NEWS FROM CAR – USE THE “SEL” FORM

May 10th, 2013 at 7:49 pm

At last week’s CAR meetings in Sacramento, one of the main subjects making the rounds was pocket listings. Now, as you know, we have discussed pockets lately since they have become so prevalent in this market. If you will recall, our concern was making sure that your seller understands the impact of not putting a property in the MLS and how that might affect their sale or sale price. At CAR, as you can imagine, they had similar concerns, along with a desire to make sure that when handling a “pocket,” you follow the MLS rules. After all, and as you know, the MLS rules require that, without instructions to the contrary, all listings must be submitted to the MLS within 2 days of signature. The only way to hold a property out of the MLS, without violating the rules, is to have an instruction signed by the seller. Unfortunately, in a good number of our “pockets,” no such instruction exists. As a result, in addition to the fiduciary duty issues we have discussed in the past, we are also faced with violations of the MLS rules which could result in unwanted discipline.

As you will recall, when discussing pockets before, we identified CAR Form SEL, the “Seller Instruction to Exclude Listing From the Multiple Listing Service or Internet”, as a good tool in this regard. In truth, when looked at in detail, that form can solve both of the problems identified above. First, paragraph 5 is a “Seller Opt-Out – Exclusion of Property From MLS.” That paragraph specifically states that “Seller advises Broker that Seller elects to exclude the Property from the MLS.” As a result, by checking the box in front of this paragraph (which is required to make the instruction applicable), you have solved your MLS problem. You have a written instruction from your seller.

As importantly, the SEL discusses most of the issues arising from a pocket that have to be discussed with the seller. In paragraph 4, the document states as follows: “Seller understands and acknowledges that if this option is checked (a) real estate agents and brokers from other real estate offices, and their buyer clients, who have access to that MLS may not be aware that Seller’s Property is offered for sale, (b) Seller’s Property will not be included in the MLS’s download to various real estate Internet sites that are used by the public to search for property listings, and (c) real estate agents, brokers and members of the public may be unaware of the terms and conditions under which Seller is marketing the Property.” In other words, the SEL sets forth the consequences of a pocket very clearly and solves most, if not all of our fiduciary duty problems. The only additional thing I would like you to discuss with a seller is the fact that with less people seeing the property, it is possible that the seller will get less for it. After all, the broadest marketing possible would theoretically increase our chances for the highest offer.

I raise this issue again because it was such a big deal with CAR last week. Obviously, if they are so concerned, we will probably see more enforcement by our Boards of Realtors and may see an increased awareness of these issues by our clients. So use the SEL. It is another good form from CAR that will help you stay out of the trouble that could be caused by pocket listings.

As always, contact your manager with any questions you may have and they will get the Legal Department involved if necessary.

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