When Farming Goes Too Far: Expired Listings and CRMLS Rule 12.11

By Edward Zorn
VICE PRESIDENT AND GENERAL COUNSEL,
CALIFORNIA REGIONAL MULTIPLE LISTING SERVICE
 

Many homeowners have reacted with frustration and resentment at being contacted by multiple real estate agents when their property listings either expire or cancel from the MLS. Such contacts have had a very negative impact and, under CRMLS Rule 12.11, are illegal.

I was sitting in Graziano’s pizzeria for a birthday celebration for my father-in-law when my sister-in-law barreled into the restaurant and went into a tirade about agents who kept calling her. She had received more than a dozen telephone calls, the vast majority being robocalls, since her property had expired from the Multiple Listing Service (MLS) earlier that morning. The few telephone calls that she’d decided to answer resulted in awkward conversations with agents who clearly knew nothing about her property and, in her opinion, did not know what they were doing. (She was a REALTOR® about ten years ago.)

Unfortunately, her experience is very typical for a homeowner who has a listing either expire or cancel from the MLS.

What many agents don’t realize is that contacting a seller because his or her listing has either expired or canceled in the MLS is a violation of California Regional Multiple Listing Service (CRMLS) Rule 12.11 (emphasis added):

“12.11 Use of MLS Information. In recognition that the purpose of the MLS is to market properties and offer compensation to other Broker Participants and R.E. Subscribers for the sole purpose of selling the property, and that sellers of properties filed with the MLS have not given permission to disseminate the information for any other purpose, Participants and Subscribers are expressly prohibited from using MLS information for any purpose other than to market property to bona fide prospective buyers or to support market evaluations or appraisals as specifically allowed by Sections 12.14, 12.15, and 12.16. MLS information may also be used to develop Statistics, Market Condition Reports, and Broker or Agent Metrics. Any use of MLS information inconsistent with these sections is expressly prohibited. Nothing in this section, however, shall limit the MLS from entering into licensing agreements with MLS Participants and Subscribers or other third parties for use of the MLS information.”

Trolling expired or canceled listings to secure a new listing clearly falls outside the permitted uses of MLS information pursuant to Rule 12.11. My sister-in-law did not agree to have her property listed in the MLS so that it would be easier for an agent to get new business. She placed her home in the MLS to secure a buyer who might be represented an agent other than her own.

Agents, or worse, computers, that call her are not gaining an upper hand in securing her business. What they are very successful in doing is angering her as a seller and greatly diminishing her respect for the REALTOR® community.

At the California Association of REALTORS® Spring Conference in 2018, Elizabeth Miller-Bougdanos, the C.A.R. staff attorney to the MLS community, provided a legal update at the MLS Committee. She mentioned in passing that agents soliciting for new business could not use expired listings. The room instantly was abuzz with conversation. Many of the agents in the room appeared to be in shock. Elizabeth pointed out that this has always been the rule and is very obvious from the clear language of the rule. She was surprised that a room full of skilled, experienced REALTORS® who were in C.A.R. leadership positions found such an obvious statement to be controversial.

As a result of the confusion generated at the Spring Meetings, CRMLS convened a task force to investigate the issue to consider alternatives to this well-established rule.
The CRMLS task force was made up entirely of active and working agents and brokers, who sought input from each of their local Association MLS Committees and Boards of Directors. They brought these comments and insights back to task force meetings that explored whether any of the language in the rules should be modified.

After evaluating some truly appalling stories of actions taken by agents attempting to secure a new listing and after weighing those negative impressions against the somewhat common practice of marketing directly to expired listings, the task force concluded that there was no need to modify or change the existing rule as written.
The task force members decided that the language in Rule 12.11 does prohibit agents from marketing to expired listings; however, they directed the CRMLS Compliance Department not to issue citations for any alleged violations for that practice. They determined that marketing to expired listings is a very fact-sensitive allegation and would most appropriately be addressed by having either the seller or the prior listing agent report these solicitations to the local Association for a disciplinary hearing.

By proceeding in this manner, a local Association’s Professional Standards hearing panel would have the ability to fine up to $15,000 for any violation of Rule 12.11.

The CRMLS Compliance Department still routinely receives complaints and reports about agents who are soliciting sellers as a result of their homes having gone to an expired or canceled status. In each of these instances, CRMLS recommends that the reporting party immediately file a complaint with the local REALTOR® Association or Board of the violating member.

In addition, I have personally fielded numerous calls from sellers who have contacted the MLS complaining about the aggressive behavior and invasion of their privacy and personal space by agents soliciting their expired listing. A number of these sellers have even threatened lawsuits. Many expressed frustration and regret about ever having listed their property in the MLS.

These activities—and the increased aggression in going after expired listings—has had a very negative impact and has lowered the reputation of the real estate community in our area.

Soliciting expired listings is a violation of the rule, and the practice needs to be stopped.

Please remember that the MLS exists to help brokers cooperate with one another in assisting established clients to buy and sell properties. The MLS does not exist as a shortcut or method for you to obtain a new client.