Chattanooga Real Estate Blog

My KarenRhodes.com site has a "Your Home’s Value" button.  This is a request for a market analysis on your home to give you an idea of what your home might bring on the open market. 

I have been getting a rash of people requesting this information who already have their home listed with another REALTOR®.   Unfortunately I have not been able to provide a market analysis to any of these people.  I have responded by explaining since they are represented I am unable to assist them at this point.  Article 16 of the Code of Ethics addresses interaction with represented parties.  Basically, I can’t do it. 

I take that back, there is a loop hole in article 16.  It’s Standard of Practice 16-6 which says if you contact me I "may discuss the terms upon which they might enter into a future agreement or, alternatively, may enter into an agreement which becomes effective upon expiration of any existing exclusive agreement." 

If you are nearing the end of your listing agreement and wish to speak to me about your home please, wait till your current contract expires.  I’m sorry but my reputation is very important to me and I hope you understand.

Duties to the Public

Article 10
REALTORS^® shall not deny equal professional services to any person for reasons of race, color, religion, sex, handicap, familial status, or national origin. REALTORS^® shall not be parties to any plan or agreement to discriminate against a person or persons on the basis of race, color, religion, sex, handicap, familial status, or national origin. (Amended 1/90)

REALTORS^®, in their real estate employment practices, shall not discriminate against any person or persons on the basis of race, color, religion, sex, handicap, familial status, or national origin. (Amended 1/00)

When involved in the sale or lease of a residence, REALTORS ^® shall not volunteer information regarding the racial, religious or ethnic composition of any neighborhood nor shall they engage in any activity which may result in panic selling, however, REALTORS^® may provide other demographic information. (Adopted 1/94, Amended 1/06)

When not involved in the sale or lease of a residence, REALTORS ^® may provide demographic information related to a property, transaction or professional assignment to a party if such demographic information is (a) deemed by the REALTOR^® to be needed to assist with or complete, in a manner consistent with Article 10, a real estate transaction or professional assignment and (b) is obtained or derived from a recognized, reliable, independent, and impartial source. The source of such information and any additions, deletions, modifications, interpretations, or other changes shall be disclosed in reasonable detail. (Adopted 1/05, Renumbered 1/06)

REALTORS ^® shall not print, display or circulate any statement or advertisement with respect to selling or renting of a property that indicates any preference, limitations or discrimination based on race, color, religion, sex, handicap, familial status, or national origin. (Adopted 1/94, Renumbered 1/05 and 1/06)

As used in Article 10 “real estate employment practices” relates to employees and independent contractors providing real estate-related services and the administrative and clerical staff directly supporting those individuals. (Adopted 1/00, Renumbered 1/05)

A lot of people will say we are not to discuss any of these subjects ever.  Well, there is also a contingent that says if I am buyers representative I have a responsibility to assist my client in buying a home in a neighborhood that has the type of community they want.  For example: my buyer client tells me they want to live in a neighborhood of individuals of the same religious belief (such as a Jewish community) would it be a violation of my fiduciary duty not to help them find a home in a Jewish community?  They are not telling me they don’t want to live in a particular area but that they do.  Something to think about…

Article 9
REALTORS^®, for the protection of all parties, shall assure whenever possible that all agreements related to real estate transactions including, but not limited to, listing and representation agreements, purchase contracts, and leases are in writing in clear and understandable language expressing the specific terms, conditions, obligations and commitments of the parties. A copy of each agreement shall be furnished to each party to such agreements upon their signing or initialing. (Amended 1/04)

For the protection of all parties, REALTORS^® shall use reasonable care to ensure that documents pertaining to the purchase, sale, or lease of real estate are kept current through the use of written extensions or amendments. (Amended 1/93)

When assisting or enabling a client or customer in establishing a contractual relationship (e.g., listing and representation agreements, purchase agreements, leases, etc.) electronically, REALTORS ^® shall make reasonable efforts to explain the nature and disclose the specific terms of the contractual relationship being established prior to it being agreed to by a contracting party. (Adopted 1/07)

Put it in writing and make sure everyone is on the same page!  If it’s not in writing then it means nothing.  This is why you should never negotiate a verbal offer, verbal repairs, verbal anything.  If it’s in writing and everyone has signed then there is no chance for miscommunication.

Article 8
REALTORS^® shall keep in a special account in an appropriate financial institution, separated from their own funds, monies coming into their possession in trust for other persons, such as escrows, trust funds, clients’ monies, and other like items.

All money received in trust for clients and customers must be kept in a special account that is totally separate from any other accounts the firm may have.  That money is not to be touched for any reason other than it’s intended purpose.  This account is closely audited by the state.

Article 7
In a transaction, REALTORS^® shall not accept compensation from more than one party, even if permitted by law, without disclosure to all parties and the informed consent of the REALTOR^® ’s client or clients. (Amended 1/93)

·  Article 6
REALTORS^® shall not accept any commission, rebate, or profit on expenditures made for their client, without the client’s knowledge and consent.

When recommending real estate products or services (e.g., homeowner’s insurance, warranty programs, mortgage financing, title insurance, etc.), REALTORS^® shall disclose to the client or customer to whom the recommendation is made any financial benefits or fees, other than real estate referral fees, the REALTOR^® or REALTOR^®’s firm may receive as a direct result of such recommendation. (Amended 1/99)

·  Standard of Practice 6-1

REALTORS^® shall not recommend or suggest to a client or a customer the use of services of another organization or business entity in which they have a direct interest without disclosing such interest at the time of the recommendation or suggestion. (Amended 5/88)

All good REALTORS® will have a team of companies they can recommend such as title companies, lenders, warranty companies and insurance companies.  There are times when a fee is received for any business these companies obtain from the REALTOR®.  Any monies received for these recommendations must be disclosed to all customers and clients.  It must also be disclosed if the REALTOR® has an interest in any company that is recommended at the time of the recommendation.  For example, if I have an interest in a mortgage company and recommend you contact them for rates I have to disclose my interest at that time.  The fact that you may already have your financing lined up and will not be using my company does not matter.  I must disclose since I have recommended them and you may use their services.

·  Article 4
REALTORS^® shall not acquire an interest in or buy or present offers from themselves, any member of their immediate families, their firms or any member thereof, or any entities in which they have any ownership interest, any real property without making their true position known to the owner or the owner’s agent or broker. In selling property they own, or in which they have any interest, REALTORS^® shall reveal their ownership or interest in writing to the purchaser or the purchaser’s representative. (Amended 1/00)

·  Standard of Practice 4-1

For the protection of all parties, the disclosures required by Article 4 shall be in writing and provided by REALTORS^® prior to the signing of any contract. (Adopted 2/86)

If I, as a professional, have anything whatsoever to do with a real estate transaction I must disclose it in writing to the other parties.  This article applies not only if I have a personal interest in the property but if a member of my family or firm that I have an interest in.  The thinking being that as a professional I have knowledge and training in the real estate market that the general public doesn’t.  It would be unfair if I wanted to buy a FSBO but didn’t tell them I am a REALTOR®.  It could look like I was taking advantage of them.

Standard of Practice 3-5

It is the obligation of subagents to promptly disclose all pertinent facts to the principal’s agent prior to as well as after a purchase or lease agreement is executed. (Amended 1/93)

·  Standard of Practice 3-6

REALTORS^® shall disclose the existence of accepted offers, including offers with unresolved contingencies, to any broker seeking cooperation. (Adopted 5/86, Amended 1/04)

·  Standard of Practice 3-7

When seeking information from another REALTOR^® concerning property under a management or listing agreement, REALTORS^® shall disclose their REALTOR^® status and whether their interest is personal or on behalf of a client and, if on behalf of a client, their representational status. (Amended 1/95)

·  Standard of Practice 3-8

REALTORS^® shall not misrepresent the availability of access to show or inspect a listed property. (Amended 11/87)

Standard of Practice 3-4
REALTORS^®, acting as listing brokers, have an affirmative obligation to disclose the existence of dual or variable rate commission arrangements (i.e., listings where one amount of commission is payable if the listing broker’s firm is the procuring cause of sale/lease and a different amount of commission is payable if the sale/lease results through the efforts of the seller/ landlord or a cooperating broker). The listing broker shall, as soon as practical, disclose the existence of such arrangements to potential cooperating brokers and shall, in response to inquiries from cooperating brokers, disclose the differential that would result in a cooperative transaction or in a sale/lease that results through the efforts of the seller/landlord. If the cooperating broker is a buyer/tenant representative, the buyer/tenant representative must disclose such information to their client before the client makes an offer to purchase or lease. (Amended 1/02)

This one can get tricky.  Lets say John Smith with John Smith Realty (made up name) has listed Sally Jones’ home.  John has agreed to market the home for a 6% fee.  However, if an agent with John Smith Realty procures the buyer he will reduce the fee to 5%.  This is a variable or dual commission. 

It is perfectly fine to do this.  However, it must be disclosed to potential cooperating brokers.  In our area there is actually a place in the MLS to note if it is a variable or not.  If I called John Smith and asked the particulars of the variable rate he is obligated to tell me.  I can ask what the difference to the seller would be if someone from John’s company wrote the same offer as opposed to me writing it.  Then I must disclose this information to my buyer client prior to writing an offer.

It puts everyone on a level playing field.  For example if I have an offer for list price and John has an offer for list price the seller will net more on Johns offer even though they are for the same amount because the commission due from the seller is lower if they accept John’s offer.