Working Expired and Withdrawn Listings Legally and Ethically

First . . . My disclaimer . . . I am a Real Estate Principal Broker of a firm I solely own (Pareto Realty). If you’re a REALTOR and you are not affiliated with Pareto Realty or Pareto Reserve, I am not YOUR Broker so if you want clarification on any of the below, be sure to consult with YOUR Principal Broker. While I’m at it . . . I’m not an attorney either . . . This post should not be considered to be “Legal Advice” – Contact an attorney with any tort related questions

Every so often, a listing agent will intentionally allow a listing to expire . . . or withdraw it for “Strategic Reasons” with full permission from the client (Owner of the property). Reasons might be to cease showings while repairs or staging happens so as to re-list later . . . or the Owner may have had a family event (Birth, Death, etc) that necessitates a Break from showings.

Just because the listing expires or is withdrawn from the Multiple Listing System does not necessarily in and of itself mean that there is no longer a contractual client and/or close personal relationship between the Seller and the Listing Agent.

Some Real Estate Professionals “work expired and withdrawn listings” which means that they pay attention to the housing inventory and contact the owners of houses which fall out of the MLS. If done legally and tactfully, this is not a bad way to find new business, .

After all –  if the listing expires (and so does the listing agreement), the owner may very well be in the market for a new agent . . . there’s nothing wrong with standing up to be noticed.

My caveat is this: as agents go about this practice of contacting expired and withdrawn listings, some become a tad overzealous and risk stepping over legal and ethical boundaries . . . 

As we ask Buyers at Open Houses or on sign calls “Are you current working with an agent, and have you signed a representation agreement?“, REALTORS in pursuit of Expired or Withdrawn Listings (Sellers) should verify that there is no existing Exclusive Right to Sell Listing agreement before they launch into any level of solicitation for the listing of the house.

Miss this step as you tackle Withdrawn/Expired listings, and you risk committing what is known in the legal world as Tortious Interference (See this defined below). Ignorance is not a good defense . . . All Real Estate Professionals should know to ask this question as required by law and the Code of Ethics.

Furthermore, some agents may slip into violation of the Code of Ethics and Standards of Practice of the National Association of REALTORS (Click the link to view the entire code) by stepping out of bounds with off-hand, disparaging comments about the initial listing agent.

I did a little digging into our code . . . Specifically:

  •  Article 15 
    REALTORS® shall not knowingly or recklessly make false or misleading statements about other real estate professionals, their businesses, or their business practices.
  • Article 16 
    REALTORS® shall not engage in any practice or take any action inconsistent with exclusive representation or exclusive brokerage relationship agreements that other REALTORS® have with clients.

Then I dug into Google for information on Tort law and found . . .

From Wiki:

“Tortious interference, also known as intentional interference with contractual relations, in the common law of tort, occurs when a person intentionally damages the plaintiff‘s contractual or other business relationships . . .

Tortious interference with contract rights can occur where the tortfeasor convinces a party to breach the contract against the plaintiff, or where the tortfeasor disrupts the ability of one party to perform his obligations under the contract, thereby preventing the plaintiff from receiving the performance promised. The classic example of this tort occurs when one party induces another party to breach a contract with a third party, in circumstances where the first party has no privilege to act as it does and acts with knowledge of the existence of the contract. Such conduct is termed tortious inducement of breach of contract.

So . . . By all means, work expired and withdrawn listings for new listings . . .

Just be sure:

  1. that you can legally solicit the business
  2. to take the high road with anything you say about the prior REALTOR
This is as much to protect reputation as it is to keep folks on the right side of legal and ethical boundaries . . . Breaking the rules and trash mouthing other real estate professionals actually damages the perpetrator’s reputation more than anyone else.
Just sayin’
Best,
b

Published by Barry Owen

Strategist-CEO of Pareto Realty Real estate sales Professional Inviter-Facilitator-Practicer of Open Space Technology Opening safe space for people & organizations to self-organize around issues & opportunities BarryOwen.US Invite-Listen-Love

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30 Comments

  1. This is why I have a series of questions that saves the actual solicitation for the end of the conversation, after I have already inquired as to the status of their agreement.

    1. As a seller, I recently had to pull my house off of the market for repairs. It will go right back on asap. I was pretty irked to open my mailbox just barely a few days “post pull” to find “apology” letters from other realtors telling me they are sorry that I did not sell my house when other houses were indeed selling in my neighborhood- and let me know they would be glad to talk to me if I had any questions or concerns. (rolling my eyes here and saying puhleeese!)
      I am a competent adult and if I had not been happy with my realtor I would have taken it upon myself to search out another realtor. I would NOT accept what I would deem a shark letter. Honestly, they felt creepy. I realize that in a business world where one’s livelihood is dependent upon making sales etc, you have to do what you can to reach those potential clients. I get it. These letters did not make me want to contact these folks though. Granted I am a networker so I want to hear referrals from people I know and I don’t like just jumping out there blindly so again, this is personal in the way I prefer to do business. I like hearing recommendations from others way more than hearing someone tout their own list of promises. There has to be a better way to “fish” for new business.
      Just wanted to share a thought from the peanut gallery. Hope it helps.

      1. Hey Amy,

        Thank you for your perspective on expired calling. Just got my real estate license this year. I listed my home recently. Did everything that I would instruct myself to do to get the house ready to sell (Cleaned, decluttered, staged and professional photos) I created a buzz about the home through marketing and then put together a fantastic description of the home. When I put it on the MLS, I had 3 above asking offers in two days and a bidding war ensued. A month later, my neighbor puts his home up—same floorplan, same lot size and similar updates. It sits and sits on the market. No open house, no marketing, nothing. So, when it expired I sent along my condolences and offered to give them the same service used to sell my home in 3 days. If you honestly want to see someone move forward in life and reach their goal, in my opinion, it’s not slimy: it’s just another profession.

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