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FSBOs on Still.


One of the things I’ve always found most amusing (and sad) about Main Stream Media is that for the most part they seem to have the attention span of a goldfish.  The MSM will take up almost any story if it contains at least one of the following seven elements:

  1. HARM (blood, violence, damage, death, scandal)
  2. SEX
  3. MONEY
  5. INVALIDATION (the story must be written to INVALIDATE something)
  6. The story must contain a CONTROVERSY
  7. A story must contain TWO OPPOSING FORCES.

The more of those seven elements the story has – the bigger the story.  Therefore, the story of the century was the O.J. murder trial.  It contained all seven and no story, with the exception of September 11, 2001, ever got more continuous coverage.  What is “news” is largely determined by how many of the above seven elements any story contains.  It seldom has much to do with how relevant or important the issue might be to the lives of the audience – just the seven points above.  Sometimes something “bad” happens and becomes news for just a day or so because some new story comes along that contains several of the seven points (the reporters and editors saw something new that is really really shiny).


A few weeks ago it was a very big issue in the real estate blog world that there were FSBOs on  At the time, I wrote a post about this.  This whole thing has now died down like it is all fixed.  But,THERE ARE FSBO LISTINGS ON REALTOR.COM.  Again, there are FSBO listings on  The issue hasn’t gone away.  It isn’t handled.  I don’t care who said what.  Nothing has changed.  FSBO listings are on  Ultimately, the correct information was contained in an article on Inman News and a comment from a flat fee broker:


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I CAN TELL YOU HOW THIS WORKS! I have been researching this and I know how this showcased package works.

First sends the listing to a CA broker at then she places the listing in her local CA MLS. Now lets say the listing is in CT. The claim is that you offer a 1% co-broke, but what CA agent is looking for CT homes on the local MLS? NONE. this is how they can say you dont pay any commission.

Basicly they are using one broker to list all the homes in CA MLS. They will show on, they set the fsbo seller up with a extension/voicemail on the toll free number, they forward all emails to the seller… Walla! forsalebyowner on the site.

The BIG question is “is this legal” for a CA broker to list a CT home? I am looking into this right now. If so, that’s the loophole that makes all this work.

NAR put out an official statement.  They said the press release from was misleading.  I went so far as calling the spokesman a liar.  I should probably clarify that: AN INTENTIONAL BIG GIANT LIAR.  Oh sure, he was telling the truth that there are FSBO listings on – but it wasn’t because of the DOJ/NAR settlement.  It was because someone at his company found a currently open exploitable hole in the system.  As in, we took an area where Realtors are on the honor system and found a way to abuse the system.  His press release should have said, We fully understand that no one who pays this money is ever going to sell their house because of it but you will have to admit, it sure sounds good.  For Vice President, Greg Healy, here is my contact information in case you would like one of your lawyers to send me a threatening letter.  I always love receiving them.


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It is a currently open hole.  It is using one of the more retarded options in the MLS system, out of area listings.  Originally thought of as a method for brokers to list vacation homes for their clients, it is now being used as an end run around the intended rules.   A simple way to plug the hole is to completely eliminate “out of area listings” from all MLS systems.  I have always thought of them as completely unnecessary in the first place.

Written By

Russell has been an Associate Broker with John Hall & Associates since 1978 and ranks in the top 1% of all agents in the U.S. Most recently The Wall Street Journal recognized the Top 200 Agents in America, awarding Russell # 25 for number of units sold. Russell has been featured in many books such as, "The Billion Dollar Agent" by Steve Kantor and "The Millionaire Real Estate Agent" by Gary Keller and has often been a featured speaker for national conventions and routinely speaks at various state and local association conventions. Visit him also at and



  1. Deborah Madey

    November 25, 2008 at 2:51 am

    Hi Russell,

    If you want info that I was told about the legal issues of listing and selling out of state, feel free to contact me.

    Deborah Madey – Broker/Owner
    Peninsula Realty Group

  2. Jim Gatos

    November 25, 2008 at 4:25 am

    How about letters of admiration? Where do we send letters of admiration to?

  3. Agentjason

    November 25, 2008 at 9:01 am

    Nice post Russell! Thanks for keeping it all exposed for us. BTW, I recently finished work with a group of agents at Prudential Arizona Properties…they all had nice things to say about you. 🙂

  4. Paul Kriewall

    November 25, 2008 at 9:04 am

    You don’t need to put a listing as out of area to accomplish the same result. Many agents have put $1 for the commission for local properties, which effectively has the result of placing the listings on and other sites.

    Years ago NAR affirmed that any amount of commission satisfies the mandatory model MLS commission rules.

  5. Kris Berg

    November 25, 2008 at 9:29 am

    Russell, Thank you for writing what I have been thinking for the past week. It is the Open Listing that is allowing this to happen, but we are overlooking one other important factoid. It is the Realtor(little R) members who are ultimately to blame. In a sense, we are doing it to ourselves. Without a licensee willing to take the open (pretend) listing to make a few bucks, the issue wouldn’t exist.

    I wrote recently about my frustration with local listings not showing up in our MLS but instead in an MLS far, far away. The punchline is that my clients are finding these properties, because while I must rely on my little closed system to find show instructions and confidential remarks, the customer is relying on third-party sites which serve as the landing pages for our collective IDX feeds. Not only does my client have access to the same information I have, they have more.

    So whose fault is it that FSBOs are on “my” official site?,, or the member agents who are the “carriers” and are no better than the former? And how do you regulate the problem away? You can kill the open listing or you can make it mandatory to list homes in the local MLS, but there will always be a loophole. Then, some hungry agent will take a $50 limited-services listing and offer a $1 coop. Mission accomplished. You can’t regulate ethics.

  6. Deborah Madey

    November 25, 2008 at 12:52 pm

    In the next few years, we will likely see more and more changes. Some will be good, and some not. Putting FSBOs on MLS systems when there is clearly an intent to manipulate a system and avoid Realtors is morally wrong. The $1 compensation offer, as described on this thread, seems to be an attempt to dissuade Realtor representation.

    There is, however, another usage of a low base coop compensation that is not meant to discourage Realtor representation. The structure of this model includes both a base coop offer to any and all Realtor members, but also includes a bonus structure where the bonus earnings are tied to tasks and services performed. I mention this on this thread because when a Realtor member sees a coop offer considered to be uncompetitive for the given market, it may be worth reading the agent notes to find out if it was (sadly) a loophole offering to get the listing on IDX systems, or if there is additional potential compensation beyond the base coop.

    One example: A buyer broker who submits an offer via fax without showing the property to their buyer or who does not attend any inspections may be compensated at the base compensation offering. Buyer brokers who perform other duties may earn bonuses based upon the tasks they complete.

    This structure has fair compensation as an objective. Sorry for any deviation from the blog post topic. I wanted to encourage Realtors to read all the agent notes when looking at coop offers since we are proceeding into more seas of changes. In the situation that Kris Berg described, she can’t even read the agent notes, because the listings do not appear in her MLS. That’s sad.

  7. Mariana the Wagner

    November 25, 2008 at 3:51 pm

    Hm. Our MLS does not let us post out of our MLS area … let alone out of state!

    Some people. geesh.

  8. bryanslist

    November 25, 2008 at 4:37 pm

    It is absolutely the NAR &’s fault that this happened.

    All of this WAY too confusing. It was a good post Russell, but it really seems like you are holding on way too tight. All if this is changing. The NAR’s model is failing, badly. There’s too many moving parts and I haven’t heard or read one person that can convince me that all of these machinations don’t only serve to do primarily conceal how needless the NAR is.

    Kris’ point about her listings not even showing up in her OWN MLS is the proof in the pudding. If I was a REALTOR, reliant upon or had anything even remotely invested in the NAR, I would be beyond embarrassed at that website and, hello?, it’s not like there aren’t working models out there the work from.

    But that’s how it goes I guess…

    Read, Cliff ‘ll tell you what time it is!

  9. fred

    November 25, 2008 at 7:26 pm

    Well I can see that a few of you Realtors don’t like this new listing method, but you can’t stop progress. The internet was always meant to be an “open source” for information, but traditional Realtor’s have held the keys to listing information for a long time. That is changing!

    I am a flat fee broker in CT, and now a National Marketing Consultant placing sellers on for a fee using the “out of area” method described in a previous post. This type of advertising has it limitations and my clients are aware of them upfront. You may visit my website and check out my services.

    There is nothing unethical about this type of service. I am simply a real estate broker assisting sellers with advertising and marketing – Isn’t that what we do? I just don’t charge the high listing fees that traditional agents charge that’s all.

    Look… We will never replace the full service agents, but there is a growing demand for flat fee services, and I plan on being the premier provider of this type of service in CT and now Nationally with the “showcase listing” on my new website.

    Fred Romano, Broker/Owner
    CT Realty Services

  10. San Diego Flat fee mls

    November 25, 2008 at 9:37 pm

    So whose fault is it that FSBOs are on “my” official site?,, or the member agents who are the “carriers” and are no better than the former? And how do you regulate the problem away? You can kill the open listing or you can make it mandatory to list homes in the local MLS, but there will always be a loophole. Then, some hungry agent will take a $50 limited-services listing and offer a $1 coop. Mission accomplished. You can’t regulate ethics.

    I’ll take the blame for it, but let’s leave ethics out of it, ok? I’ll take an occasional open listing, but it isn’t for a quick buck, and I am most certainly not unethical.

    This isn’t about the open listing, which will never be killed or legislated away. It is about abusing a loophole and then lying about it.

  11. Jim Gatos

    November 26, 2008 at 4:47 am

    Mr. Romano..

    The biggest concern I have with companies such as yours, and I say this sincerely, not sarcastically, is most of you folks aren’t even around after a couple of years, or the market share’s so small it’s practically non existent..


  12. Ernie Tabel

    November 26, 2008 at 5:34 pm

    This hole has been open for years; it’s not remotely new or recent. The hole is in the MLS systems on which is currently entirely dependant for its data. As long as the MLSs allow the inclusion of FSBOs that are not clearly identified as such, has no way to tell them from regular Realtor-represented listings, and thus no way to filter them out.

  13. Paul Kriewall

    November 27, 2008 at 10:35 am

    MLSs do not allow FSBO listings. They do however allow Limited Service Listings. Many of those are the $1 commission listings, but regarless of some who do not agree with that business model, they are still a listed by a broker who is a member of the MLS.

    Funny thing happened when some MLSs excluded Limited Service, the DOJ entered the picture, sued and won.

  14. Bob

    November 27, 2008 at 12:34 pm

    “Funny thing happened when some MLSs excluded Limited Service, the DOJ entered the picture, sued and won.”


  15. fred

    November 27, 2008 at 8:30 pm

    Mr. Gatos, I have been around for many years and I plan on continued success in the future. It is you, the traditional agent that should be worried.

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