Many colleagues of mine – as well as many national sales trainers in real estate – suggest solicitation of listings that are no longer active as fertile ground for farming. The theory is that if someone has already demonstrated an interest in selling, and for whatever reason their property did not sell during a contract period, they might be receptive to someone new.
This leads to certain questions:
1. Does the listing agent “own” the listing for some interval after it is no longer active? If so, how long? I recently had someone tell me that he “owned” the listing for two weeks after it was no longer active. (?)
2. Is it OK to respond to sellers who solicit input or even proposals prior to the end of a listing period? Is there a maximum length of time before expiration that it would be OK to respond?
3. Is it OK to solicit active listings directly while the listing is still active, but due to expire soon? If so, is there a maximum length of time before expiration that it would be OK to so solicit?
The National Association of Realtors’ Code of Ethics and Standards of Practice provides guidance on this.
“Realtors® shall not engage in any practice or take any action inconsistent with exclusive representation or exclusive brokerage relationship agreements that other Realtors® have with clients.”
Standard of Practice 16-2
“…. Article 16 is intended to recognize as unethical two basic types of solicitations: First, telephone or personal solicitations of property owners who have been identified by a real estate sign, multiple listing compilation, or other information service as having exclusively listed their property with another Realtor® and Second, mail or other forms of written solicitations of prospects whose properties are exclusively listed with another Realtor® when such solicitations are not part of a general mailing but are directed specifically to property owners identified through compilations of current listings, “for sale” or “for rent” signs, or other sources of information required by Article 3 and Multiple Listing Service rules to be made available to other Realtors® under offers of subagency or cooperation.”
Standard of Practice 16-4
“Realtors® shall not solicit a listing which is currently listed exclusively with another broker.”
Standard of Practice 16-6
“When Realtors® are contacted by the client of another Realtor® regarding the creation of an exclusive relationship to provide the same type of service, and Realtors® have not directly or indirectly initiated such discussions, they may discuss the terms upon which they might enter into a future agreement or, alternatively, may enter into an agreement which becomes effective upon expiration of any existing exclusive agreement.”
Standard of Practice 16-8
“The fact that an exclusive agreement has been entered into with a Realtor® shall not preclude or inhibit any other Realtor® from entering into a similar agreement after the expiration of the prior agreement.”
So, the answers are (my interpretation):
1. If the listing is no longer active, you can ask for the business. There is no cooling off period where the former listing agent still controls the listing.
2. If a seller approaches you, and you have not initiated the communication either directly or indirectly, you may respond and may even enter into an agreement that would commence after the existing arrangement is no longer active.
3. Under no circumstances may you approach a seller yourself if the property is somebody else’s active listing.