The New Code of Ethics: Effective January 1st

Quite a few ammendments and newly addopted standards are now in effect for REALTORS throughout the nation.  Here's a summary of these changes so you are on the ball.

Amendnents:
Standard of Practice 3-2: Now says:

To be effective, any change in compensation offered for cooperative services must be communicated to the other REALTOR prior to the time that REALTOR submits and offer to purchase/lease the property.

This amendment just changes the way this paragraph is written...the basic requirements are still standing, but it is much easier to understand, now...So, this is going to create some issues with our local MLS (MRIS) which doesn't have the ability to annotate a "true" change in compensation.  It also will present an issue because, most of the time, the commissions are not "re-negotiated" until right before settlement.  In a short sale, this might be 2-6 months after an offer is first submitted.  I think we are going to have to include a disclosure with our home packets, flyers and attach it to the listings in MRIS (yes, you can do this, now).  The disclosure will simply state that there is a chance that the commission may change, that the other REALTOR understands this and is in agreement to any change that may occur.  Our Long and Foster attorneys will have to work on this one.

Article 11: Now says

The services which REALTORS provide to their clients and customers shall conform to the standards of practice and competence which are reasonably expected in the specific real estate disciplines in which they engage; specifically, residential real estate brokerage, real property management, commercial and industrial real estate brokerage, land brokerage, real estate appraisal, real estate counseling, real estate syndication, real estate auction, and international real estate.

 REALTORS shall not undertake to provide specialized professional services concerning a type of property or service that is outside their field of competence unless they engage the assistance of one who is competent on such types of property or service, or unless the facts are fully disclosed to the client.  Any persons engaged to provide such assistance shall be so identified to the client and their contribution to the assignment should be set forth.

Here they added "Land Brokerage" as a specialty.  Not sure why it wasn't there before, but it's there now...so if you are not a land specialist...find someone who is to refer your business to.  You'll be glad you did (and so will the clients and the other agent!)

Standard of Practice 11-1: Now reads:

When REALTORS prepare opinions of real property value or price, other than in pursuit of a listing or to assist a potential purchaser in formulating a purchase offer, such opinions shall include the following unless the party requesting the opinion requires a specific type of report or different data set:

1) identification of the subject property

2) date prepared

3) defined value or price

4) limiting conditions, including statements of purpose(s) and intended user(s)

5) any present or contemplated interest, including the possibility of representing the seller/landlord or buyers/tenants

 6) basis for the opinion, including applicable market data

7) if the opinion is not an appraisal, a statement to that effect

Here, they added the statement "Unless the party requesting the opinion requires a specific type of report or different data set."  This is in response to the BPO's, BPA's, ERC's, BMA's, etc that are all over the place right now (and will be for a while to come).  These are opinions of real property value but may not contain all 7 items a "traditional" CMA would require.  The lesson here; make sure you include these 7 things when putting together your CMA's for both your buyers and sellers.

Standard of Practice 12-5: Now reads

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 (e.g., electronically, print, radio, television, etc.) without disclosing the name of that REALTOR's firm in a reasonable and readily apparent manner.

Here they added  "real estate services."  So...this means that, if you are advertising a service you provide, you still need to disclose your firm name (and other disclosures your state requires) in a manner that it is obvious you are affiliated with that firm.  I guess they just needed to clarify that you have to do this all the time...not just when you are advertising listed property.

Standard of Practice 15-2: Now reads:

The obligation to refrain from making false or misleading statements about competitors, competitors' businesses, and competitor's business practices includes the duty to not knowingly or recklessly publish, repeat, retransmit, or republish false or misleading statements made by others.  This duty applies whether false or misleading statements are repeated in person, in writing, by technological means (e.g. the Internet), or by any other means.

Here they added the word "publish."  Wow...so it wan't unethical to publish misleading information about our competitors until now.  Call me crazy, but my morals would stop me here (shows you there is a difference between Ethics and morals).  I'm glad they made it clear, now, and I hope there wasn't that much of an issue with it before this change was made.  Keep in mind, you cannot "retransmit" this information: be careful on Twitter doing a RT's: you may violate this Article by simply hitting the wrong button on your i-Phone or Blackberry.

Standard of Practice 16-20: Now Reads:

REALTORS, prior to or after their relationship with their current firm is terminated, shall not induce clients of their current firm to cancel exclusive contractual agreements between the client and that firm.  This does not preclude REALTORS (principals) from establishing agreements with their associated licensees governing assignability of exclusive agreements.

This basically says the same thing as the old one, the words are just moved around to make it more clear: it used to say: "prior to or after terminating their relationship with their current firm."  Now it says "prior to or after their relationship with their current firm is terminated."  Thanks for the clarification NAR!

New Adoptions:

Standard of Practice 3-9: Brand new!

REALTORS shall not provide access to listed property on terms other than those established by the owner or the listing broker.

So...if you are showing a property to your clients and someone else shows up (off the street) also wanting to look: watch out...you could be in violation of the CoE (and you could also be putting yourself and your clients in danger).  This standard is for everyone's protection. There have been too many murders and scams surrounding people other than the owners or agents having access to homes (especially vacant homes) and we don't want you to be a victim.

Standard of Practice 15-3: Brand new!

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.

So...if you are blogging about your competitors...you might want to go back and delete the posts that are misleading or incorrect.  Personally, I think it is disrespectful to blog about your competitors: you should be blogging about why you are so good, not why they are so bad.  I turned down working at a brokerage because their broker's recruitment presentation was all about how bad the other brokerages were...what a huge turn-off.  Be a gracious competitor and do what's right. Morals, people, Morals.


It is important for our Code of Ethics to change with the times and the fact that it is a working document is one of its benefits.  The Code is what sets REALTORS apart from all other Real Estate Agents and we need to cherish the Code, live the Code and adapt with the Code and it will do the same for us.

Questions?  Visit Realtor.org for more information.  Who knows what changes will come about this next year, but if you think something should be done, your voice will be heard!

Have a great 2010!