September 26th, 2022 at 7:35 pm
A. You can ignore it.
B. You must exclude those names from your listing agreement.
C. You must discuss the matter with the sellers, as according to the NAR Code of Ethics.
D. You must discuss the matter with the sellers, as according to both the NAR Code of Ethics and the law.
Answer: As a little background, it’s time to brush up on how to handle expired listings! When the market is hot, listings generally get sold long before they ever expire. But when the market is not so hot, listings have a greater likelihood of expiring or cancelling.
Answer A is wrong. It’s true that you have no legal obligation to pay Ada if a buyer on Ada’s list ends up buying the property. That obligation to pay belongs to the sellers, not you, given that they were the ones who entered into a listing agreement with Ada. However, even though you have no obligation to Ada, you do have certain ethical and legal obligations to the sellers, as further discussed below.
Answer B is also wrong. It’s a common mistake. You are not obligated to exclude the buyers protected by Ada, but you do have to discuss the matter with your sellers.
Answer C is not wrong, but it’s not the best answer. The NAR Code of Ethics specifically prohibits a listing agent from knowingly obligating the sellers to pay more than one commission, except with their informed consent (see Standard of Practice 16-14.
Answer D is the best answer! A judge or arbitrator is highly likely to deem that the discussion of Ada’s list falls within the scope of your legal obligation as a fiduciary to act in the sellers’ best interest. But the key takeaway is that “excluding” and “discussing” are not the same thing. Granted, most of the time, you will end up excluding Ada’s list from your listing. But occasionally sellers will not want to exclude any names from your listing, or even work with Ada ever again. In that case, make sure that you properly document that you had the discussion with the sellers and that we are not responsible for paying Ada. You should insert that in the “Additional Terms” paragraph of your listing agreement.
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