must meet specific criteria and do not contemplate advertising individual listings.
But, when it comes to allowing another broker to advertise your company’s listings, there are good reasons not to allow that to happen:
1. If Broker A has a listing and Broker B advertises it for sale, it can give the impression that Broker B has the listing unless it is properly identified as to who is the listing agent. If improperly done, this can be violation of Article 12 of the Code of Ethics (failure to provide a true picture in advertising).
2. Broker B could make a statement about the property listed by Broker A which is incorrect, thus resulting in a misrepresentation lawsuit against both brokers.
3. By allowing Broker B to advertise Broker A’s listing, Broker B is then picking up buyers that, presumably, Broker A and Broker A’s agents would have been able to get from Broker A’s advertising.
4. Also by allowing Broker B to advertise Broker A’s listings, Broker B can be perceived as a larger listing force in the market place (not all buyers understand the disclaimer that Broker A is the listing agent) thus granting Broker B a market perception advantage.
So, for these reasons many brokers have policies not to allow other brokers to advertise their listings at all.
PRACTICE TIPS:
1. If you see another broker advertising your listings, or your company’s listings, without your broker’s permission, notify your broker who should send a “cease and desist” letter. Many such advertisements appear on internet sites, such as Craigslist.com.
If the broker advertising the listing without permission is an MLS member, this would be a MLS violation. If that broker is a member of the local AOR/CAR/NAR, this could also be an Ethics violation. In addition, this could be a DRE license violation for making a “substantial misrepresentation.” Finally, there could be civil liability and monetary damages for engaging in an “unfair business practice” as prohibited by the Business and Professions Code.
2. No salesperson or broker-associate should agree to allow another broker or agent from another company to advertise their listings without the approval of the listing agent’s broker.
3. Even if the listing broker were to allow another broker to advertise their listings, it should only be done with a written agreement between the two brokers and the seller providing that:
A. The seller will allow the advertising of his/her listing by that broker. (This is necessary because you are bringing another fiduciary into the relationship to engage in licensed activity – i.e., advertising property for sale.)
B. The broker being allowed to advertise your listings agrees in writing to:
(1) Use only listing broker’s pre-approved marketing language and descriptions, so as to avoid any misrepresentations.
(2) Advertise only in pre-approved media and for a specific time frame.
(3) Turn over to the listing agent all broker and agent inquiries.
(4) Maintain minimal levels of E&O insurance in place.
(5) Indemnify and defend the listing broker from any and all claims, suits or actions which may arise out of the conduct, disclosures, representations, errors or omissions while advertising the sellers’ properties.
DO NOT FORWARD TO CLIENTS. This Weekly Practice Tip is for the exclusive use of clients of Broker Risk Management and their agents. It may not be reproduced or distributed without the express written consent of Broker Risk Management. The advice and recommendations contained herein are not necessarily indicative of standards of care in the industry, but rather are intended to suggest good risk management practices.
© Copyright Broker Risk Management 2010 07/02/10