Chattanooga Real Estate Blog

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.

Standard of Practice 1-11
REALTORS^® who are employed to maintain or manage a client’s property shall exercise due diligence and make reasonable efforts to protect it against reasonably foreseeable contingencies and losses. (Adopted 1/95)

The best example of this one I can think of is as a property manager, if I entered your property for some reason, upon leaving I would make sure the property is secure.  Doors and windows locked, etc.  Common sense, huh?

Standard of Practice 1-10
REALTORS^® shall, consistent with the terms and conditions of their real estate licensure and their property management agreement, competently manage the property of clients with due regard for the rights, safety and health of tenants and others lawfully on the premises. (Adopted 1/95, Amended 1/00)

Well now, this is obvious. 

Standard of Practice 1-9
The obligation of REALTORS^® to preserve confidential information (as defined by state law) provided by their clients in the course of any agency relationship or non-agency relationship recognized by law continues after termination of agency relationships or any non-agency relationships recognized by law. REALTORS^® shall not knowingly, during or following the termination of professional relationships with their clients:

1.  Reveal confidential information of clients; or

2.   use confidential information of clients to the disadvantage of clients; or

3.  use confidential information of clients for the REALTOR^®’s advantage or the advantage of third parties unless:

a.  clients consent after full disclosure; or

b.  REALTORS^® are required by court order; or
c.   it is the intention of a client to commit a crime and the information is necessary to prevent the crime; or

d.  it is necessary to defend a REALTOR^® or the REALTOR^®’s employees or associates against an accusation of wrongful conduct.

Basically what you tell us is confidential.  Even after an agency contract ends.  I will take it to the grave with 4 exceptions:  if you tell me to disclose it, if I am compelled by court order, if it is illegal and I have to talk to prevent the crime or in my or any other REALTOR^®’s defense.

If I am working as a buyers agent and my client tells me they will pay up to xxx for a particular home but makes an inital offer in a lesser amount, I will not tell the listing agent or seller that my client is willing to go up on the price.  If I represent a seller who is going thru a divorce and desperatly needs to sell I will not disclose this information to a potential buyer or their agent.  These are just a couple of examples.  There are many many more.  Kind of like "What happens in Vegas–Stays in Vegas".  Well, "what happens between a client and myself–stays between a client and myself".

Standard of Practice 1-8
REALTORS^®, acting as agents or brokers of buyers/tenants, shall submit to buyers/tenants all offers and counter-offers until acceptance but have no obligation to continue to show properties to their clients after an offer has been accepted unless otherwise agreed in writing. REALTORS^®, acting as agents or brokers of buyers/tenants, shall recommend that buyers/tenants obtain the advice of legal counsel if there is a question as to whether a pre-existing contract has been terminated. (Adopted 1/93, Amended 1/99)

This one means after a buyer client is under contract on a home we are under no obligation to continue to show them more homes.   Sounds like this one would never be needed but if you can believe it, some people want to keep looking at homes even after they have contracted on one.  Just in case… Nope, I don’t do it.  If the first one falls apart then we start looking again but not until then. 

And if a contract falls apart for whatever reason the buyer should consult an attorney if there are questions involved as to whether or not the contract is actually terminated.  This might happen if the buyer or seller wants to terminate but the other doesn’t and refuses to sign a release.  Even if the party who wants to terminate has just cause the other may refuse to sign.  This doesn’t happen very often.  At least I haven’t been involved in any cases.

Standard of Practice 1-7
When acting as listing brokers, REALTORS^® shall continue to submit to the seller/landlord all offers and counter-offers until closing or execution of a lease unless the seller/landlord has waived this obligation in writing. REALTORS^® shall not be obligated to continue to market the property after an offer has been accepted by the seller/landlord. REALTORS^® shall recommend that sellers/landlords obtain the advice of legal counsel prior to acceptance of a subsequent offer except where the acceptance is contingent on the termination of the pre-existing purchase contract or lease. (Amended 1/93)

Lets break this one down into parts.  I have had this very issue arise with a seller client of mine recently.

When acting as listing brokers, REALTORS^® shall continue to submit to the seller/landlord all offers and counter-offers until closing or execution of a lease unless the seller/landlord has waived this obligation in writing.

This was my clients issue.  I received an offer at a lower price than what my client expected.  After getting very upset that I would waste their time presenting this offer I explained this Standard of Practice.  I had not been informed in writing to not present any offers less than X amount.  Personally, I don’t think doing this is a wise move.  If you get a low offer you can always make a counter offer.  Every offer should be considered and handled in the appropriate way.  The offer that I was chastised for presenting was countered and accepted by the buyer.  The buyer was fishing to see how low the seller would go.  Had I not presented it to my client then it certainly never would have been countered and accepted. 

REALTORS^® shall not be obligated to continue to market the property after an offer has been accepted by the seller/landlord.

Not difficult to understand.  If the property is under contract, don’t expect it to continue to be in the paper, magazines, etc.

REALTORS^® shall recommend that sellers/landlords obtain the advice of legal counsel prior to acceptance of a subsequent offer except where the acceptance is contingent on the termination of the pre-existing purchase contract or lease.

Another obvious practice.  If your home is under contract with a buyer and another acceptable offer is received it should be accepted as a back up to the first one.  You can’t have two working contracts on one piece of property.  If you do, go ahead and find a good attorney.

Standard of Practice 1-6
REALTORS^® shall submit offers and counter-offers objectively and as quickly as possible. (Adopted 1/93, Amended 1/95)

This has been a recent topic of discussion on a listserve in which I participate.  The debate was, what is "as quickly as possible"?  Opinions varied.  Apparently there are quite a few REALTORS® who only work Monday thru Friday, 9 to 5.  Well, this means if they receive an offer on a home at 6 pm on Friday night that they will present it to their seller client Monday morning.  I believe this is only acceptable when the seller has given written instruction regarding presentation of offers to be between whatever hours the agent works and that disclosure is made to the buyer and their agent prior to an offer being written.  For example, it should be disclosed in the MLS remarks.

I don’t work 24 hours a day 7 days a week but if I get an offer or need to write or present an offer on the weekends or in the evening I handle it.   That, in my opinion, is "as quickly as possible".  However, my clients know I do not work major holidays (who does?) or after 9 pm. 

Of course, "objectively" means just that.  Offers and counter offers are to be presented objectively without bias by the agent.

Standard of Practice 1-5
REALTORS^® may represent the seller/landlord and buyer/tenant in the same transaction only after full disclosure to and with informed consent of both parties. (Adopted 1/93)

This one is all about dual agency.  With full disclosure to both parties in the transaction and their consent a REALTOR® can represent both of them in the same transaction. 

My personal opinion on this is that it can’t be done.  If I represent a buyer I have pledged to them that I will assist them in getting the home they want for the least amount of money and at the best terms for them.  If I represent a seller I have pledged to them that I will assist them in getting the most money they can from the sale and at the terms best for them.  I see this as a huge conflict of interest.

Tennessee practices "designated agency".  I will be going into agency at a later time but a quick lesson on this follows:  When you list your home with me or enter into a buyers representative agreement with me, you are actually hiring my firm, Happy Home Realty.  The firm in turn designates me as you representative to the exclusion of anyone else.  No one in my office is privy to our conversations or contracts.  If I represent you as your buyers agent and you decide to make an offer on a home that is listed by another agent in my firm, I still represent you and the agent who is the designated agent for the sellers represents them.  This way there isn’t a conflict of interest.   More to come on agency at a later date.

Moving right along.

Standard of Practice 1-4
REALTORS^®, when seeking to become a buyer/tenant representative, shall not mislead buyers or tenants as to savings or other benefits that might be realized through use of the REALTOR^®’s services. (Amended 1/93)

A REALTOR® can not mislead you by puffing themselves up.  For example:  I can’t tell you if you that if you buy this house thru me I will get you a huge price reduction in order to entice you to work with me when in fact I have no idea if I can help negotiate a reduction at all.

OK, we’re up to Article 1 SOP 1-3

Standard of Practice 1-3
REALTORS^®, in attempting to secure a listing, shall not deliberately mislead the owner as to market value.

What can I say?  A REALTOR^®, will not tell you your house is worth more than they believe it is or less than they believe it is.  Not to gain the listing, in contract negotiations or at under any circumstances.  This is just not acceptable.