Virtual Office Websites

In May, the National Association of REALTORS® (NAR) adopted a new policy governing Virtual Office Websites (VOWs) operated by MLS participants. VOWs have been described as vehicles for conducting online brokerage in a way that’s similar to how a brokerage firm interacts with its clients and customers in a “bricks-and-mortar” office. Upon “registration” with a VOW, a consumer can search the MLS listing database for properties of interest to them. (Virtual Office Website Frequently Asked Questions, www.realtor.org, 6/11/2003.)

Broker-Consumer Relationships and Consumer Registration

The NAR VOW Policy has a number of features affected by the Real Estate License Law and Commission rules. For example, under the policy, the MLS participant (a licensed broker or salesperson) must first establish a lawful “broker-consumer relationship,” satisfying all agency, non-agency, and other disclosure obligations. And the participant must execute any required agreements. VOW Policy § II(1). The consumer has the opportunity to search the MLS data, subject to the participant’s oversight, only after the consumer “registers” with the VOW by providing his or her name and an email address and making a verified agreement to the VOW “terms of use.” VOW Policy § I(1), II(2).

With regard to these provisions, remember that Commission rules require licensees to provide a prospective buyer or seller with a copy of the Commission’s Working with Real Estate Agents brochure at first substantial contact, review it with him or her, and determine whether the licensee will act as the agent of the buyer or seller in the transaction.

Merely, obtaining a consumer’s name and email address is not enough to trigger a “substantial contact.” First substantial contact occurs when the consumer is invited to provide, or does provide a licensed broker or salesperson with information about the consumer’s particular property needs, personal information, financial circumstances, family matters or the like. It may also occur when the licensee by his or her own words or conduct leads the consumer to believe that the licensee will act as the consumer’s agent. A licensee who requests this kind of information should post the Working with Real Estate Agents brochure on the VOW, require the consumer to acknowledge that he or she has read and understood its terms and verify that the consumer has done so.

According to the NAR VOW Policy, consumers who merely “register” at a VOW are not entering into an agency agreement with the operator and are not financially obligated to the operator — such agreements must be created separate from the registration process, must be “prominently labeled and may not be accepted solely by mouse click.” VOW Policy § II(2). Agency agreements should be entered into separately, and in a form and manner that assures that the consumer understands and agrees to whatever he or she is signing. Once the buyer has been registered and his or her review of the Working with Real Estate Agents brochure verified, under the Commission’s agency agreements rule, buyer agents can continue to work with buyers through a VOW without a written buyer agency agreement until the time the buyer is ready to make an offer.

Brokers and Salesperson Associates Operating VOWs

Under the NAR VOW Policy, the VOW can be operated by broker and salesperson associates affiliated with MLS participants, if permitted by state law and the participant’s MLS, but only with the MLS participant’s supervision. VOW Policy § II(4)(b). This is a matter between a broker and the firm. Salespersons who operate VOWs, however, must be supervised by the broker-in-charge, and must assure that the name of their broker or their firm appears on the VOW. The broker-in-charge is responsible for the proper conduct of all the firm’s advertising, including listings displayed on the VOW. [See “VOWs as Advertising” below.]

Permission to Display Required

The NAR VOW Policy presumes that a listing broker entering data into the MLS will permit all other MLS participants to display the active listing data on their own VOWs, unless such a presumption is prohibited by state law or regulation. Here in North Carolina, express permission will be required. Thus, before a licensee displays another agent’s listings on his or her VOW, the licensee must have the permission of the listing agent and the listing agent must have permission from the seller. With regard to the seller’s permission, this is usually obtained as a part of the standard REALTOR Exclusive Right to Sell Listing Agreement. With regard to the permission of the listing broker, this may be obtained through membership in the MLS and should be addressed in MLS policy.

In addition, under the NAR VOW Policy, a broker who does not want his or her listings displayed by other MLS participants may “opt out” by directing that the listings can’t be searched or displayed on: (1) the VOWs of all other participants in the MLS (“blanket opt-out”), or (2) the VOWs of selected other participants determined independently by the listing broker (“selective opt-out”). VOW Policy § I(3). Licensees should exercise caution, particularly when exercising the selective opt-out option, that they do not unlawfully discriminate against members of protected classes. Too, clients should be advised of the extent of any opt-out, as it may affect the marketability of the seller’s property and the array of choices available to a buyer.
Similarly, under the NAR VOW Policy, a seller can opt out by directing his or her listing broker to withhold the listing or property address from the Internet. Alternatively, a seller can permit his or her agent to display the seller’s listings on the agent’s website or VOW and not on other sites. VOW Policy § II(4)(a). The seller’s directives in this regard must be honored.

VOWs as “Advertising”

A component of the service provided by a VOW is the dissemination and promotion of its own listings and those of other MLS participants in the hope of achieving a sale (or lease). Although NAR has a contrary view, the use of a VOW necessarily involves advertising.
Additionally, a listing on a VOW cannot be surrounded by the advertisements of anyone except the VOW operator, who may include his or her name, address, phone number and company logo, and any other information required by state law. VOW Policy § IV(1)(b). In North Carolina, every advertisement must clearly indicate that it is the advertisement of a broker or brokerage firm and shall not be confined to publication of only a post office box number, telephone number, or street address. Similarly, licensees should take care to assure that their VOWs do not imply that the listings of others are those of the VOW operator.

Conclusion

The NAR VOW Policy represents a new step in the use of information technology to the service of the real estate marketplace. A number of issues may arise as MLSs implement NAR directives and licensees begin using VOWs on a wide-spread basis. These will be addressed by the Commission as they arise. In general, however, the Commission will continue to direct its energy and resources as it always has - to curtail the old evils of misrepresentation, theft and incompetence.