We know the market conditions are fast and ever-changing right now. Make sure you understand the rules on the Clear Cooperation Policy and Office Exclusive Listings. IAR Legal Counsel, Gabe Walsh, breaks down some of the important details regarding office exclusive listings.
Read more on the Clear Cooperation Policy from the National Association of REALTORS here: https://www.nar.realtor/about-nar/policies/mls-clear-cooperation-policy
You can watch IAR's Legal Breakdown that further discusses the Clear Cooperation Policy. https://youtu.be/ktwiBhWo3Vk
Disclaimer: This video is intended to be an education resource for Iowa REALTORS®. The information in this video discusses general legal information and is not legal advice or a substitute. Every situation involving areas of the law, such as the areas discussed in this video, are sensitive to the particular facts of your case, and therefore, you should always consult your own legal counsel to get legal advice.
If you prefer to read this information, you can scroll below the video to read the transcript of the video.
This is a transcript of the Legal Breakdown video recorded by IAR Legal Counsel Gabe Walsh in June 2021.
Iowa Realtors®. It's good to be back for another Legal Breakdown. Today we are going to be talking about the Clear Cooperation Policy and more specifically the concept of an office exclusive listing. We all know Clear Cooperation by now, right? If you're going to be publicly advertising a property, you have one day to get that property into the MLS. Again, one business day from publicly marketing that property.
Now, why was this rule put into place? Because we know as Realtors® that widely exposing properties on the multiple listing services single-handedly the best way for a seller to maximize a top dollar for their home. It gives buyers the most access to find that home of their dreams. The MLS every day operates in the best interest of consumers. That's important to understand and always understand. Because an office exclusive is a little bit different.
What an office exclusive is doing is saying, "Actually, we don't want to take all the advantage of the MLS. We don't want to put our home out for all these people to see it. We actually want very little marketing done at all." And of course, there are situations where that's okay, where you can do an office exclusive listing. And if it's an office exclusive listing, what that means is it can go into the MLS, but only people within your office are going to be able to see that. Now, if it's an office exclusive, you can't be marketing it on Facebook. You can't be putting signs in the yard. You can't be talking to anybody about the property outside your brokerage. Because at that point, you're public marketing, and it has to be into the MLS within one business day.
But here's what we always need to remind ourselves. An office exclusive listing is never something that a Realtor® should suggest to a client. It is something that a Realtor® would only suggest if a client comes to them. Maybe they have a divorce situation. Maybe they are a top level executive of a company and they don't want somebody to know about their multimillion dollar vacation home. Maybe there's some specific reason that client comes to you and does not want that property on the MLS. Of course, in that situation, you're going to advise them, just like I did, of all the great benefits of the MLS, why the MLS works in the interest consumers, what they're giving up if they don't put that property into the MLS. And if they agree that they don't want all that, and they want to give all of that up after fully informing them, of course, at that point, you can do that listing as an office exclusive if that's what the client wants.
But of course, as we all know, this doesn't work the other way. A Realtor® should never be suggesting the use of an office exclusive for self-interest. Because think about this. Imagine a situation where a client comes to the listing appointment and a listing agent just tells them, totally unsolicited, doesn't know anything about the client, just says, "Hey client, it's a great market out there. Let me tell you something. I think we can sell your home real quick. Customarily in my business I do office exclusives. Let's put this thing office exclusive for seven days. We'll try to sell it. If it doesn't work out, we'll put it in the MLS. Let's give it a run, client. What do you say?" And the client just says, "Well, what's your advice?" And you tell them, "Oh, you know, I think it'll work great. I think it's a good opportunity. Let's proceed forward."
So you go office exclusive. The thing sells. And six months later that client comes back and finds out that all the other homes around them in their neighborhood and very similar sold for another 30,000 or $40,000 that were put into the MLS. They come to you and say, "Why on earth did you suggest to me that we put this office exclusive?" Of course, in that situation, it's going to be very hard to argue that what you did was anything but self-serving in your own self-interest.
Now, of course, do we think our members are doing this at large? Absolutely not. Most people definitely understand the benefits of the MLS, the Clear Cooperation Policy. But we want everybody to be very careful and make sure this policy isn't being misused. Because at the end of the day, you can imagine that somebody's going to come back on that listing agent someday if they think they could have got 30,000 or 40,000 more, and they're going to come back and sue for damages on the difference of that purchase price. You know it's coming, you know it's going to happen. Don't put yourself in that situation. Make sure everybody understands the benefits of the MLS. And if you have further questions about the Clear Cooperation Policy, give us a call here at the legal hotline, we'd be happy to talk to you. Take care out there.