One of the concepts that sets Realtors apart from licensed real estate practitioners who are not members of the National Association of Realtors is a time-tested Code of Ethics. Both commercial and residential Realtors subscribe to the same Code of Ethics.
This code and its companion Standards of Practice form a sort of moral compass by which Realtors conduct themselves with each other and with the general public which they serve. When inducted as a member of the NAR, brokers agree to abide by the Code of Ethics and adhere to the Standards of Practice. They also agree to successfully complete periodic Code of Ethics training as part of our continuing education requirements.
It is important for the public to know that if you work with a licensed broker who is not a Realtor (just possessing a real estate license does not make you a Realtor), that broker is not required to abide by the same standards as Realtor with respect to how they treat the public.
Many brokers who practice commercial real estate are not members of the National Association of Realtors. Perhaps they view the NAR as primarily an organization of residential Realtors. Perhaps they don’t want to pay the annual dues that are required of all members. Having said this, commercial/investment brokers who hold the Certified Commercial Investment Member designation, the Society of Industrial and Office Realtors designation, the Association of Industrial Real Estate designation as well as the Farm and Land Institute designation are only qualified to use the Realtor designation if they belong to a local board of Realtors or what is called an overlay board of Realtors. Each of these commercial trade groups has its own Code of Ethics which aspires to provide the same moral compass as the Realtors code.
It is important to mention in any discussion of the Code of Ethics how the 17 specific codes are enforced in practice. Realtors have set up an elaborate self-enforcement mechanism for hearing and adjudicating potential ethics violations. Both Realtors and members of the public can file ethics complaints at the local association of Realtors if they believe they have been a victim of a broker’s unethical behavior. Punishment for ethics violations can range from a censure to a fine to a suspension/termination of membership.
The Realtors Code of Ethics has served as a vital benchmark for conducting the real estate business correctly. It is designed to enhance the level of professionalism in the industry. It is a time-tested Golden Rule. It is divided into three segments: the broker’s duty to his clients, the broker’s duty to his fellow brokers, and duties to the public in general.
One of the codes in particular, Article 11, seems to get ignored from time to time by Realtors who attempt to engage in aspects of real estate that they are not competent to handle. For example, a residentially trained real estate broker who endeavors to handle a commercial real estate transaction is obligated by Article 11 to get help from some other broker with the proper credentials or experience before holding himself out as an expert. An exception to this rule is if the less experienced broker discloses his lack of competency to the client and if the client is OK with it. I would conversely add that a commercially trained broker should not attempt to handle a residential transaction without getting some experienced help.
The main thrust of Article 11 is that no Realtor should get his experience at the expense of the general public. We sometimes get calls from residential Realtors who latch onto a prospect and who attempt to bluff their way into a commercial deal because they smell a substantial commission at the other end. Sometimes they admit their lack of expertise and ask for assistance. In any event, the public should be aware that Realtors tend to have areas of expertise and they should readily disclose when they don’t meet the needs of the client.
What inspired me to write this article was learning that in 2013, the Code of Ethics will be 100 years old. The code is a living document that undergoes annual revisions to keep up with the times. The real estate industry has made a long-standing strong effort to teach its members how to conduct themselves ethically. In all your future real estate transactions, may the code be with you.
If you would like a copy of the Realtors Code of Ethics, please drop me an email and I will gladly forward it to you.
• Bruce Bossow is the broker/owner of Premier Commercial Realty. His email is email@example.com.