Soliciting future business of another REALTOR®’s client

QUESTION: A developer/builder in our market has all its listings with another firm in town. One of my agents would like to solicit the company’s future business. Would there be a problem with him dropping off some marketing material for the owner’s review and saying that he wants to be considered for the company’s future business?

ANSWER: We think the answer depends on what you mean by “future business.”

Article 16 of the REALTOR® Code of Ethics prohibits REALTORS® from “taking any action inconsistent with…exclusive brokerage relationship agreements that other REALTORS® have with clients.” There are 20 so-called “Standards of Practice” related to Article 16. Standards of Practice are applications of ethical principles to specific conduct in specific circumstances as related to the various Articles of the Code. In our view, Standards of Practice 16-3 and 16-6 are instructive in answering your question. Read together, we think they draw an important distinction between two different types of solicitation: (1) the solicitation of a future listing agreement on a property that is currently listed with another REALTOR®, and (2) the solicitation of a listing agreement on property that the owner/future owner does not currently have listed. As illustrated by Standard of Practice 16-6, the first type of solicitation may be unethical unless the owner initiated the conduct with the REALTOR® regarding a listing on the property. On the other hand, the second type of solicitation is specifically permitted under Standard of Practice 16-3, which provides in relevant part that “Article 16 does not preclude REALTORS® from contacting the client of another broker for the purpose of…offering the same type of service for property not subject to other brokers’ exclusive agreements,” provided that “information received through [an MLS] or any other offer of cooperation may not be used to target clients of other REALTORS® to whom such offers to provide services may be made.”

Applying this to your question, we think that what your agent proposes to do would be okay so long as he makes the following things clear: (1) that he is soliciting listings on projects that the company may develop/build in the future, and (2) equally importantly, that he is not soliciting listings on any of the properties that the company currently has listed with another firm. Your agent should be careful in what he says and should consider including a cover letter or note with the marketing material confirming the purpose of his solicitation. This risk management technique may prove helpful if the other firm alleges that he has violated Article 16.