Legal Summaries

MAR Legal Hotline

Oh, how many times have we tried to clone our state legal department? Real Estate law gurus Michael McDonagh, General Counsel of the Massachusetts Association of REALTORS®, and his ever supportive Associate Counsel Ashley Stolba keep us out of trouble on a daily basis!

Now, both will share their information with you each month; provide you with a highlight of the calls they field on the legal hotline; and keep us posted with changing Massachusetts law. Also included here are national notes from NAR’s legal department concerning federal cases that are of interest to Massachusetts brokers and salespersons.

Members may access the Legal Hotline by calling 800-370-LEGAL (5342), sending an e-mail, or faxing questions to the Legal Department at 781-890-4919

The MAR Legal Hotline offers authorized callers access to staff attorneys who can assist members with questions about current state and federal laws and regulations, permissible business practices, and important court rulings affecting real estate practitioners.  To take advantage of the Legal Hotline service, a member’s designated broker must first complete and sign an Authorization Form and return to the MAR Legal Department.  Once approved as an authorized caller, MAR members may access the Hotline. The hours of operation are Monday-Friday, from 9 a.m. to 1 p.m.

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Coming Soon Listings: Do the Right Thing

We’ve received several calls about facebook ads and lawn signs featuring ‘coming soon’ properties – homes advertised by an MLS member but NOT listed in the MLS.  Members must follow MLS rules for coming soon/pocket listings, but also should also be aware of NAR’s caution about following fiduciary law as well, and understand the impact on the industry as a whole.

Understand The Rules

These listings are not prohibited however, all members must always follow the MLS’s Rules and Regulations with regard to them.

    • You should submit paperwork immediately – a copy of the Exclusive Right to Sell AND Refusal/Delayed to List form to Listings@BerkshireREALTORS.org.  When asked, the MLS will tell brokers that the property is exclusively listed and all dealings must go through the agent. If there is no paperwork on file, we cannot confirm it’s exclusively listed.
    • If you promote a Coming Soon listing without an Exclusive Right to Sell and delayed submission form submitted to the MLS, there is nothing that stops a member from knocking on the door or contacting the seller of the “open listing” if they have interested buyers.
    • REALTORS® are bound by the Code of Ethics to protect and promote the best interest of the client. Coming soon listings have limited exposure, potentially resulting in fewer offers and thereby reducing the possibility that your client will get the best and most reasonable price and terms.
    • SELLERS must be the one to decide to pre-market their property, especially in this low inventory market when exposure could bring more / higher offers. Most sellers just want the highest price possible for their home. The best way to accomplish that goal is to make sure their home is exposed to the maximum amount of potential buyers. If a seller has privacy or other legitimate concerns and want to keep the listing off the MLS, agents must explain the pros and cons of how this could affect their sale.
    • SELLERS must also decide if they will allow showings and/or accept an offer before it’s been listed in the MLS.  If the strategy is to deprive some buyers of the ability to view and offer for the property, you better make sure that the seller – not an agent – is making that decision.  It’s no coincidence that Fannie Mae and Freddie Mac properties require a listing to be advertised in the MLS for 72 hours before they will accept and offer – it’s to ensure fair market exposure and value.  If an agent puts their own interest ahead of their client, to secure both sides of the commission, not only is that highly unethical, it is a breach of your fiduciary duties. Depending on the scope, it could result in a violation of Chapter 93A and treble (triple) damages to be paid by the agent / broker, plus legal fees.
    • The primary purpose of the MLS is to foster cooperation and establish offers of compensation among participating brokers. If the spirit of sharing listing information, compensation and cooperation falters, so will our ability to work collectively on transactions for the good of the consumer and industry.
    • If you tell cooperating REALTORS that a property can’t be shown until a specific date and then get caught making an appointment with an unrepresented buyer that calls directly, you will wind up in hot water for unethical and potentially illegal behavior.  That self-serving behavior is a tarnish on our whole industry because it lines the agent’s pockets while harming both the buyer and seller.
    • Remember – Selling it “behind the scenes”, changes the entire dynamic of our real estate market – that sale can no longer be used by appraisers as a comparable since it hasn’t  had exposure on the open market.

Best practice:  How to handle coming soon marketing due to a home not being ready to show? 

List it exclusively, have the seller sign the Refusal / Delayed Submission, send it to the MLS office IMMEDIATELY.  Work with the seller to develop a consistent way to arrange showings, preferably waiting to show to all buyers only when it is publicly listed in the MLS, so they get the most exposure and activity.

Make sure if you allow a buyer to preview the listing before it is actively marketing it in the MLS, you are not discriminating and are showing it to ALL buyers.

Advise sellers on legitimate pros and cons if an offer is received before it is actively marketed.

List it in the MLS (and syndicate as your seller wishes) for at least some time (72 hours is a good rule of thumb based on Fannie and Freddie’s rule) so that proper exposure to the marketplace and pool of interested buyers is made aware of the property’s availability.

Most importantly, honor all dealing with co-brokes. Our business structure exists based on cooperation – if our industry loses cooperative sales (can you imagine the impact on your income if you don’t have access to sell MLS listings?), consumers AND Realtors are harmed.  And I’m sure Zillow will be happy to take over matching buyers to sellers in your place.

Are Your Clients Best Interests Being Served?

The National Association of REALTORS® (NAR) has responded to the recent industry discussion surrounding “coming soon” listings by reminding members that, “‘The first important step in advising a seller-client on whether to advertise a property as ‘coming soon’ is to identify the client’s best interests, as defined by that client…Failing to act in the client’s best interest and failing to disclose the pros and cons of a limited marketing plan, such as ‘coming soon’ advertising, can violate state real estate license laws and regulations, MLS policies, and the REALTOR® Code of Ethics.'”  You can also read NAR’s guidance for members on the use of coming soon listings. (or watch the following 4 minute legal video from NAR General Counsel).

Read more from NAR’s response to coming soon listings.

Impact to the MLS Community

The primary purpose of the MLS is to foster cooperation and establish offers of compensation among participating brokers. Instead of promoting cooperation, the use of pocket or coming soon listings may discourage and may dampen that spirit of sharing listing information, as well provide no assurance of cooperative compensation should you find yourself involved in a transaction that includes a non-MLS listing.

Outside of the effect these listings could have on your seller, pocket listings also adversely affect information everyone relies on the MLS to provide.  Please don’t forget that appraisers rely on the MLS data to create accurate appraisals.  Many lenders will not allow non-MLS sales to be used as comparables because those properties were not adequately exposed to the market and, therefore are not an accurate representation of market-driven prices.  Brokers and salespersons also heavily use the MLS database to help sellers determine list price and to help buyers determine what they should offer. Sales that aren’t included in the MLS lead to incomplete and inaccurate results.

Stay Compliant, Serve Your Clients

Despite the ongoing industry discussion about on this topic, remember these two things: you are still required to comply with the MLS’s listing entry rules and you have an obligation to act in the best interest of your clients. Keep these two things in the forefront of your mind and you can avoid running into trouble when confronting off-MLS or coming soon listings.

REALTOR® Magazine. http://realtormag.realtor.org/daily-news/2014/06/17/how-avoid-trouble-coming-soon-ads?om_rid=AAB0ys&om_mid=_BToIuFB86uBi-Q&om_ntype=RMODaily. Accessed: 6/18/2014.

Other BerkshireREALTOR.net articles written about this topic:

Lead Law Changes for 2018

The Massachusetts Department of Public Health made some changes to deleading standards as well as the standards for lead poisoning in children last month.  The changes should result in lower costs to delead, and help property’s meet Initial Compliance status easier.  That progress comes at a cost – there will be more lead left in

Clearing Snow?

Hopefully this reminder won’t be needed after our recent thaw, but many members have been calling extremely frustrated that they arrive to a property showing appointment to discover that the drive or walkway has not been plowed or shoveled.  In some cases of extremely long, un-maintained drives, properties were not even accessible to buyers –
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