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Loyalty to the Seller or the MLS Rule?



The MLS or Multiple Listing Service was set up in the late 1800’s so that brokers could share information with one another and help sell each other’s properties with an offer of compensation.

Fast forward to today.

We all want or have feeds to our web sites, we all want them indexed, we all want Google to know. The data is out there, pretty much everywhere.

A buyer or seller can do plenty of research online to get familiar with an area they are thinking of moving or see how they “think” their home should be priced.

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This is all good.

Accuracy of the Data

The issue that is not good, and as a Director for my local Board we encounter all the time and as a board have discussed to the death is the accuracy of the data.

The MLS is a way for Realtors in your board to share information on the listing and the Status of that Listing.  When I go do a search for a buyer, or they have requested a showing on 123 Main Street, it is now necessary to check with the listing agent to see if that home is under contract and not reported.

Many agents in my area, if they have an offer will not report it is under contract. They do it for 2 reasons:
•    They want a back up offer and know showings will decrease if reported under contract.
•    They “say” it is in the best interest of their seller to keep it active.


The word fiduciary comes from Latin: fides meaning faith, fiduciary meaning trust. When we practice fiduciary we have a standard of care to the one we are representing. We have to be able to trust one another.

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Is our fiduciary to the seller? Yes

By being a member of a board, we are told to abide by the MLS rules. Do we have any fiduciary to one another as members of the MLS?

Do we have an obligation to report the true status of the listing? Yes it is rule.

Nothing is more frustrating than to have a buyer fall in love with a home and then be told “sorry, that is under contract.”

So we have to call all the listing agents and ask, “Do you have an offer?” “Are you negotiating an offer?”

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Rules are made for us to be able to communicate to one another in an honest and truthful way. I would rather make the call to the listing agent first then to have a buyer fall in love with a home that is completely not available.

The accuracy of the MLS data is only as good as the agent who has imported it and kept the data up to date.  If we are going to have MLS rules then we need to follow them.

When attorneys practice law they cannot and do not represent two clients, they call it “conflict of interest”.  They cannot give their fiduciary or loyalty to more than one person.

What do you do when you have a conflict of interest or two fiduciaries in conflict?  Which comes first in your opinion the seller or the MLS Rule?

The chicken or the egg?

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Photo Credit

Written By

Written by Missy Caulk, Associate Broker at Keller Williams Ann Arbor. Missy is the author of Ann Arbor Real Estate Talk and Blog Ann Arbor, and is also the Director for the Ann Arbor Area Board of Realtors and Member of MLS and Grievance Committee's.



  1. Bridget Magnus

    July 24, 2009 at 12:06 pm

    Great article, thanks for bringing these issues into the light of day.

    However, let me flip this issue around a little. Listing Agent neglects to mention that either they are waiting on a signed counter-offer from a prospective buyer, or that there are already 10 purchase offers for that listing on her desk (the latter is disturbingly common in Vegas right now). It is in her client’s best interest to continue to solicit “highest and best” until everything is signed, after all.

    However, how many times does a Buyers Agent have to send worthless purchase offers to the office of Listing Agent before saying to herself “You know what? There is no point in even looking at Susie Agent’s listings! Every time I talk to her — assuming I can get her on the phone at all — there’s already a buyer and sometimes more than one buyer.” I know agents with lists of 10-12 listing agents whose listings won’t be shown to their clients. When enough buyers agents boycott your listings, your long term success as a listing agent must be called into question.

    It turns out that following the MLS rules in the short run is good for your fiduciary duties to clients in the long run!

    So *please*, go ahead and update your listings to reflect “Counter-offer in potential buyers hands, back-up offers still being accepted” or “Multiple offers! Please submit highest and best by Friday”. Not only is it good for other agents (who now don’t have to call you to get this info), it’s good for your clients because you will only get clean offers.

  2. Joe Loomer

    July 24, 2009 at 2:21 pm


    Although I have several issues with our MLS and the agents who do not update their listings, there is one function it seems your MLS lacks.

    Our board now has an “Active Contigency” status (vs. simply Active) for listings who are a) under contract awaiting the end of a Buyer’s due diligence period or b) the Buyer has a property they must sell in order to close on the listed property.

    Most agents are diligent enough to place their properties in this “Active Contingency” status – which allows you to make the call knowing the home is more than likely under contract, but it still may be something YOUR buyers can see and write their own offer. In the case of the homes that require a Buyer’s other property to sell – many times the kick-out provision in that contingency allows you to supplant the previous Buyer with your own.

    Just my thoughts – I may be wrong, but I took from your post that your local MLS does not have this contingency status as an option – just Active or Pending.

    Navy Chief, Navy Pride

  3. MIssy Caulk

    July 24, 2009 at 2:59 pm

    Joe, yes we have that here. CTS= Continue to Show but has a contract.
    If everyone did that there would not be an issue. Unfortunately they don’t just keep it A=Active.

    We did this CTS status so homes would stay active on the National web-sites.

  4. Hank Lerner

    July 24, 2009 at 4:05 pm

    I teach various legal/ethics classes. One of the points I make on this issue is that you have a fiduciary responsibility to your client…but only within the rules that you’ve agreed to play by.

    Realtors agree to restrict their practice according to the Code of Ethics when they join the Association. Similarly, Brokers/agents agree to certain rules and restrictions that come along with the benefits of listing properties in the MLS.

    For example, there may be situations in which your client tells you to lie because it is in her best interests for you to do so, but the Code – and law – say you can’t. And if you do, you’ll (hopefully) be punished enough that you won’t do it again. Which leads to the question of enforcement, but that’s a different topic altogether.

  5. Fred Romano

    July 24, 2009 at 4:10 pm

    Wouldn’t it be great if all MLS’s had the same data fields, abbreviations, and rules? How about one big MLS.

  6. Marie Kratsios

    July 24, 2009 at 4:34 pm

    Missy, you always raise very good points and I love hearing how things are handled in other parts of the country.
    I’ve mentioned before that on Long Island attorneys write the contract, sends to buyer’s attorney, buyer goes in to sign contracts (brings check for 1st portion of down payment), they are sent back to seller’s attorney, seller goes in to counter-sign contracts and then they are released back to the buyer’s attorney at which point the property is considered under contract.

    The Long Island MLS has two main statuses Available (under which you would have new, price changed or extended) and Unavailables (which is under contract, closed, withdrawn, or expired). Once a home is under contract it is not shown (boy,what a can of worms it would open if it were). The exception to the rule is if the buyer seems to be having trouble getting a mortgage commitment it may be put back as available with the instructions being to speak with the listing agent who would say that it may still close, but the seller wants it shown in case the buyer can’t get his mortgage commitment).

    Since we have a fiduciary responsibility to get the highest price possible, and since a seller has the right to listen and act on all offers until contract, once an “acceptable” offer comes in we indicate in the office as “proceeding to contract, still show.” It is still at this point listed as available and the agent for the buyer decides if they do want to show knowing that the seller has an offer he is hoping to move forward with. If an engineer inspection was done (and on Long Island we also do that before contracts are signed), we note that as well. Often an agent will want to speak with the listing agent to see if it’s a solid offer. If they have a great buyer, they may want to show anyway. If it’s a new buyer just starting out, they choose not to. Often a buyer doesn’t want to see a property that is moving toward contract.

    I do think it’s important to maintain as much transparency as possible without betraying any fiduciary responsibility to the seller, or even to your buyer client.

  7. Jeff Allen

    July 24, 2009 at 4:55 pm

    I’ve been bitten buy this personally when my wife and I were allowed to view a property that actually had an accepted offer on it. We fell in love with the place only to learn it was never actually available.

    The listing agent may be “helping their seller,” but they’re also setting a bad precedent that reflects poorly on the entire industry. In the long-term, that’s not worth one extra week of market time for your seller.

    On the stats side this rears it’s head too. We do market reporting partnerships with associations and MLSs throughout the country and find that the old adage “garbage in, garbge out” applies. MLSs with inaccurate reporting tend to get less relevant market trend indicators than those that do.

  8. Joe Sheehan

    July 24, 2009 at 6:33 pm

    In our MLS, we have 3 “Active with Contingency” statuses that a listing agent can use.

    ACT – E means active with escape clause. It allows the seller to unilaterally terminate the agreement without consequence for another offer. This is often used if the buyer needs to sell their home before purchasing the listing. It also would not prevent the seller from accepting a better offer from another buyer and simply “cancelling” the original offer.

    ACT-F means the buyer has 1st right of refusal. Similar to the ACT-E except if another buyer appears with an offer, the seller notifies the original buyer and gives the original buyer the opportunity to remove the contingency and proceed to settlement. In that case, the 2nd offer is rejected. Again, usually used if the buyer needs a homesale contingency before proceeding with the purchase of the listing.

    ACT-O is the crazy one. It means that the seller and buyer have agreed on the sale of the listing. Both have signed the agreement. The only contingencies are for home inspections, mortgage commitment, etc. and can only be exercised by the buyer. There are essentially no conditions that the seller can use to terminate the agreement except default. The buyer can terminate for any number of reasons resulting from inspection, mortgage, etc. contingencies.

    In my book, I call this listing PENDING!

    Our MLS gives no guidance as to why anyone would use ACT-O. They state in their online documentation that ACT-O should NOT be used for contingencies that are normal to the sale process (inspections, mortgage, etc). Finally, the MLS will arbitrarily and automatically convert ACT-O listings to PENDING after 14 days.

    To buyers who receive listings in email from their agents, the ACT-O listings look like ACT listings. There is no indicator that the property is under contract. Fortunately, the agent view of the listing indicates it is active with contingency.

    I have no problem with Active under contingency where the seller can legally terminate the agreement with a buyer for contingencies the buyer can’t fulfill. Anything else is PENDING in my book.

    I notice my learned colleague, Hank Lerner, has weighed in on this issue. Perhaps I am missing something that he can clarify as he is very familiar with the law in the State of Pennsylvania.

    Sorry, I’ve been ranting about this issue for about 2 years. One of those things that gets my Irish up. Anyway. that’s how contingencies are done in the Philadelphia suburbs.


    Joe Sheehan

  9. Bob

    July 24, 2009 at 8:12 pm

    Fiduciary to the seller where it doesnt breaks the law trumps the MLS. In California, a breach of fiduciary to a seller is illegal. Breaking a rule set forth by the mls is not, in most cases, illegal.

  10. Missy Caulk

    July 24, 2009 at 8:46 pm

    Bridget, thanks for you thoughts. I agree that it is in everyone’s best interest to change the status of the listing. You said, and I agree.

    “It turns out that following the MLS rules in the short run is good for your fiduciary duties to clients in the long run!”

  11. Missy Caulk

    July 24, 2009 at 8:48 pm

    Hank, beautifully said. I will pass this along at my next MLS and Board meeting as we discuss fines. There is quite a debate going on.

  12. Missy Caulk

    July 24, 2009 at 8:54 pm

    Fred, nice try…it will never work. Every area likes their own fields. We interviewed all the vendors this past year and decided to stick with ours.

    Marie, that sounds a lot like Canada. Gosh would we need an assistant if we had attorney’s doing all of that?

    Jeff, yes the data is not accurate either. That is one of my biggest complaints is the situation that occurred with you and your wife. So unnecessary.

    Joe, we have lots of agents complaining too, that is why we are trying to figure out if fines will help. I hate it and if they would just obey the rules it would not be necessary. Rant on….

  13. Missy Caulk

    July 24, 2009 at 8:56 pm

    Bob, so are you saying that if a seller says, “Don’t place my house as under contract (with whatever term you use) that it is OK because they have more legal authority than the MLS?

    Some agents say that, but I have always wondered if it is really true.

  14. Elaine Reese

    July 24, 2009 at 10:05 pm

    Ours is similar to Joe’s. Active, Contingent-Escape, Contingent upon Insp/Fin, and Pending. Pending is when the loan has been underwritten.

    Our Board implemented fines a couple years ago. It has helped quite a bit to clean up the data.

    When a home is listed, an agent must enter it into the MLS within 72 hours or a special form must be signed by the seller. No showings dare occur.

    When a home goes into contract, that must be reflected within 72 hours.

    Tempo has little red flags on the side bar of each listing where an agent can report incorrect info such as if they’re told they can’t show the home because it’s in contract and that is not reflected. The MLS investigates the red flag, and fines or warns depending on the offense.

    Until you hit the agent in the wallet, “rules” don’t seem to work.

  15. Matt Thomson

    July 25, 2009 at 10:35 am

    I agree whole heartedly with Hank L’s comment. You have a duty to your client BUT ONLY within the rules you agree to play by.
    I have a duty to my family to provide for their needs, but that doesn’t mean I can go rob the grocery store when my sales are slow. I still have to play by the rules.
    I have every duty to my seller to get that house sold, but misleading others and manipulating the system isn’t okay.

  16. Bob

    July 25, 2009 at 12:07 pm

    No Missy, but I am saying some rules are ill-conceived.

    Our local MLS was requiring that we change the status to pending on short sales where we didnt have lender approval. In many cases, we didn’t really have a true open escrow as the buyer’s deposit isnt deposited until bank approval.

    That rule was hampering our clients ability to solicit additional offers. In the meantime, buyers are making multiple offers on properties to see what would stick.

    We refused to post these as pending. The mls threatened to fine us. We came back and argued that these contracts are illusory – an agreement that appears to be binding, but in reality lacks mutuality of obligation. We took the stance that they either add a contingent status or leave us alone, because if they forced this issue on our sellers, we would go to court.

    We now have a contingent status.

    Sometimes you have to stand up and not just accept an arbitrary rule at face value.

  17. John Lauber

    July 25, 2009 at 12:15 pm

    Joe, I’m with you on Active-O in PA. I’ve yet to hear a good reason for anyone using it. Everyone I’ve asked about why they used it, has given a reason that (as you stated from the rules) should have been marked pending. Stop confusing the public and just mark it as pending in my opinion and get it off the active list.

  18. Judith Lindenau

    July 25, 2009 at 1:17 pm

    The question isn’t whether loyalty to seller conflicts with MLS rules usually. In the case of a shaky offer, that could be the case, but lots of times it’s just failure to report–because of keeping the community data accurate is not a priority of the MLS member. The MLS is a data base consisting of contributions from volunteers who really don’t have a commitment to data accuracy–their priority is real estate sales. I’m not sure there is a way to solve the general problem of data inaccuracy and inconsistency–and actually, the ability to find out the true facts about a property, even if you have to make phone calls to do it, is one of the reasons buyers need Realtors.

  19. Russell Shaw

    July 25, 2009 at 1:31 pm

    To knowingly mislead other agents is lying. Yes, we have our agency relationship – who we represent and have a fiduciary duty to take care of their best interests in the transaction. But that is never an excuse to knowingly pass on – by commission or omission – a false or misleading statement.

    A listing agent who would knowingly lie to his or her fellow agents would be the very same agent who would knowingly lie to the buyer or seller.

  20. Bob

    July 25, 2009 at 1:58 pm

    Not sure about other states, but in California, listing agents owe a duty of honesty to the buyer as well as fiduciary to the seller.

    Lying isnt an option.

    I see most of these issues caused by MLS systems that cant keep up with the fluid nature of the business in today’s world.

  21. MIssy Caulk

    July 25, 2009 at 2:12 pm

    Elaine, I believe our board is coming to that decision too.

    Matt, great way to put it.

    Bob, there is also a disagreement on Short Sales and Relocation houses here too. We are having our MLS add the type of listing as either short sale or foreclosure. I actually don’t mind that not being put CTS as in reality the bank has not signed. But, the regular listings are what gets me. Personally, I never report CTS UNTIL it is signed. In reality is in not an accepted offer.

    Russell, well said. As the definition of fiduciary said, “faith” and “trust”.

    Judith, true. Reporting data without difining how the data was obtained and the perimeters is useless.

  22. Brandie Young

    July 26, 2009 at 2:31 pm

    Hi Missy – excellent thoughts.

    We both work in customer-centric roles. What I’ve seen is clients don’t care about “how” we get things done, or the pain in the process – that’s our problem. At the end of the day, the customer needs to be the primary consideration.

    Just my two cents.

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