Title: Business Practices vs. Ethical Behavior
The housing market has continued to show signs of recovery throughout most of the country. However, desperate times lead to desperate measures and can result in unethical behavior. The lack of listed properties, for instance, can lead to a competitive marketplace with aggressive marketing and tactics that often verge on being unethical.
The following are a few real estate issues that may be prevalent in some areas of the country and totally unknown in other areas. However, all are representative of situations where a question of ethical behavior on the part of the agent may arise.
- Office Exclusives/Pocket Listings – Acquiring and marketing a listing only within the firm rather than through the MLS. There may be situations where this type of marketing is in the seller’s best interest, and the practice is not necessarily unethical if the seller instructs the broker to market in this fashion. However, if done incorrectly or without seller consent, it could run afoul of the standard for broker cooperation as suggested in Article 3 and possibly Article 1 of the Code. NAR recently released a new resource to help with guidance on this topic.
- “No Offers Presented Until Next Tuesday” – Once again, so long as done in the client’s best interest and on their instructions, this instruction that seller will review and consider offers at a set time or date may be included in the advertising or on the MLS . However, REALTORS® should be aware that Article 1 Standard of Practice 1-6 states all offers shall be presented “objectively and as quickly as possible” and ensure that any deviation is based on seller’s instructions and their best interests.
- Escalation Clause – This is when the buyer says they will meet the highest offer and raise it by “x” number of dollars. Generally a buyer’s “top dollar” would be considered confidential information (Article 1, SOP 1-9) and not disclosed to the opposing party in a transaction. This can get complicated when several of the multiple offers have escalation clauses.
The National Association of REALTORS® developed the Code of Ethics that became a mandatory requirement for membership. In addition, they provide the Pathways to Professionalism, a list of professional courtesies or etiquette REALTORS® should consider in their relationships with clients, customers and peers.
At the June REALTOR® Legislative Meeting, NAR introduced a new resource on their website, “The Code of Ethics is Good Business,” which organizes the Code of Ethics Standards of Practice by where they typically occur in real estate transactions and groups them by phase rather than listed numerically. This resource make the Standards easier to reference and apply in everyday business and helps REALTORS® connect ethical practice with real-world transactions.
Hopefully, this and the many other resources NAR provides will help you navigate your daily business practices ethically.