Guidelines for Agents Conducting an Open House for a FSBO Owner

QUESTION: An agent at my firm has been in contact with a FSBO owner who has had her house on the market for several months. The owner asked my agent if she would be willing to conduct an open house to hopefully generate some interest in the house. The owner is not offering my agent any compensation but my agent is willing to proceed in the hopes that she will meet some potential buyer clients who are not already represented by another broker. Is this kind of arrangement permissible? If so, what guidelines should my firm and the agent follow to comply with the license law, the Commission’s rules, and any MLS guidelines?

ANSWER: It is permissible for a licensed broker to conduct an open house for a FSBO seller.

Because there is no compensation being offered by the owner, the services being offered by your agent do not constitute “brokerage services.” As a result, we do not believe that your agent is legally obligated to have a written agreement with the owner. Having said that, your firm should absolutely insist that a written agreement be in place before allowing any of its agents to conduct an open house. That agreement should include the following provisions:

1. Authorization to conduct the open house on a specific date and at a specific time;
2. Authorization to advertise the open house (social media, yard signs, etc.);
3. Seller acknowledgement of the risks associated with conducting an open house (see paragraph 10(d) of Form 101 for suggested language;
4. Seller acknowledgement that your firm and its agents do not represent the Seller; and
5. Non-discrimination language required by Commission rule 104(b).

In addition to requiring a written agreement, your firm should require that the Seller sign a Working with Real Estate Agents Disclosure indicating that the agent will not be representing the Seller and has no loyalty to the Seller.

We do not believe that any public marketing of the open house by your agent would obligate your firm to submit anything to your local MLS. Because your firm does not have a listing agreement, is receiving no compensation from the seller, and is offering no compensation to cooperating brokers, it is our view that the clear cooperation policy is not triggered.

Finally, your agent should understand the need to discover and disclose material facts about the subject property. The Real Estate Commission has long taken the position that brokers who provide limited services to a property owner may not limit the duties imposed by statute and by the Real Estate Commission’s rules.