by Dennis Wilson, Manager, Professional Standards
Today I’d like to talk about one of the first questions you should ask someone before you offer them your services as a REALTOR®: “Are you – or have you been – working with another REALTOR®?”
The answer is particularly important if you’re holding an Open House and someone walks in without a REALTOR®. You don’t know who they’ve been talking to or where they’ve been.
If the answer to “the first question” is YES
If the reply to your first question is YES, then it’s important to follow-up with a secondary question: “Did you sign a Buyer’s Agency Exclusive Contract?” If the potential client says YES then you have to walk away from them. As a professional REALTOR®, you cannot interfere with an existing agency relationship.
If they answer YES to the first question but NO, ‘I didn’t sign anything,’ you need to confirm or determine that the agency relationship they had has been terminated, cancelled, or no longer exists before you become their REALTOR®.
One way to do this is to ask the individual to call or email the other REALTOR® to say they are no longer working with them or that they are changing REALTORS®. It must be clear that any pre-existing agency relationship (if there was one) is no longer in effect. What would be even better is if they forwarded you the email so you have a copy of it and have evidence if there’s a dispute in the future.
I get calls from consumers on this issue all the time – they ask if they have to continue to work with a particular REALTOR®. The first question I ask is, “Have you entered into a Buyer’s Agency Exclusive Contract?” If they say yes, then I explain it’s a contractual matter. Therefore they need to contact the managing broker.
If they say no (they haven’t entered into a Buyer’s Agency Exclusive Contract), then I tell them, “You are not contractually obligated to continue to work with a particular REALTOR®, however in the interest of your new REALTOR®, I would encourage you to contact the first REALTOR® to let them know you no longer require their services.”
Many members get upset if they’ve been working with someone for a while and they don’t get paid when the client buys a property with another REALTOR®. The fact of the matter is, if you don’t have a signed Buyer’s Agency Exclusive Contract, a client can terminate a working relationship with you at any time.
So what happens if the consumer doesn’t want to call or send the other REALTOR® an email? You need to do it.
If the answer to “the first question” is NO
If the potential client says NO, they aren’t and haven’t been working with another REALTOR®, you need to decide if you believe them. If you later discover that your client was working with another REALTOR® previously but lied to you about it, the other REALTOR® is likely to dispute the commission you thought you had earned, especially if they had a signed Buyer’s Agency Exclusive Contract.
So what happens in a dispute?
First off, at no time should the allocation of commission jeopardize a client’s interest. Secondly, all members must settle commission disputes with the Board.
If a member asks the Board for help to settle a commission dispute, the Board’s Arbitration committee will conduct an investigation based on their committee guidelines (which can be found on REALTOR Link® under Professionalism > Professional Standards Resources > Arbitration/Commission Disputes).
The committee members will review the facts and try to determine who was the effective cause of sale. That is, which REALTOR®’s actions lead to the transaction?
The first thing they will want to know is whether you asked “the first question.” They’ll also be looking for evidence that you shared a Working with a REALTOR® brochure with the consumer, that you explained your role as an agent, ask you how many times you showed the client the property and whether you wrote the Contract of Purchase and Sale.
The committee will make a decision (which is binding) on the commission based on the information provided by you, the other REALTOR® and the client. The result will depend on how the scenario unfolded.
So, the next time you meet a potential new client, please protect yourself and your commission by asking “the first question.” The question is: “Are you – or have you been – working with another REALTOR®?”
Another important take-away is to use the Buyer’s Agency Exclusive Contract. This would go a long way towards saving you future frustration and disappointment.