Fiduciary Responsibility, Laws and Morals
I’ve been panning this question in both hemispheres of my brain: “Does MLS actually fulfill the fiduciary or statutory responsibility of the Agent?” I am not sure it does. Most buyers hire Selling Agents to help them find their next home, not just those homes in the MLS. An undisclosed, Unrepresented Seller’s (FSBO) webpage has information stating that only 80 percent of housing inventory is in the MLS. Considering “Pocket Listings”, Unrepresented Sellers, some REO, poorly maintined listings (Listing Agents not updating expired listings) and other factors; they may have a valid case.
Do You Disclose?
The Realtor Code of Ethics requires Realtors to disclose their company’s policies and many states have the same regulation. For those agents who have Buyer Agency Agreements (hopefully everyone), do you disclose to the buyers that you only search in MLS for homes for sale?
Better yet, do you rountinly search, Trulia, Zillow, FSBO sites and local resources for homes / properties for sale (like newspaper websites)?
I think it’s a reasonable expectation on behalf of the buyer, to assume that their agent is looking for the right home or property for them, and not just where commission is promised or access is easy.
What say you?
Gina Kay Landis
April 19, 2009 at 10:44 am
Matt, it’s a valid point. As an example, I had a commercial client who couldn’t find anything in his price range. Because I knew there were many commercial properties that likely had expired in the past year, I looked them up, rang the agent, and sold the property to my client. Had I not made that extra effort, he would not have found his choice property.
Agents who are aware of the varied ways properties become available search out those properties and, frankly, sell more! It takes knowing the market, knowing what has expired, knowing foreclosure potential in the areas you serve to be successful. Thanks for a thought-provoking post!
Gina Kay
Follow me on Twitter: @ginakay
Tony Sena
April 19, 2009 at 12:06 pm
Great food for thought!
Katie Minkus, R(B)
April 19, 2009 at 12:35 pm
Aloha, Matt. Definitely a good point. We routinely send letters to sellers of homes that are not actively on the market but for which my clients are interested in pursuing a possible purchase (howz that alliteration?), and of course, there’s the old “drive through the neighborhood” tactic as well. Additionally, we make certain to network with other agents and Brokers regularly to find out what “pocket” listings they may have that fit our client’s needs.
Sometimes old school works too. 😉
And I’m a huge “bleeding edge” techhie!
Warm aloha and Happy Sunday! Katie Minkus, R(B)
Jim Duncan
April 19, 2009 at 12:46 pm
I’ll turn this around from an example from today – listing company has a foreclosure “listed” – but they aren’t in our MLS and their homepage doesn’t list *any* of my market’s counties as areas they serve.
Is this a breach of their duty to their client – the bank – and thereby unethical?
Per Article 11 –
Matthew Rathbun
April 19, 2009 at 12:53 pm
Jim,
I’ve written about this before, as well. There are a large portion of “REO Agents’ who don’t regard the lender giving them foreclosed properties, as worthy a client as a traditional listings.
Regardless of what the REO agent may say, their “marketing” is usually much less than their other listings. It’s sad that it’s generally very easy to tell a home is REO simply by the marketing.
I agree that it is a potential violation.
Sarah Cooper
April 20, 2009 at 2:54 am
Excellent question. A savvy buyer is going to be looking at many different sources. What a letdown it would be for a buyer to realize they “have access” to more homes than their agent because the agent gets all information from one website.
Joe Loomer
April 20, 2009 at 5:37 am
Matt,
You seem to be very adept at raising the thorny issues that sometimes get ignored in the course of day-to-day business.
Katie & Gina are on the ball – I’ve also sold properties that are either expired or FSBO. Other than commenting on blogs, I often spend part of my coffee routine searching for other listings online.
Melina Tomson
April 20, 2009 at 12:04 pm
I have a check box/section on my buyer agency agreement that addresses non-MLS homes. If they check, yes, they want me to look for them, then they know they might have to pay me directly. If they check no, then they know that the search is limited to the MLS.
Most buyers choose to have me look for non-MLS listings, even knowing that they might have to pay for my services themselves.
Fred Romano
April 20, 2009 at 2:31 pm
@Melina – That’s a great idea! I might try that out.
Ken Montville - The MD Suburbs of DC
April 21, 2009 at 6:29 am
It’s interesting that you frame this question as a possible shortcoming for the agent (“…not just where commission is promised or access is easy.”)
As we know, 80%+ of the consumers out there use the Internet in their search and then call a Realtor for help. FSBO sites, newspaper sites, etc. are all easy access for the consumer. How much responsibility do we take on for the consumer? All of it? Doesn’t the consumer have some responsibility for searching for the house they are planning to live in (assuming a primary residence search).
I can’t count how many times a consumer has asked me about House A or House B only to research it to find that it has SOLD or is UNDER CONTRACT.
I’ll raise my hand and say, “Yes. I only use the MLS to search for homes.” (Should I call a lawyer?). There are tons of choices in the MLS in a large spectrum of architectural styles, price ranges, geographic location, and physical condition. There are also plenty of deep discount brokers that provide home sellers with MLS access so their homes can be exposed to a wider range of potential buyers. Inventory is not a problem at the moment.
If a consumer asks to see a house that he/she sees on the Internet or hears about from a friend, co-worker or family member (or even from eavesdropping in the grocery line), I’ll do what I can to show that house.
I’m sorry, Matt. I belong to the school where you find out what your buyer client’s preferences are and what their motivation is and then help them find their home of choice sometime before I’m eligible to receive Social Security.
Yes. There is such a thing as too much information (i.e., homes on the market).
My $.02
Matthew Rathbun
April 21, 2009 at 2:51 pm
Ken,
I understand your point of personal responsibility of the consumer, but if I follow your logic, then we weaken the argument of why a consumer would need to hire an agent at all. If we just say that our fiduciary responsibility is limited by the consumers acclamation to Google; than it’s a sad state of affairs.
Just because (according to NAR) 83% of consumers use the internet in the course of a real estate transaction, does not translate that they know what they are looking at. Enter: the agent. The agents role should be to help the consumer navigate the vast information.
Just because the consumer got their information from Wikipedia, doesn’t mean I don’t have to go and let them know that it isn’t a reliable source and that our state or my practices maybe different.
If you’re a Realtor the Code of Ethics (and my local state’s law) compel me to disclose my company policy or my practice to my client. Agents should disclose that the listings that show the client would only be those listed in MLS.
I’m not saying you are unethical if you only use that tool, but shouldn’t the buyer know the limits of your services?
Does your buyer agency agreement stipulate that you get paid, in exclusive agency, for only those homes the buyer buys inside of MLS?
My question is not necessarily if an agent should search outside of MLS (although I always have) but more so, should a quick disclosure or consumer education take place to let the buyer know what the limit or scope of your service might be.
I also understand that you are of the school “…where you find out what your buyer client’s preferences are and what their motivation is and then help them find their home of choice sometime before I’m eligible to receive Social Security.”
I’m of the school that my length of service is a non-issue. Meeting the goals of the buyer, who hired me, is far more important than doing it in my timeframe. Having said that, I also am very careful to choose who I work with and to establish reasonable expectations in the forefront.
Matthew Rathbun
April 21, 2009 at 2:53 pm
By the way… Let me point out that the true power of AgentGenius is when you get comments like Katie and Melina. Those are great ideas and really what I was looking to find out, when I wrote this post.
Thanks for sharing!
Jonathan Dalton
April 21, 2009 at 3:21 pm
> then we weaken the argument of why a consumer would need to hire an agent at all.
Only if you’re making the assumption that the sole purpose of hiring a real estate agent is to locate a particular home and that’s the end, thanksbyebyenow. To me, there’s more work to be done than just that.
Zillow and Trulia are routinely incorrect. There was a recent example of (shudder) an agent asking if a home was on lockbox inside Trulia Voices. The home hadn’t been active for more than a month, at least not according to the MLS, but was on Trulia.
If I go to my doctor for an ailment, I would expect him to treat me using the treatments that are recommended wherever such things are recommended. I wouldn’t expect him to advise me of a poultice from a tribe living isolated at the top of the Andes, just to make sure I knew what all of my possible options might be.
Similarly, if someone asks me to help them find a home, I’m going to go to what tends to be the most reliable source – the MLS (even if our own local MLS is less reliable these days thanks to agents who don’t understand the meaning of active.)
There may be a FSBO of which I’m unaware but the reason I’m unaware is the seller has done a poor job of marketing the property in any reasonably accessible fashion. Knowing the failings of the listings on the aggregation sites, those aren’t even worth the look 99 times out of 100.