Christopher
O. Ashe, REALTOR®
Christopher
O. Ashe, REALTOR®
by
By Christopher O. Ashe
As
I travel around the state teaching and consulting I hear a lot of anecdotal
information about the fact the “in-house/private” listings are on the rise
and a lot of complaining that they are illegal and unethical. I thought that
because of the concern, it might be a good time to take a good look at this way
of doing business.
What
do we mean by an “In-house/Private listing?” This kind of listing occurs
when a seller directs their listing agent not to place the listing on the MLS
and, in some cases, not to share it with other agents. (Our MLS officially
refers to them as an “Office Exclusive”; other MLS systems may use a
different term.) The listing is to be kept “in-house” and not shared with
many or any other brokers. Other agents only find out about the listing when
they see an advertisement for it or a yard sign in front of the house. When they
call the listing office they are told that it is private or in-house listing. In
some instances the listing agency will agree to co-broke the listing and some
times they will not, instead offering a referral fee or even offering no
cooperation or compensation.
Why
would a seller choose to have this sort of listing? There could be
several different reasons a seller would prefer this type of listing. One reason
would be privacy. A seller could be concerned by the thought of lots of people
they don’t know wandering through their home. This might be especially true
where there a lots of valuable items out in the open where someone might pick
them up. In the case of a celebrity client they wouldn’t want curiosity
seekers wandering through their home and would hope that having just one agent
involved would solve the problem. Another reason for using a private
listing would be to save money. The listing agent tells the seller that if they
are the only agent involved they will charge a lower fee and thus save the
seller money at closing. Another reason is that the seller believes that
their agent is the only one that can locate the right kind of buyers for their
property; for instance the property in question is a working horse farm and the
agent is a specialist in horse farm properties.
Is
this type of listing illegal? No, not if it is done
correctly. Section 20-328-2-a(h) of Connecticut License law says “In
the sale or lease of property which is exclusively listed with a real estate
broker pursuant to an exclusive right to sell or lease listing or an exclusive
agency to sell or lease listing, the broker shall cooperate with other real
estate brokers upon mutually agreed upon terms when it is in the best interests
of the party or parties for whom the broker is acting.” In other
words the license law says that we MUST share our listings with other brokers unless
we can demonstrate that not sharing would be in the client’s best
interest. As mentioned in the previous paragraph there can be some very good
reasons that a seller would choose to use this type of listing thinking it was
in their best interest. Having said all of that, there are a couple of very
important points that the listing agent should be aware of. The first is that
this decision is the seller’s to make; it is not up to the listing agent to
decide not to share the listing. There is a perception that the primary reason
these listing get used so much is the greed of the listing agent who wants to
keep control and commission all for him or herself. They act as if they are
doing the seller a big favor and protecting their interests when all they want
is to keep the whole pie for themselves. If that were the case it would be a
violation of
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