In slow real estate markets, sellers often become frustrated with the fact that their homes are failing to sell. Stories of the hot 2004-2005 market with properties selling in thirty minutes are still fairly fresh in their minds. Often sellers wrongly blame their listing agents for the home’s failure to sell. They will fire their current Broker despite having signed an Exclusive Right to Sell/Rent (“Listing Agreement”) with the Broker, which often doesn’t expire for several months. They will then go out and attempt to hire a new Broker to sell their property.
Can a seller hire the second Broker? This is a question Arizona real estate law attorneys regularly receive from the first Broker. The answer to that question is yes. The seller will not be prohibited from listing with both their first Broker (assuming that the Listing Agreement was not mutually cancelled by the first Broker and the seller) and the second Broker. However, the seller may be subject to multiple commissions as a result.
The question we receive from the second Broker in these situations is: What do I need to do before I take this listing? Prior to listing with the seller, the second Broker must obtain written acknowledgment from the seller that the execution of additional real estate employment agreements could expose that seller to liability for substantial additional commissions. ARS § 32-2151.02(C). Failure to obtain this written acknowledgment could subject a licensee to punishment by the Arizona Department of Real Estate, as well as potential civil liability for their actions. The statute specifically states that it will not affect any civil liability of a licensee arising out of such conduct. Furthermore, members of the Association of REALTORS® have an obligation to make reasonable efforts to determine whether a prospect is subject to a current, valid exclusive agreement. See Standard of Practice 16-9 in the NAR Code of Ethics.
The general rule: If a client comes to you seeking your services and complaining about their previous Broker not doing his or her job, make sure that you receive written acknowledgment from that seller that retaining multiple Brokers may subject them to multiple commissions.