By Travis Close, ABR, GREEN, GRI, e-PRO
President, Greater Chattanooga Association of REALTORS®
A common frustration when searching for property is learning that a listing being marketed as available for sale (or lease) already is under contract. Even worse is to learn the true status of the listing after previewing and falling in love with the property. So who is to blame? The seller? The listing agent?
When listing property with a REALTOR®, most Sellers agree to have their property disseminated through the local Multiple Listing Service (MLS) to which their REALTOR® subscribes. Sellers gain tremendous exposure by having a property in the MLS. In Greater Chattanooga, more than 1,500 REALTORS® use the MLS daily to search for available properties on behalf of their buyer/tenant clients. In addition, MLS data is distributed to various public search portals where consumers can search online for available properties. Thus, it is extremely important that all parties on both sides of a potential real estate transaction have a clear understanding on whether a property already under contract and whether back-up offers are being considered.
With the benefits of an MLS, there are Rules that the Listing Broker must follow in order to have access to the MLS. GCAR strongly advises Sellers not to request their REALTOR® take action inconsistent with the MLS Rules. In our local MLS Rules, there are no circumstances in which a Seller's instructions can override the REALTOR®'s obligation to ignore the MLS Rules. In addition to the MLS Rules, a REALTOR® is obligated by the Code of Ethics, Article 3, to communicate to other real estate professionals "the existence of accepted offers, even those with unresolved contingencies."
Through listing status definitions, our local MLS Rules are clear when REALTORS® should enter a listing in the MLS and when they are required to change the status of the listing. Following the MLS Rules in this regard automatically enable the REALTOR® to abide by the Code as referenced above.
Below we share the GCAR MLS's listing status definitions to help Sellers better understand what to expect when listing their property with a local REALTOR®. As a result, Buyers gain confidence they are not wasting time and emotional energy on a property that already is under contract.
The following definitions are paraphrased from the GCAR MLS Rules, Section 1.2.4. Listing Status Definitions.
Active: A listing for which the Listing Broker has a current listing agreement, the property is available for showings, and no offers have been accepted by the seller. An Active listing automatically will change to Expired at midnight on the date of expiration. A listing with contingencies* may remain in Active status only when the purchase and sale agreement is contingent upon the buyer having a first right of refusal should a seller receive and wish to entertain a subsequent offer. Once a first right of refusal has been removed, the listing no longer is eligible to remain in Active status.
Back On Market: This status is available only for listing agreements that have not Expired naturally or were Cancelled by a mutual agreement between the Seller and Listing Broker.
Contingent: A listing for which the Listing Broker has a current listing agreement and for which the Seller has accepted an offer with a contingency* and continues to seek back-up offers. We recognize that a Buyer has the right to present a back-up offer for the Seller's consideration should the initial contract not come to fruition. Thus, Contingent listings are included in syndication feeds to public portals, which denote the Seller has accepted an offer but still wishes the property to be marketed.
Expired: A listing for which the property did not sell during the timeframe specified in the listing agreement. Once a listing Expires, the former contractual obligations between Seller and Listing Broker no longer are in effect. A Seller whose listing has expired should be free to sign a new listing agreement with the same or different Listing Broker. NOTE: When a property goes under contract, the listing agreement is extended by virtue of the purchase and sale agreement and remains in effect until the transaction closes. However, should the purchase and sale agreement not come to fruition, the listing agreement terminates upon the original expiration date unless prior to that date, the Seller and Listing Broker amend and extend the original listing agreemention.
Pending: A listing for which the Listing Broker has a current listing agreement, the Seller has accepted an offer and no longer seeks additional offers, and any contingencies* have been met. A Pending Listing is not included in syndication feeds to public portals since the Seller no longer desires to consider back-up offers.
Cancelled: A listing for which the Listing Broker and Seller mutually have agreed to terminate prior to the expiration of the listing agreement.
Withdrawn: A listing for which the Listing Broker has a current listing agreement yet the Seller has requested the listing no longer be marketed as available for sale or lease. A Withdrawn listing does not negate the existence of a listing agreement, which remains in effect between Seller and Listing Broker until the listing agreement Expires naturally or is Cancelled by a mutual agreement between the Seller and Listing Broker. With the Seller’s written permission, the Listing Broker may change the listing to another status at any time prior to the expiration date. Otherwise, a Withdrawn listing automatically will change to Expired at midnight on the date of expiration.
*The GCAR MLS considers Contingencies to be those defined in the purchase and sale agreement between Seller and Buyer, which include (a) appraisal value equaling or exceeding the agreed upon purchase price; (b) financial contingency; (c) sale or lease of another property; and/or (d) buyer specified contingencies in the special stipulations of the purchase and sale agreement.
Real estate transactions can be confusing, but they don't have to be, especially when it comes to understand listing statuses. Rely on and avoid discouraging your REALTOR® to operate outside the requirements of the local MLS Rules and the Code of Ethics. With all parties having the same expectations, consumers get clear, accurate and consistent information about listed properties. Asa result, properties get sold or leased and Buyers avoid unnecessary frustration and loss of confidence in the process. In other words, it is a win-win.