Pictured home: 16-2048 Sandalwood Ct. Pahoa, HI 96760
Our REALTOR® Code of Ethics provides a strict framework under which we, as licensed members of the National Association of REALTORS® are expected to abide. It’s also the genesis for my answer to the question regarding pending offers on a listing. REALTORS® have a fiduciary responsibility to the party they represent. While it’s clear that an agent can not disclose what a buyer will pay or a seller will take, there are parts of the “Code” that are not widely followed or even understood.
The duty of a seller’s agent is basically to get the seller the most they can in the least amount of time. When a buyer’s agent asks “the offer” question, they normally ask for one of two reasons.
- Either their buyer wants to avoid a “bidding war” with a competing offer, or
- They figure the seller may be more motivated if there are no current offers.
A buyer who perceives a bidding war will often decide not to make an offer at all and, of course, the buyer who perceives a uber-motivated seller may discount their original target price.
Standard of Practice 1-15 states:
“REALTORS®, in response to inquiries from buyers or cooperating brokers shall, with the sellers’ approval, disclose the existence of offers on the property. Where disclosure is authorized, REALTORS® shall also disclose, if asked, whether offers were obtained by the listing licensee, another licensee in the listing firm, or by a cooperating broker.“
The operative phase, of course, is “with the Seller’s approval”. Implied is that the seller’s agent should fully inform the seller regarding their options. Sellers don’t always realize the repercussions or even that their agent needs their express permission to disclose this simple piece of information. (Prior to license renewal every other year, REALTORS® (and real estate licensees) must complete 10 hours of continuing education. In addition, formal ethics training is required every 3 years.)
Most common ethics disputes among agents surround representation and compensation, however, as you can see, there’s more to Code Of Ethics than meets the eye. Article 1-3 of the Standard of Practice provides that:
“REALTORS®, in attempting to secure a listing, shall not deliberately mislead the owner as to market value”.
Now, why would an agent do such a thing? To get the listing, of course! That’s when dealing with experienced agents counts! Most busy agents don’t need a listing just to have a listing.
A final nuance has to do with the use of the term “REALTOR®”. The term is a registered trademark so it should always be written as presented here, all caps with the registration symbol. Only members of the National Association of REALTORS® can use this designation. Even then, they may NOT use the term REALTOR® as part of their email address or tag line. It might be assumed that agents who do so may not be as experienced as you’d hope.
Interestingly, the National Association of REALTORS® was the first business organization to construct a code by which their members subscribe. It’s a strict code to be sure and while it’s perhaps not an exciting topic, it is an important framework that provides buyers and sellers great confidence and peace of mind as they participate in the biggest financial transaction of their lives!