Negotiating contracts with Limited Service v Exclusive Right of Sale

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Real Estate Services with ADDvantage Real Estate Services

The most important difference between a limited service (usually flat fee MLS) listing and a traditional “Exclusive Right of Sale" listing is that with Exclusive Right of Sale, buyers’ agents cannot go directly to the seller and discuss terms of an offer.  Then why does this happen on a regular basis?

I believe it is because some agents get carried away and forget that it is a clear ethics violation and on top of that little break in the chain of command, it is a remarkably stupid negotiation strategy.

These unethical renegade agents, in essence, are attempting to pre-negotiate an offer with a represented seller.  When a seller is self-represented, as they would be if they did a flat fee MLS listing with a discount broker, this would of course be perfectly kosher.  But when a seller has hired an agent, this practice is unethical and can hurt negotiations.

For example, if a buyer’s agent asks a seller if they would consider an offer at “x” price or particular terms, the seller could say, “no, I want full price.” The point is when speaking directly with the person that can both make a final decision and has the power to do so, the one asking the question is no longer in a position to negotiate. At best, they have degraded their buyer’s chances of getting the best deal possible.

What is causing a Realtor to dismiss ethical practices and circumvent the listing agent is a mystery.  One might theorize that they have experienced negotiating with flat rate MLS listing sellers and have gotten used to this strategy and forget that it’s not permitted with a full service listing.  Either way, perhaps this is something that needs to be addressed more in the Realtor education system.

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Topic:
Real Estate Best Practices
Tags:
discount real estate
flat rate
full service
mls listing
flat fee mls
limited service real estate listing
exclusive right of sale

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Rainmaker
1,165,850
Gene Riemenschneider
Turning Houses into Homes
Home Point Real Estate

I don't see this a lot.  The big danger is when the seller is present while showing and then some agents/buyers fish for info.  Keep the Seller out of the house.

May 26, 2012 09:39 PM
Rainmaker
261,060
Paddy Deighan JD PhD
Paddy Deighan J.D. Ph.D

things like this happen because of greed and because in desparate times, people do desparate things

May 27, 2012 01:08 AM
Rainmaker
613,522
Bob Miller
The Ruiz/Miller Team - Ocala's Dream Team
Keller Williams Cornerstone Realty

Hi Keith, excellent post.  So far I have never found myself in a limited service agency.  Hopefully never will.

May 27, 2012 06:50 AM
Rainer
19,164
Keith Gordon
ADDvantage Real Estate Services

I had this happen with 2 different clients within two weeks...one was in Sarasota, the other in Clearwater.   Both were exclusive right of sale listing clients.  I have over 50 Exclusive Right listings so maybe I have more exposure because of this.  However, it should not ever be happening.   I did report the agent who had made repeated contacts with my client of which he informed me.  Since the MLS clearly states the listing type there is absolutely no excuse for this. 

 

May 29, 2012 04:29 PM
Rainmaker
124,583
Matt Robinson
Pensacola Real Estate (850) 292-4000
ERA Emerald Coast Realty

Keith, I can honestly say that after almost 11 years, and over 50 million in transactions, I don't remember a single time when a buyer's agent tried to go around me as the listing agent to negotiate directly with the seller.  If this happens as frequently in the Miami market as you insinuate in your post, I am extremely glad I don't work or live there!  God bless your heart for putting up with those kinds of agents...

May 07, 2013 10:43 AM
Anonymous
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Rainer
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Keith Gordon

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