Sold! Or Is It?

The property has been on the market for a few days, and an offer has already been accepted by the seller. Congratulations!

The listing agent may want to quickly advertise that the property has “sold” or is now under contract. And in some cases – particularly in today’s hyper-competitive market – the buyer’s agent may want to advertise the same thing to show other potential clients that they’ve successfully gotten a client’s offer accepted.

The question the PAR Legal Hotline has been getting in a few different versions is whether and how agents can advertise a “sold” property prior to actually closing the transaction.

Basics

Code of Ethics Standard of Practice 12-7 states “Only Realtors® who participated in the transaction as the listing broker or cooperating broker (selling broker) may claim to have ‘sold’ the property. Prior to closing, a cooperating broker may post a ‘sold’ sign only with the consent of the listing broker.”

So what does “sold” mean? Case interpretations 12-5 and 12-11 make it clear that either broker involved in the transaction can make claims to have “sold” the property upon acceptance of a purchase offer by the seller, even before closing. In some markets, the common practice may be to use other terms such as “under contract” or “sale pending,” but the code says that “sold” is acceptable as well. The Standard of Practice says that a cooperating broker needs permission from the listing broker to put up a sign (because the cooperating broker wouldn’t otherwise have the right to put something on the seller’s property), but does not restrict other types of advertising.  So, let’s take it a bit further.

With a Twist

Standard of Practice 12-7 was last amended in 1996.  That means 25 years of technology and advertising have been unfolding. Our calls focus more on advertising on social media, email or mailers rather than a sign in the yard. Since none of that is restricted in any by the text, yes, the listing broker or cooperating broker can claim to have sold the property in a social media post, a website or other type of advertising or marketing outlets. It’s not a violation of any other rules because this isn’t advertising the property for sale, but rather advertising the brokerage services that were provided.

But a key point here is that if the deal falls through, whatever has been advertised has to be able to be withdrawn. For example, once an Agreement of Sale is terminated, the sold/under contract sign riders would have to come down because they no longer reflect the current status of the property. With that in mind, you’d want to be very careful in exactly what types of advertising you use. It could be problematic to send postcard mailers or emails prior to settlement, because those advertisements would not be able to be withdrawn. Despite the immediate urges to shout your success from the rooftops, it may be prudent to wait until the deal is a bit further along, so as to not have to backtrack or edit such advertisements.

Bonus Answer

A related topic that gets just as messy is how agents can advertise their involvement in transactions after they leave a brokerage. As a general matter, clients and transactions are “owned” by the broker. But realistically, individual agents do the bulk of the work and get credit in various ways for the transactions that are completed. NAR Case Interpretations 12-25 and 12-26 cover this issue, noting that an agent may advertise their involvement in transactions handled at a former broker if they also somehow disclose that some or all of the transactions referenced in the advertisement did not occur with the current brokerage. (And no, we cannot draft those disclaimers for you). Putting these two concepts together, an agent who changes brokerages while a transaction is pending should probably not be advertising their involvement in the transaction until it closes. Though they could reference it after they’re sure the transaction is complete, any advertising before then runs the risk of being inaccurate since the agent now working for a different brokerage would not know about the status of this transaction on a daily basis to ensure that the advertisement continues to be valid.