Must a home be listed in the MLS to be “for sale?”

Reader Question: Must a home be listed in the MLS to be for sale? What, if any, legal issues would be caused by offering on a home that’s off the MLS but was on it recently? Should the seller’s agent re-list it before one makes an offer?

Monty’s Answer: Any seller is free to sell their property without utilizing the Multiple Listing Service (MLS) or a real estate agent. Any buyer is free to buy a home without using the services of a real estate agent. There is a legal requirement to pay a commission when a seller violates the terms of a listing agreement.

The background

There are more than two million licensed real estate agents in the country according to the Association of Real Estate License Law Officials (ARELLO). Over one million of them are members of the National Association of Realtors (NAR). If you were to list your home with a real estate company that is a NAR member, listing your home in the MLS is a requirement. A non-NAR member cannot utilize the MLS so a home would not be in the MLS with a non-NAR member.

The bulk of the real estate licensees that are not members of NAR are not active in real estate. They see real estate as a fall-back career were their current employment to evaporate. There are practicing real estate brokers that are not members of the NAR.

How to determine if the buyer is protected

If the buyer alluded to in your question is known to the agent, and the agent registered that buyer’s name with the seller, the seller may likely be legally obligated to pay the commission they agreed to when the house went on the market initially. The steps to register a buyer are spelled out in the listing contract, and an agent must adhere to them to protect their commission. The home seller can review the submitted names to determine whether a buyer is on the “protected buyer” list.

If the buyer is a “protected buyer,” these circumstances would not require re-listing the home. It may be wise to have that listing agent do the work if the seller is obligated to pay the commission.

A seller can create a legal issue when they violate the terms of the listing agreement.