What many REALTORS® don’t know about the Code when they are first introduced to it is that the Code is much more than a bunch of rules put down on paper. It embodies not only our philosophical values as REALTORS®, it embodies the standards of conduct that we all strive to attain and by which we abide. The history of the Code is at the core of the history of the organized real estate industry. When the Code was adopted in 1913, there were no real estate licensing laws. The Code was the only set of standards of conduct to which real estate practitioners could look to gauge their behavior. The concepts of the original Code continue to be relevant and embodied in today’s Code, whether in the concepts of fiduciary duty or the concepts of truth in advertising.
More so, the core concepts of the Code are being applied by the National Association of REALTORS® Professional Standards Committee to the “new” business practices we all use today on the Internet, social media, and in short sales and affiliated businesses. Let’s sample how the Code applies in some of these “new” situations.
Many of the “new” questions about the Code that come up are in the area of advertising, whether in print, on the web or in social media contexts as well as issues related to short sales. Let’s examine some tips to watch for in those key areas.
Disclose your state of licensure on your website.
On your website, you need to include some statement disclosing the state or states in which you hold a real estate license. The note could say something like, “Licensed in Wisconsin,” “Wisconsin Licensee” or “Wisconsin Broker.” Standard of Practice 12-9 requires all licensees to include this information on their websites. “REALTOR® firm websites shall disclose the firm’s name and state(s) of licensure in a reasonable and readily apparent manner . Websites of REALTORS® and non-member licensees affiliated with a REALTOR® firm shall disclose the firm’s name and that REALTOR®’s non-member licensee’s state(s) of licensure in a reasonable and readily apparent manner.” The public has a right to know, when looking at a website with real estate information on it, where the person running the website is licensed. Questions arise about whether your mailing address is sufficient. While the Code is silent on this particular point, I always recommend using one of the “licensed in …” phrases and not just a street address. Does your street address always reflect that you may also be licensed in multiple states – like Illinois or Minnesota? While the disclosure of state of licensure only applies to websites, it’s good practice to include it in any advertising you do.
Make sure your company name is readily apparent in any real estate advertising you do.
Standard of Practice 12-5 has the basic concept that the public is entitled to know when looking at your advertising that you are a REALTOR® or real estate licensee and to know the company with which you are licensed. “REALTORS® shall not advertise nor permit any person employed by or affiliated with them to advertise real estate services or listed property in any medium – such as electronically, print, radio or television - without disclosing the name of that REALTOR®’s firm in a reasonable and readily apparent manner.” It’s easy to miss that the company name requirement applies in all advertising and marketing that you do, whether on the internet, in print or on giveaways like magnets and pens. Also, don’t forget that this includes teams and other entities working under a brokerage company’s licensure. If you are the “Sam Jones Team,” your advertising also must include your company’s name, like “Sunset Realty,” somewhere in your advertising.
Using social media like Facebook, blogging or tweeting without making your company affiliation evident.
In any real estate–related communications on Facebook, Twitter or other social media sites, you must include your company name in the posting or make it accessible via a link back to your company name, like your username’s link to a profile page. Standard of Practice 12-5 was recently amended to provide for the “link back” idea so a tweet of 140 characters wasn’t required to have your full company name under the Code. “ … Standard of Practice (12-5) acknowledges that disclosing the name of the firm may not be practical in electronic displays of limited information such as thumbnails, text messages or tweets. Such displays are exempt from the disclosure requirement established in the Standard of Practice, but only when linked to a display that includes all required disclosures.”
Registering or using domain names that don’t reflect a “true picture.”
Several Standards of Practice under Article 12 prohibit deceptive uses of domain names, whether registering them or using them. Specifically, REALTORS® should consult Standards of Practice 12-10 and 12-12 for registration and use of domain names. Standard of Practice 12-12 includes not only the use of a domain name that isn’t a true picture, but the registration alone also violates the Code of Ethics. These deceptive uses and registrations include other persons’ names, competitors’ names, and the term “MLS” when the URL directs the viewer to a REALTOR®’s site and not an MLS website.
Monitor your sites and don’t allow false or misleading comments.
You should monitor your blog(s), Facebook wall and pages, and other electronic media regularly for any false or misleading comments about others and immediately remove any that you find. Standard of Practice 15-3 provides, “The obligation to refrain from making false or misleading statements about competitors, competitors’ businesses, and competitors’ business practices includes the duty to publish a clarification about or to remove statements made by others on electronic media the REALTOR® controls once the REALTOR® knows the statement is false or misleading.” In other words, if you find a statement about another REALTOR® on one of your “sites,” whether website, blog or Facebook wall, the Code requires that you publish a clarification or remove the statements you know are false.
Disclosing a short sale.
You have an obligation to know your MLS and state license law rules on short sales and to disclose a potential short sale when it’s required in those rules. Many MLS’s have a rule that requires the disclosure of a potential short sale in the MLS. Even if your MLS does not have this rule, consider that Article 2 of the Code requires that you avoid “concealment” of “pertinent facts” about the property or the transaction. The fact that an owner cannot convey clear title without the lender reducing their outstanding balance(s) could certainly be considered a “pertinent fact” in a transaction. In any event, a buyer will eventually know about the short sale because the sale contract will necessarily need to be contingent on the seller’s lender’s approval.
Flipping, flopping or ignoring conflicts of interest.
Flipping and flopping are typically associated with short sales and involve clients buying a property from the lender at a discount and then selling it at a premium shortly afterward - often as soon as the next day. The inherent conflict is in the price differential, since there’s no improvement to justify the difference in price. In particular, listing brokers can’t “double up” by trying to represent both the short sale seller and the short sale buyer who is attempting to flip a property. These conflicts of interest are, at a minimum, a possible violation of Article 1’s requirement to protect and promote the interests of the client – the short sale seller.
Giving unauthorized access to listings.
You should make it clear to cooperating agents that they’re expected to accompany buyers to the house and aren’t permitted to provide the lockbox combination to buyers. As surprising as it may sound, the NAR Professional Standards Committee received feedback from all around the country that cooperating agents and brokers, as well as listing agents and brokers, were at times extremely casual about access to listed property. Agents and brokers who do not personally accompany buyer prospects to listings or arrange for them to be accompanied by an agent, the seller or other authorized person, violate the trust given to them by the seller/owner. Standard of Practice 3-9 makes it clear that unauthorized access is a violation of the Code as well as the possibility that a lockbox rule violation may occur.
The Code and its Standards of Practice are updated virtually every year to keep pace with our constantly changing business. While the principles of the Code are timeless, the details of how the Code applies are clarified and explained through the changes to the Code every year. William D. North, former Executive Vice President of the National Association of REALTORS®, elegantly described the Code as a “gift of vision” of the founders of the NAR. The Code has truly been that gift of vision – the conscience of the community of REALTORS® for the past 100 years. No doubt it will serve ably for the next 100 years.
Bruce Aydt is a REALTOR®, attorney and educator from St. Louis, Missouri. He has been involved in the management of real estate brokerages for 30 years, currently as Senior Vice President and General Counsel of Prudential Alliance, REALTORS®.