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I’m moving brokerages – why can’t my listings come, too?

by James F. McClister

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Agents work for their listings. They put in the time and the effort, the blood, sweat and tears. But no matter how hard they work, agents do not technically own their listings: their brokerage does.

Most agents in this country are independent contractors, which means that though they may advertise under the banner of, say, Keller Williams or Dream Town Realty, in most respects, they are their own company. “The independent contractor relationship between brokers and their salespeople is a longstanding tradition in the real estate industry,” wrote the National Association of Realtors.

But even though agents technically work for themselves, their work is not their own. Whenever a seller signs a listing agreement with an agent, they are actually signing with the brokerage. So if an agent, for whatever reason, changes brokerages or opens up shop for themselves before the transaction with that seller is complete, the client is bound to the brokerage.

A client can request their listing agreement be cancelled so they may sign with a different brokerage, and most companies will oblige. But an agent cannot encourage a client to do so. If they do, they may very well find themselves in court.

Marty Walsh, a broker with Dream Town Realty and former director of the Illinois Association of Realtors, has watched the mechanics that govern client-agent-brokerage relationships long enough to have decided there’s something wrong.

“The entire model is backwards,” says the nine-year veteran. “I’m surprised it hasn’t been challenged in court yet.”

The crux of Walsh’s argument is that brokerages, while they support agents, have no interactions with clients that don’t involve the agents themselves. “In almost every single listing, the only point of contact a client has with a brokerage is their designated agent,” he says. “The relationship is agent based. Clients choose an agent, not a brokerage.”

And he’s right, according to Keller Williams CEO Chris Heller. He agrees that because agents work for the business, it should be considered theirs.

“When agents leave Keller Williams, it’s our policy that they can take their business with them,” he says. “It’s their work that gets the business, [and] we believe it’s their right to keep it.”
Heller is certainly in the minority of brokerage heads who subscribe to the mindset that an agent’s business is their own. He explains the disconnect in terms of value proposition.

“Other brokerages really view their company or brand as the value proposition, and agents really work for them,” he says. “We see it as the agents are the value.”

The numbers support Heller. According to the National Association of Realtors, two thirds of sellers work with an agent because they were referred or because they had previously used that agent.

Nevertheless, for Walsh it all boils down to the concept of ownership, or rather a lack thereof.

“The whole idea of who owns a listing is outdated,” he says. “Nobody owns a client. Period.”
If other brokerages want to follow Heller and Keller Williams’ lead, the process is as simple as reassigning ownership of listings from themselves to their agents. But it’s ultimately the brokerage’s choice, and there is little incentive to give up their legal right to the listings.

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