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A brokerage has a “listing” that charges a flat fee to the sellers to place the property on the Multiple Listing Service (“MLS”). The sellers agree to pay the MLS-offered co-broke to an agent that procures a buyer. The MLS states all offers should be presented to the sellers, and that the brokerage should not be listed on page 9 of the Residential Resale Real Estate Purchase Contract (“Contract”). Should the listing broker be listed on page 9, section 8r of the Contract, when the buyer’s agent presents an offer to a seller listed in the MLS under a flat fee listing agreement?
Although a broker can limit the services the broker provides to a client, a broker cannot limit the regulatory authority of the Arizona Department of Real Estate. Therefore, a “limited service broker” is required to comply with all real estate statutes and rules, including A.R.S.§ 32-2151.01(A), which requires that “each licensed employing broker shall keep records of all real estate…transactions handled by or through the broker.” Thus, the listing broker should be identified on page 9 of the Contract, and a copy of all transaction documents should be retained by the listing broker.
In regard to the buyer’s broker who is instructed to submit an offer directly to the seller, A.A.C. R4-28-1102, states: “except for owner listed properties, negotiations shall be conducted exclusively through the principal’s broker or the broker’s representative unless 1. the principal waives this requirement in writing, and 2. no licensed representative of the broker is available for 24 hours.”
The sellers and the limited service broker can satisfy this Rule by providing a written waiver (preferably in the listing agreement) indicating that the buyer’s agent should present/negotiate the buyer’s offer directly with the seller.
Buyer #1 offers $100,000 for the home. Buyer #2 offers $105,000. The listing broker contacts the broker for buyer #1 to see if buyer #1 wants to make a higher offer than the $105,000 offer from buyer #2. The broker for buyer #1 wants a copy of the $105,000 offer from buyer #2. Can the listing broker furnish a copy of the $105,000 offer to the broker for buyer#1?
Yes. Under the fiduciary duty owed to the seller, unless the seller denies permission, the listing broker is required to “shop offers” to get the highest price for the seller. Neither the offer nor the terms of the offer are confidential unless otherwise agreed. Therefore, the listing broker can furnish to the broker for buyer #1 a copy of the $105,000 offer received from buyer #2.
The listing broker represented the seller when the purchase contract was executed. The closing is not scheduled for another 60 days. The buyer wants the listing broker to immediately list the buyer’s existing home for sale. Can the listing broker now list the buyer’s existing home for sale?
Yes. The listing broker, however, will now be a dual agent in the closing of the sale of the seller’s home. Therefore, the AAR Consent To Limited Dual Representation Agreement form should be used.
The seller has stated to the listing agent that the seller does not want any offers under $180,000. The listing agent has an offer for $172,500. Should the listing agent present this $172,500 offer to the seller?
Yes. Unless the seller instructs otherwise in writing, the listing agent should disclose all offers to the seller.
The seller and the listing agent execute a 4% listing agreement. One week later the buyer and the seller execute a purchase contract and open escrow. The seller now demands that the listing agent reduce the listing commission to 3%. The listing agent agrees and an amendment to the listing agreement is executed. The listing agent’s broker, however, does not want to amend the 4% listing commission. Is the listing agent’s broker bound by the listing agent’s agreement with the seller to reduce the 4% commission to 3%?
Yes. The listing agent is the agent of their broker. Third parties such as the seller have the right to reasonably believe that the agent is authorized to take action or make representations on behalf of the agent’s broker. See Anchor Equities, Ltd. v. Joya, 160 Ariz. 463, 466,773 P.2d 1022, 1025 (App.1989). (Apparent authority exists “when the principal’s conduct leads a third party to have reason to believe that he has authorized his agent to take the actions or make the representations in question.”)
Therefore, a listing agent has apparent authority to enter into a listing agreement. For example, the effective date of the listing agreement is generally when the listing agent signs the listing agreement and not when the listing agent’s broker reviews and initials the listing agreement. Inasmuch as the listing agent has the authority to enter into a listing agreement, the listing agent has the authority to execute an amendment to the listing agreement to reduce the listing commission from 4% to 3%.