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The Code is good business.1
The Code is good business.
Meet Your Instructor
Bob Memoli
CRB, GRI, SFR, SRES
Broker-Realtor®
The Code of Ethics: Our Promise of Professionalism
The REALTORS® Code of Ethics
Biennial Member Education ProgramThis is a certified 3 Hr. C.E. Credit Course
The Code is good business.
History of the Code of Ethics
The Code is good business.
Pre -1900
No licensing of real estate practitioners
Speculation, exploitation, and disorder
Caveat emptor governed transactions
The Code is good business.
Known then as the National Association of Real Estate Exchanges
NATIONAL ASSOCIATION OF REALTORS®
Formed in 1908
The Code is good business.
Code of Ethics Adopted in 1913
Established professional standards for conduct
First ethical code for business after medicine, engineering, and law
Focused on:
– service to the public
– commitment to professionalism
Included “Duties to Clients” and “Duties to Other Brokers”
The Code is good business.
Under all is the land...
The Code is good business.
The Code is good business.
Preamble to the Code of EthicsBreakout
The Code is good business.
The Code of Ethics
Your Promise of Professionalism
The REALTOR® Code of Ethics
Biennial Member Education Program
Icebreaker Exercise
The instructor will tell you how to form groups. In your group, you should:
1. Introduce yourselves if you do not already know each other.
2. Select a spokesperson.
3. You will have received a copy of the REALTOR® Code of Ethics. Your group will be asked to summarize or "paraphrase" several Articles of the Code of Ethics and/or parts of the Preamble. Use the grid below to paraphrase the Articles you have been assigned. Your spokesperson will be asked to share your answers.
continued on next slide
The Code is good business.
The Code of Ethics
Your Promise of Professionalism
The REALTOR® Code of Ethics
Biennial Member Education Program (continued)
Preamble or Article
Paraphrase or Summary
Preamble
Preamble
Article 1
Article 2
Article 3
Article 9
Article 11
Article 12
Article 16
Article 17
The Code is good business.
The REALTORS®’ Code of EthicsProtects the buying and selling public.
Promotes a competitive real estate market place.
Enhances the integrity of the industry.
Is our promise of performance.
Is our promise of professionalism.
The Code is good business.
Structure of the Code of Ethics
Three Sections
Duties to Clients and Customers
Duties to the Public
Duties to Other REALTORS®
The Code is good business.
Whatsoever ye would that others should do to you, do ye even so to them.
The Golden Rule . . .
The Code is good business.
The Code of Ethics was the basis for later-adopted
license laws.
The Code is good business.
The Code Ethics
Since its inception, the Code has required:
arbitration of contractual disputes between/among REALTORS®
respect for other brokers’ exclusive relationships with clients
cooperation between/among REALTORS®
The Code is good business.
Business Ethics, NAR Code of Ethics, and Pathways to Professionalism
The Code is good business.
Business Ethics
Industry codes
Company policies
Individual moral values
Business ethics and legal standards
The Code is good business.
REALTORS® Share One Common Characteristic
Regardless of real estate business specialty (such as appraisal, property management, etc.), all REALTORS® are bound by the Code of Ethics.
The Code
The Code is good business.
The Code and the Law
The Code of Ethics:
must be reasonably construed with the law
imposes duties above and in
addition to duties imposed by law
or regulation
restates certain fundamental
legal principles
The Code is good business.
How the Code of Ethics Evolves
Amendments made during Midyear Meetings and REALTORS® Conference and Expo.
Revisions require approval by NAR Professional Standards Committee and Board of Directors.
Interpretations and Procedures Subcommittee of the Professional Standards Committee recommend many of the changes.
The Code is good business.
Pathways to Professionalism
Three Sections
Respect for Public
Respect for Property
Respect for Peers
The Code is good business.
Enforcement of the Code of Ethics
The Code is good business.
Enforcement of the Code of Ethics
An association where someone holds membership or gains MLS access has jurisdiction to process ethics complaints and arbitration requests filed against that individual.
Associations do not determine violations of law and regulation.
The Code is good business.
Enforcement of the Code of Ethics
Every association is responsible for enforcing the Code.
This includes providing mediation and conducting ethics and arbitration hearings.
Only REALTORS® and REALTOR-ASSOCIATES® are subject to the Code.
The Code is good business.
Who can file an ethics complaint?
The Code is good business.
Association Dispute Resolution
Ombudsman
Ethics complaints
Grievance
Mediation – Informal
Arbitration - Formal
The Code is good business.
Contractual Disagreementsor
Specific Non-Contractual Disputesbetween REALTORS® of Different Firms
Call Board and Get Form
Complete Form and Attach Evidence to Back
Grievance Committee Review
Professional Standards Hearing Panel
Process Complaint
The Code is good business.
Grievance Committee in Ethics
Is there a potentialviolation of the Code of Ethics?
The Code is good business.
Informal Dispute ResolutionMediation
Voluntary process in arbitration.
Disputing parties meet with a mediator appointed by the association.
Parties create a mutually acceptable resolution of the dispute, rather than go before an arbitration hearing panel.
The Code is good business.
Mediation
Preferred dispute resolution tool by the REALTOR® organization.
Must be available to all REALTORS®.
Must offer Mediation to disputants before review of Arbitration Requests.
The Code is good business.
Preferred dispute resolution tool by the REALTOR® organization.
Must be available to all REALTORS®.
May offer before or after grievance committee’s review.
If offered before, must offer again after grievance committee determines matter is arbitrable and forwards on to a hearing.
Mediation
The Code is good business.
If a resolution is reached, parties sign an agreement containing the terms of the settlement, and no arbitration hearing is held.
Mediation
The Code is good business.
Mediation Versus Arbitration
Mediation Arbitration
Low-cost Moderate cost
Little delay Moderate delay
Maximum range of
solutions
Win/lose/split
Parties control outcome Arbitrators control outcome
Uncertain closure Definite closure
Maintain/improve
relationships
May harm relationships
The Code is good business.
Ethics Hearing Panel
Following a hearing, the panel decides whether the Code of Ethics has been violated, proven through clear, strong, and convincing evidence.
If a Code violation is found, then the panel also determines the discipline.
The Code is good business.
Authorized DisciplineLetter of warning
Letter of reprimand
Education
Fine, not to exceed $15,000
Probation of one year or less
Suspension of not less than 30 days, nor more than one year
Expulsion from membership for one to three years
Suspension or termination of MLS privileges
The Code is good business.
Filing an Arbitration Request
Arbitration is conducted under Article 17 of the Code of Ethics and under a state’s arbitration statute (if any).
Article 17 provides that arbitration occurs under the following circumstances . . .
The Code is good business.
Arbitration and Article 17
Contractual or specific non-contractual disputes, as defined by Standard of Practice 17-4
Between REALTORS® (principals)
Arising out of their relationship as REALTORS®NOTE: Clients also may arbitrate with their REALTOR® principals.
The Code is good business.
Grievance Committee in Arbitration
Is there an arbitrable issue?
(That is, a money dispute, typically concerning which REALTOR® is entitled to the cooperative commission in a transaction).
The Code is good business.
Arbitration Hearing Panel
Conducts full “due process” hearing.
Comprised of members from an association’s professional standards committee.
After a hearing, the panel decides which party is entitled to the award, based on a preponderance of the evidence.
The Code is good business.
Payment of an Arbitration Award
An unpaid award typically may be judicially enforced.
Some associations require that award monies be deposited with the association, pending review of the hearing process or during a legal challenge.
The Code is good business.
Concepts of Procuring Cause in Arbitration
The Code is good business.
Arbitration Guidelines
Found in the Code of Ethics and Arbitration Manual.
Guide hearing panels in resolving arbitrable issues.
Focus primarily on procuring cause as the basis for resolving most commission disputes.
The Code is good business.
Procuring Cause
The proximate cause; the cause originating a series of events which, without break in their continuity, result in the accomplishment of the prime object.
– Black’s Law Dictionary, Fifth Edition
The Code is good business.
A series of events could involve many things:
Presenting the property
Showing the property
Promoting the benefits of the property
Discussing financing with the buyer
Discussing possible terms
Writing the offer
Working the offer to acceptance
Help obtain the financing
Managing the non-legal aspects of post-contract to closing
Close the transaction
The more of these events performed, the more preponderance of evidence would be on behalf
of the REALTOR®. Arbitration panels determine which REALTOR® in the dispute shows
preponderance of evidence of procuring cause.
Procuring Cause Factors
The Code is good business.
Procuring Cause Factors
No pre-determiners.
Consider the entire course of events.
Writing an offer, making the first showing, or an agency relationship, in and of themselves, do not necessarily determine procuring cause or entitlement.
The Code is good business.
Procuring Cause
It is the squirrel that shakes the branch and not the squirrel that gathers the nut.
– Arkansas Supreme Court
The Code is good business.
New Team Rules
Team or Group names Are Authorized
Real estate teams or group names may include the word team or group as part of the name.
Slide 48
The Code is good business.
Team or Group Names Shall Not IncludeAgency
Associates
Brokerage
Brokers
Company
Corporation or Corp.
Inc. , LLC, LP, LLP or Partnership
Property or Properties
Real Estate
Realty
Slide 49
The Code is good business.
Team Rule Summary
Any suggested words suggesting the team or group is a separate real estate brokerage or company may not be included.
Slide 50
The Code is good business.
Summaries and Case Studiesof Selected Articles of the Code of Ethics
Breakout
The Code is good business.52
The Code is good business.
Listing Sales Associate’s Refusal to Submit My Offer
Case Study 1
Cooperating broker Fred is upset because the listing broker, Janet, refused to submit his offer without proof showing the buyer is prequalified to purchase the property because her seller did not want to see offers unless the buyer was prequalified. Standard of Practice 1-7 says, the listing sales associate shall present all offers and, therefore, he is required to submit my offer with or without proof the buyer is prequalified. Janet explained to Fred that her seller was adamant about not wanting to waste his time looking at offers from unqualified buyers and he wanted proof that the buyer was prequalified by a lender. Regardless, Fred felt Jane was in violation of Article 1, Standard of Practice 1-7.
Is this a possible violation of the Code of Ethics based on the face of the complaint?
The Code is good business.
Going to the Seller’s LenderCase Study 2
There are several offers on a short sale property my buyer wants to purchase. My buyer is very anxious because there are a number of buyers competing for the same property. She feels by making a full-price cash offer, she should be the top contender for the property. She presented a full-price cash offer, on another short sale and a less attractive offer was accepted. This time she wants to make sure the lender sees her offer and wants me to go directly to the lender. I don’t see this as a problem since I am not going directly to the listing broker’s seller.
Is this a possible violation of the Code of Ethics based on the face of the complaint?
The Code is good business.
Modifying the Offer of CompensationCase Study 3
Broker Sally’s buyer was very impressed with Sally’s hard work in trying to negotiate a very difficult transaction and feels Sally should be compensated above what the listing broker offered in the MLS. The buyer asks Sally to include in the offer the buyer’s request for the seller to compensate Sally an additional x% over what the listing broker offered in the MLS. The listing broker was furious and feels Broker Sally is trying to modify the offer of compensation which is clearly a violation of Article 16 Standard of Practice 16-16.
Is this a possible violation of the Code of Ethics based on the face of the complaint?
Describe concepts established in Articles 1, 2, 12, and 17 and possible violations of them.
The Code is good business.
Disclaimers Accompanying Solicitations
Case Study 4
Realtor Fred exclusively works the Greenbrier subdivision and has a number of listings in that area. Fred was furious when Realtor George mailed out prospecting solicitations to all of the residents in the Greenbrier area. George knew this was Fred’s area in the first place, but he is supposed to include a disclaimer that states, “if you are currently listed with another sales associate, please disregard.” This is an obvious violation of the Code of Ethics.
Is this a possible violation of the Code of Ethics based on the face of the complaint?
The Code is good business.
My Buyer Was Contacted by the Listing Sales Associate
Case Study 5
I have been working with my buyer, Eunice, for years and recently we started looking at properties because Eunice is ready to downsize. I told Eunice I would be out of town for a couple of days and would be back on Wednesday. On Tuesday, Eunice spotted an open house and the listing sales associate. Eunice advised the listing agent that she was working with another REALTOR®. The sales associate continued to work with Eunice and wrote the offer that was accepted. I feel it is unethical for the listing sales associate to continue to work with my buyer after my buyer told her she was working with me.
Is this a possible violation of the Code of Ethics based on the face of the complaint
The Code is good business.
Changing the Offer of Compensation
Case Study 6
I started working on a listing and the offer of compensation was X% in the MLS. I submitted my offer and found out the offer of compensation had changed. The listing broker changed the offer before my offer was submitted. I didn’t think it was necessary to check the MLS on a daily basis. It doesn’t matter anyway; I should be paid what was offered in the MLS at the time negotiations began. I think this is a violation of the Code of Ethics.
Is this a possible violation of the Code of Ethics based on the face of the complaint?
The Code is good business.
The Elusive Listing Sales Associate
Case Study 7
I submitted an offer over two weeks ago and the listing sales associate has disappeared into thin air. He doesn’t call me back, email me, nothing. I tried calling the broker and all I get is the run around from the mystery person who answers the telephone. My buyer thinks I’m inept because I can’t find out what has happened to this offer. If I don’t find out something soon, the buyer’s going to walk. I can’t contact the seller or I’ll be in violation of the Code. I think it’s a violation of the Code that this broker and his sales associate won’t communicate the status of my offer.
Is this a possible violation of the Code of Ethics based on the face of the complaint?
The Code is good business.
Frequent Flyer Ethics QuizIs this a violation of the Code of Ethics or not?
Case Study 8
John, a new Realtor, is excited about setting up his new website. The challenge is to come up with a catchy URL that promotes that he is the “go-to real estate guy “ in the Orange Blossom area. He decides on, “Orange Blossom MLS.com.” It covers his market area and will definitely attract attention which it did. A complaint has been filed citing Standard of Practice 12-10.
Do you think John should be in violation of the Code?
The Code is good business.
Is this a violation of the Code of Ethics or not?Case Study 9
Sandy Keeps a close eye on the listings in the MLS especially the ones that have been temporarily withdrawn from the market. The minute she sees one of these, she calls the seller to solicit the listing. She was flabbergasted when she received a letter from the Grievance Committee asking her to respond to an ethics complaint filed against her citing Article 16.
Is Sandy in violation of the Code of Ethics?
The Code is good business.
Is this a violation of the Code of Ethics or not?
Case Study 10
Realtor Tom, a broker, is named as a respondent in an arbitration request. He refused to respond to the request for arbitration or participate in the hearing. The complainant, Realtor Sue, files a complaint naming Article 17.
Is this a violation?
The Code is good business.
Is this a violation of the Code of Ethics or not?
Case Study 11
Realtor Liz’s husband wants to sell his commercial property located in a popular downtown area. After the property was listed, it sold in no time. Realtor Jenny who sold the listing found out through a mutual friend that Liz’s husband owned the property and never disclosed this to her buyer.
Jenny files a complaint against Liz, is this a possible violation of Article 4?
The Code is good business.
Is this a violation of the Code of Ethics or not?
Case Study 12
Fran loves to write her blog about real estate in her area. The blog has generated good leads for her. After the county tax assessments were mailed out, Fran thought it would be a great time to talk about the property values in her area. She published a “recently sold” list and included the disclosure required by the MLS that clearly states the comp information came from the MLS data and the period of time when the transactions had closed. Realtor Tommy was upset because one of the listings she discussed in her blog was his. He filed an ethics complaint claiming she violated Article 12. Fran couldn’t believe it wasn’t an advertisement, it just was a blog on real estate news.
Could Fran be in violation of the Code?
The Code is good business.
Is this a violation of the Code of Ethics or not?
Case Study 13
Kathy was thrilled with her very first sale of Realtor Andy’s listing that she sent out postcards to the neighborhood before the property closed. Another agent in Kathy’s office was mortified by this newbie’s gall to advertise prematurely, what if the deal falls through, then, what? To teach Kathy a lesson, her fellow agent filed a complaint citing Article 12
Is this a possible violation?
The Code is good business.
Twenty Things How to Be Successful➢ Don’t Make Excuses, Make it Happen➢ Keep Going, Keep Growing ➢ We Are Family➢ Early is on Time ➢ Don’t Think Outside the Box, Act Like there is No Box➢ If You Are Not Over Communicating, You Are Under Communicating➢ Care About Your Work, About Your Customers and About One Another➢ People and Time Are Our Best Assets, Don’t Waste Either➢ Entertain, Educate, Execute and Empower➢ The Spirit of Excellence in Everything You Do➢ Be Honest, Be Kind and Be Your Best➢ Create the Energy it Takes to Go the Next Level➢ Every Leader is Measured by How Many Leaders They Create➢ Just Because You Can, Does Not Mean You Should➢ It is Not Necessary, Unless it is Necessary➢ Do Not Put Off Until Tomorrow What You Can Do Today➢ You Attract What You Are➢ It is All About Impact➢ Dominate Daily➢ Keep Going
Slide 66