2015 April Withdrawing a Listing from the MLS

By James L. Goldsmith, Esq.

Why withdraw a listing from the MLS before the term of your listing agreement expires? Maybe a seller has become critically ill, lost a job, or suffered an unforeseen financial setback. These are among the many and myriad reasons why sellers may seek to terminate the marketing of their property.

When asked to terminate your listing, do you do so? That depends. The answer might be "yes" in the case of a death of one of the sellers and it may be "no" for a seller who is whining about it being your fault that his home has not sold. Each request has to be reviewed on its distinct set of facts and circumstances. I will tell you that, in my experience, representing someone against their will usually leads to trouble! Why work hard, for free, for difficult sellers?

On those occasions when you agree to withdraw the property from the market, exercise care and adequately document any obligations that survive withdrawal. Consider that a withdrawal of the listing from the multi-list does not necessarily address whether the listing contract retains any viability. If a listing is withdrawn from the MLS three months before expiration of a listing contract, and the property sells within those three months, are you assured of collecting a commission? The answer depends on the terms you established when the property was withdrawn from the MLS and whether those terms were memorialized in writing. To sellers, your agreeing to withdraw their property from the MLS equates to your termination of the listing agreement with no surviving fee provisions. Hence, the necessity to assure that there are no false expectations or misunderstandings.

Issues to button down by agreement include whether a commission is earned if, following the withdrawal of the listing from the MLS, the property is sold to buyers who looked at it during the term of your listing and prior to its withdrawal from the multi-list. If the buyers are represented by a buyer agent who responded to your MLS listing, will you owe a cooperating commission to the selling agent? Might you owe that cooperating commission even if you are not going to be paid by the seller (possibly, if not probably, yes).

Does withdrawing a listing from the MLS also mean that you are no longer actively marketing the property? If so, protect yourself by the appropriate provision in your withdrawal agreement. Does the period of time that the property is withdrawn from the MLS get added to the term of your listing agreement and can you do so if the term will then exceed a year? Have you considered a provision whereby the sellers agree to relist with you at such time as they determine to sell their property and how might you enforce such a provision (think liquidated damages)?

It is easy to establish terms by which you will represent sellers. A standard form is available for this purpose and you well know its provisions and the protocol for representing sellers. It is far more difficult to terminate a listing agreement before its expiration while at the same time preserving certain rights and the possibility of being paid. Such arrangements are not common and the particulars do not lend to a standard form. This does not mean you cannot or should not create a termination agreement with the aid of legal counsel. The first step, however, is analyzing exactly the rights to be preserved and those to be given away by the withdrawal from the MLS. Keep in mind too that you may enjoy a negotiation advantage. You've engaged time, energy and money in marketing your seller's property. To give up your right to a commission must be worth something in return.

Copyright © James L. Goldsmith, Esquire, CALDWELL & KEARNS, P.C., 2014

All Rights Reserved

Jim Goldsmith is an attorney with Caldwell & Kearns and serves as general counsel to PAR. A substantial portion of his practice is dedicated to providing advice and counsel to real estate licensees. He and his firm represent and defend real estate salespersons and brokers in civil lawsuits and licensing claims across the Commonwealth. Jim also defends REALTORS® in disciplinary hearings conducted by the Real Estate Commission. He routinely counsels employers on employee relations issues and is one of the voices of the PAR Legal Hotline. He may be reached at www.realcompliance.com.