In accordance with the C.A.R. Model MLS Rules, a broker participant is required to submit new listings within the MLS service area into the MLS within 48* hours from entering into a written listing agreement (*Note: some local MLSs may have established different time frames). The Rules, however, allow an exception to mandatory submission in the event the seller has instructed the listing broker to keep the listing off the MLS. The listing agent will have to submit to the MLS a form signed by the seller (such as C.A.R. form SEL or a similarly required MLS form) indicating the seller's refusal to permit the listing to be disseminated by the MLS. The pertinent sections of the C.A.R. Model MLS Rules are set forth as follows:
7.5 Mandatory Submission. Broker participants shall input exclusive right to sell or exclusive agency listings on one to four unit residential property and vacant lots located within the service area of the MLS within 48 hours (excepting weekends, holidays and postal holidays) after all necessary signatures of the seller(s) have been obtained on the listing. Only those listings that are within the service area of the MLS must be input. Open listings or listings of property located outside the MLS's service area (see section 7.7) are not required by the service, but may be input at the broker participant's option.
7.6 Exempted Listings. If the seller refuses to permit the listing to be disseminated by the service, the listing broker shall submit to the service a certification signed by the seller that the seller does not authorize the listing to be disseminated by the service.
7.7 Service Area. The MLS's service area shall be determined by the MLS Committee, subject to approval by the Board of Directors. If the AO.R. has entered into regional MLS agreements or a regional MLS corporation with other MLSs and has enlarged the service area as part of the agreement or corporation, submission of the type of listings specified in section 7.5 is mandatory for the area covered by the combined service areas of the Associations signatory to the regional MLS agreement or part of the regional MLS corporation.
Seller Exempted Listings
As stated above, if a seller wants a listing withheld from the MLS, that is his or her right. So, from an MLS Rules and policy perspective, there is not too much to talk about on this aspect of the subject. The problem arises, however, when listing agents don't get informed seller consent to "pocket" a listing. Some sellers may have no concept of what an MLS is nor its reach, so the listing agent desiring a pocket listing should be upfront about this tactic.
Under both general principles of California Agency Law and the N.A.R. Code of Ethics, REALTORS® have a duty to their client to at all times act in the best interests of the client. The Code of Ethics provides the "obligation to the client is primary". This includes the obligation to provide your clients with all the information they need to make informed decisions about the sale of their home, such as whether to list the property in the MLS.
When seeking and obtaining the consent of your client to withhold a listing from the MLS, one of the questions you must ask yourself is whether withholding the listing from the MLS is in the best interests of your client. One sure way to answer this question is to submit the listing to the MLS. By submitting the listing, you are either going to receive superior "in house" offers, or you are going to receive better offers from those cooperating through the MLS. Either way, your decision cannot be second guessed from a legal or ethical standpoint.
Although the duty to your client is primary, some consideration should also be given to the general duty (See Code of Ethics, Article 3) REALTORS® have to cooperate with one another, and also the fact that this cooperation is fundamental to maintaining the strength of the industry.
For these reasons, you should consider your legal and ethical obligations to your client and whether excluding a listing from the MLS is in the best interests of your business and the real estate profession as a whole.
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Readers who require specific advice should consult an attorney. C.A.R. members requiring legal assistance may contact C.A.R.'s Member Legal Hotline at (213) 739-8282, Monday through Friday, 9 a.m. to 6 p.m. and Saturday, 10 a.m. to 2 p.m. C.A.R. members who are broker-owners, office managers, or Designated REALTORS® may contact the Member Legal Hotline at (213) 739-8350 to receive expedited service. Members may also submit online requests to speak with an attorney on the Member Legal Hotline by going to http://www.car.org/legal/legal-hotline-access/. Written correspondence should be addressed to:
CALIFORNIA ASSOCIATION OF REALTORS® Member Legal Services 525 South Virgil Avenue Los Angeles, CA 90020
The information contained herein is believed accurate as of Feb. 20, 2008. It is intended to provide general answers to general questions and is not intended as a substitute for individual legal advice. Advice in specific situations may differ depending upon a wide variety of factors. Therefore, readers with specific legal questions should seek the advice of an attorney.