Can Realtors® exclude an MLS participant from compensation?

FACTS:  Realtor® A is about to enter a property into the MLS. The sellers, however, have a slight problem with Realtor® B, who happens to be one of their neighbors. Realtor® B was the listing agent at the time the sellers purchased the property and they believe she misrepresented certain conditions. They were vindicated when a civil court found in favor of the sellers and against Realtor® B on several counts of misrepresentation.

As you can imagine, neighborhood relations are somewhat chilly and the sellers have neither forgiven nor forgotten this neighbor, Realtor® B. Now they want to keep her from showing the property and from any involvement in its sale.

Q:  May an MLS participant exclude any other participant from the blanket offer of compensation implicit in every MLS listing?

A: Yes. While MLS listings are generally blanket offers of compensation (the offer of compensation is extended to all MLS participants), participants can be excluded.

To exclude a participant, one must provide written notice to that person advising that the offer of compensation does not apply to her. This exclusion from the offer of compensation has to take place before the to-be-excluded participant begins her effort to sell the property. That means the best practice would be to inform the excluded participant, before the listing hits the MLS.

I am pleased to report that we get few Hotline calls of this nature. It is nice that we all play fairly together and rarely have a beef with another member. Reduced commission or excluded cooperation, however, should not be the methods by which one member “gets even” with another.

If a Realtor® has breached an article of the Code of Ethics, then perhaps an ethics complaint should be filed. If a fee dispute arises, then arbitration is the method of resolving the dispute. But when an owner seeks to prevent the involvement of another Realtor®, then exclusion from the offer of compensation is appropriate.

My recommendation to the listing broker is that she has a copy of the letter that will be sent to the excluded salesperson, signed by the sellers and kept with the file for safekeeping. This is proof that it was the sellers’ determination to preclude the cooperation, not the listing agent’s.

Another good practice is to call the broker of the agent who will be excluded before that letter arrives. The call should be handled as a courtesy to the broker, given as advance notice of the letter his agent will receive. The listing agent has the opportunity to explain the basis of the sellers’ decision and reinforce that the exclusion is solely the decision of the sellers. Such a call might help assure that future relations between the offices are warm.