Amy Mizner
The real estate market is more competitive than ever these days, and with the pressures of securing new listings, responding to the fluidity of the market and managing the daily demands of buyers and sellers, there are times that it may be tempting to cut corners and slip into the gray area when it comes to ethics.
It is critical for all Realtors to maintain the high standards and moral obligations contained in the National Association of Realtors’ Code of Ethics. Both clients and other agents rely on real estate professionals to make sure that the market is fair and ethical, and it is the responsibility of every agent to operate under the same guidelines.
Some of the main ethical dilemmas that arise for real estate professionals involve client relationships and interactions with other agents or companies. The following key points should be kept in mind when conducting business and help you stay within the boundaries of ethical behavior.
Don’t trash the competition. We’ve seen and heard this in the field, especially during listing presentations. Sometimes in order to gain an edge over the competition, Realtors make unsolicited comments about other agents who were invited to the table. Understand that you are in front of a prospective client to sell your expertise and market knowledge, not attempt to undermine the competition in the process. This is all about integrity and you should never sacrifice yours for a quick win.
Do not mislead owners as to the market value of their property. Real estate pros understand the market better than anyone and can easily calculate the value of the home based on a number of factors that include neighborhood, the number of rooms, acreage and, of course, area comps. Market knowledge helps determine the selling and asking range of the home. Sometimes to obtain a listing, the agent may provide an inflated value to impress the homeowner. This is called “buying a listing” and usually backfires, causing distress for both the homeowner and the agent, especially when the property, priced incorrectly, lingers on the market. It’s one thing to acquiesce to a higher price for an agreed-upon period of time if a seller disagrees with your opinion, but it is your responsibility to provide the market knowledge and expertise of a fair selling price.
Don’t misrepresent a property. Consider this: an agent is showing clients what they think is a perfect property. However, a previous home inspection for a deal that fell through revealed that there is some structural damage to the home that may affect price and livability. While sharing this information may deter clients from buying, it’s the responsibility of the agent to inform potential buyers of anything that may affect the value or desirability of a home. It is essential to fairly represent a listing.
Do not steal clients from another agent if the property is under contract. Another issue that arises, especially in a pressure-driven climate, is when agents attempt to solicit clients that have already entered into an exclusive agreement with another Realtor. While securing clients is important for a successful career in real estate, it should never come at another agent’s expense. No phone calls, emails or personally targeted mailings of any nature may be made to a homeowner whose property is under contract. There is an exception to this rule and that is only if the seller desires to make a change with their representation and calls another agent directly to discuss this.
Do play nice in the sandbox. The Code of Ethics states that agents must share certain information with other agents if prompted, such as listing expiration date, dual commission arrangements, etc. There is always enough business to go around for enterprising real estate professionals and you should always be honest and forthright in your communication with other agents regarding a property you represent or are competing for. The cardinal rule is treat other agents as you want to be treated yourself. If you do not make the house available for other agents to show in order to sell it to your own buyer, that is not working in the best interests of your seller client. This is called a “closet listing” and can backfire when the situation is reversed.
By respecting the needs of clients and of other agents, real estate professionals can ensure a long and successful career, one that is unmarred by improper conduct. Upholding the standards expected of all Realtors is one of the best ways to grow your business and build relationships with other agents, who could be allies in the long run. We recommend refreshing yourself and your team on the Code of Ethics annually, so that every agent has the opportunity to sell to the best of their abilities within those ethical boundaries, and boost their career to the next level.
Amy Mizner is a principal at the real estate firm of Benoit Mizner Simon & Co.
