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Standard of Practice 3-3
Standard of Practice 3-2 does not preclude the listing broker and cooperating broker from entering into an agreement to change cooperative compensation. (Adopted 1/94)
Obviously if everyone agrees to changing the compensation then it’s not a violation.
Standard of Practice 3-2
REALTORS® shall, with respect to offers of compensation to another REALTOR®, timely communicate any change of compensation for cooperative services to the other REALTOR® prior to the time such REALTOR® produces an offer to purchase/lease the property. (Amended 1/94)
This means no changing the compensation amount without notifiying the other agent. For example: If the compensation listed in the MLS is 3% when I present an offer to the listing agent then it is 3%. They can’t change it to 2.5% since at the time I submitted the offer it was 3%.
Article 3
REALTORS® shall cooperate with other brokers except when cooperation is not in the client’s best interest. The obligation to cooperate does not include the obligation to share commissions, fees, or to otherwise compensate another broker. (Amended 1/95)
REALTORS®, acting as exclusive agents or brokers of sellers/ landlords, establish the terms and conditions of offers to cooperate. Unless expressly indicated in offers to cooperate, cooperating brokers may not assume that the offer of cooperation includes an offer of compensation. Terms of compensation, if any, shall be ascertained by cooperating brokers before beginning efforts to accept the offer of cooperation. (Amended 1/99)
There is a difference between cooperation and compensation. A REALTOR® working with a buyer or tenant must work out compensation prior to making an offer to the selling or landlord agent. For example: I can’t write an offer on a home for a buyer and just automatically assume the selling agent is going to compensate me for bringing a buyer to the home. In most cases if a home is listed in the MLS on offer of compensation is in the listing so we don’t run into this often. However, we do have some agents who don’t list in the MLS and the compensation or lack of must be worked out prior to an offer being made. Sometimes the buyer pays for my services themselves and in that case, I would not accept compensation from the listing agent.
Totally confusing??
In Article 2 we will be discussing disclosure. The article reads:
REALTORS® shall avoid exaggeration, misrepresentation, or concealment of pertinent facts relating to the property or the transaction. REALTORS® shall not, however, be obligated to discover latent defects in the property, to advise on matters outside the scope of their real estate license, or to disclose facts which are confidential under the scope of agency or non-agency relationships as defined by state law. (Amended 1/00)
We must be truthful about properties and transactions. Disclosure is a must if I am aware of any type of problem with the property. However, I am not an expert in many fields
and will not advise on anything outside the scope of my real estate license. Meaning I will not give advise on electrical matters plumbing, roofing, etc. I will however recommend you have a professional inspect anything that we have questions about. And, of course, I will not disclose confidential information of my client.
Great quiz today at Sellsius on the Code of Ethics. The very first question is:
The Code of Ethics is based on the concept:
a. Let the buyer beware
b. Let the seller beware
c. Let the public be served
d. Let the public be dammed, how do I get paid?
I’ll give you a couple of clues: there is no need to beware and my pay has nothing to do with it
I’ll run thru the answers tomorrow so be sure to check back and see how much you know!
Standard of Practice 1-15
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 whether offers were obtained by the listing licensee, another licensee in the listing firm, or by a cooperating broker. (Adopted 1/03, Amended 1/06)
A lot of people don’t understand this one. They think we all know how many and what offers have been received on a specific property and that we can tell them. Not true. If I have a listing and we have received an offer then get a call that another one is coming in, it is up to the seller to as to whether I can tell anyone we have another offer. If the seller says it’s OK I also have to disclose who wrote the other offer. Not the person specifically but was it someone from the listing firm, another firm or did I write it myself.
It is also up to the seller if it is OK to let others know that offers had been received in the past but not worked out.
Woo Hooo!! We are finished with Article 1. Next up Article 2.
Standard of Practice 1-14
Fees for preparing appraisals or other valuations shall not be contingent upon the amount of the appraisal or valuation. (Adopted 1/02)
No bribes for inflated value estimates or appraisals. Sometimes the truth hurts. You can not withhold payment because you don’t like the value given.
Standard of Practice 1-13
1. the REALTOR®’s company policies regarding cooperation;
Cooperation, in this case, refers to how the company gets paid. Either by accepting cooperation thru the MLS or from the buyer based on the contract the buyer has with the firm.
2. the amount of compensation to be paid by the client;
Item 1 addressed how the firm gets paid. Item 2 addresses how much.
3. the potential for additional or offsetting compensation from other brokers, from the seller or landlord, or from other parties;
Is there potential for compensation over and above what has been addressed in items 1 and 2? Such as a selling bonus.
4. any potential for the buyer/tenant representative to act as a disclosed dual agent, e.g. listing broker, subagent, landlord’s agent, etc., and
Potential for dual agency which as we discussed previously, we do not practice.
5. the possibility that sellers or sellers’ representatives may not treat the existence, terms, or conditions of offers as confidential unless confidentiality is required by law, regulation, or by any confidentiality agreement between the parties. (Adopted 1/93, Renumbered 1/98, Amended 1/06)
Obvious.
Standard of Practice 1-12
When entering into listing contracts, REALTORS® must advise sellers/landlords of:
1. the REALTOR®’s company policies regarding cooperation and the amount(s) of any compensation that will be offered to subagents, buyer/tenant agents, and/or brokers acting in legally recognized non-agency capacities;
2. the fact that buyer/tenant agents or brokers, even if compensated by listing brokers, or by sellers/landlords may represent the interests of buyers/tenants; and
3. any potential for listing brokers to act as disclosed dual agents, e.g. buyer/tenant agents. (Adopted 1/93, Renumbered 1/98, Amended 1/03)
When you sign a listing agreement with a REALTOR® there are certain things the code requires that be known by you up front.
Most of the time, when you agree to pay a marketing fee to your listing agent, your agent will offer a portion of that fee to the agent who works with the buyer. In my case I split the fee down the middle.
The fact that I am paying the buyers agent from the my fee does not mean that agent is working for the seller. In fact, in Tennessee, they will not be working for the seller because we do not practice dual agency. Note: more on agency to come.
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