Must Real Estate Brokers Advertise Everywhere?

In defense of the right to pirate broker data, the argument is increasingly made that brokers must allow listing information and photos to be posted anywhere and everywhere because — we are told — this benefits property owners and benefiting sellers is an absolute obligation for listing brokers.

This is a perspective which is both cute and disingenuous, and one that is also wrong. Like arguments favoring a flat earth, there is a certain superficial logic but endless repetition will not make such assertions true, rational or compelling.

When a property is offered for sale through a real estate broker, a performance contract called a listing agreement is created. This means that the broker is not paid until the listing terms, or terms otherwise acceptable to the seller, are met.

If a listing agreement allows a broker to offer a property for sale at $300,000 with a 5 percent deposit, that means an offer of $299,999 has not met the terms of the listing agreement. A $300,000 offer that requires the owner to paint the front door may not make it either if the front door arrangement is something not found in the listing arrangement. In both cases, since the requirements of the listing contract were not met, the broker is not entitled to a fee.

Within a listing agreement a broker is typically authorized to market and advertise the property to prospective buyers and also within an MLS. An MLS allows members to share information and inventory unavailable to non-members and third parties.

Nowhere in a listing agreement is a broker obligated to advertise “everywhere.” In fact, a typical listing agreement provides permission for a broker to advertise but does not obligate him or her to do so.

Seen the other way, a typical listing agreement provides no authorization whatsoever for a third-party to market the owner’s property.

How can this be? Go back to the listing broker’s job. The broker is retained to sell a property under criteria established by the owner through the listing agreement. How the property is sold is the broker’s business — it may be that the broker knows a ready, willing, and able buyer and has no need to advertise. Or, it may be that a buyer broker has a client who wants a specific property, and the listing broker can meet that need.

But let’s say there was an absolute obligation to advertise everywhere. What would this mean?

In an absolute world, the broker would be forced to market in all newspapers, TV stations (including all cable outlets), radio outlets, and magazines. The ad bill for a property might be several times larger than the possible commission, a situation which makes no sense.

The term “all” also makes no sense. In an electronic era where homes in Deluth can be seen in New Dehli, an absolute obligation for brokers to advertise “everywhere” could well be interpreted to mean just that — all media in all locations. And if a broker happens to miss the afternoon paper in Rangoon, then no doubt in an absolute world a trial lawyer would argue that the broker has somehow committed a commercial sin for which the owner — and the lawyer — should be well-compensated.

Now we have the Internet and the claim that brokers “must” advertise on all possible sites. This notion is no different than the idea that brokers “must” advertise in all local media. There is no such obligation, online or off.

But suppose that an online site is willing to provide “free” advertising. Is not the broker now obligated to post listings online? Isn’t this good for sellers?

There are two answers here.

First, a sale is a sale. Brokers sold homes before the Internet, and many continue to market properties without web pages and online ads. This is entirely fair, since the broker’s obligation is not to advertise, it is to sell the home under terms acceptable to the owner.

Second, such ads are not “free.” There may not be a cash expense, but there are real costs. For example, by advertising on many sites a broker may dilute and devalue the worth and effectiveness of his or her home page and other online marketing locations. Or, imagine if a KKK or Nazi site offered “free” web pages for home sellers. Does anyone believe that a broker is required to market from such sites, even if the exposure is available without cost?

The real issue here has little to do with brokers and their advertising requirements. Instead, what we are seeing is still another effort by third-parties to build-up the traffic and value of their online sites without paying brokers for their inventory. This is the equivalent of someone claiming the right to sell chain saws from Sears merely because Sears happens to have a fine supply of such devices.

It’s not hard to figure out — just follow the money.

Published originally by Realty Times on May 9, 2000 and posted with permission.

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