Welcome to the first in my series on the Texas Association of Realtors Code of Ethics.
Firstly, what is a REALTOR®? Contrary to popular belief, not all real estate agents are REALTORS®, and not all REALTORS® are real estate agents (appraisers can also be Realtors). Realtors are specifically members of the Realtor boards, to include the National Association of Realtors (NAR), the Texas Association of Realtors (TAR), and any local boards (in Texas there are about 30; I am a member of the Austin Board of Realtors (ABOR) which includes Williamson County, and the Fort Hood Association of Realtors (FHAAR)). Most residential real estate agents are Realtors because for access to the MLS (the local boards control the MLS) and access to professional certifications and other benefits. Not all commercial real estate agents are Realtors, however.
One advantage as a consumer for choosing a REALTOR® instead of merely a real estate agent is the Code of Ethics that Realtors are subject to. An agent who violates the Code of Ethics can be disciplined or even stripped of membership, which would be career ending for most real estate agents. The Code of Ethics is above and beyond the legal requirements laid out by TREC and the State of Texas, and helps to ensure that agents do good by their customers and give the profession a good name.
So what is in the Code of Ethics?
Let’s find out, starting with Article 1 today!
You can read the full language of Article 1 (and the entire Code of Ethics) here. I won’t reprint it here, and it does change from time to time. Instead, I will briefly overview the Article and what it might mean to you as a buyer, seller or investor.
Article 1 is a long one, relatively, and covers several different responsibilities of the Realtor®. First is honesty. This includes making a genuine estimate of a home’s value. As an agent, it is tempting to overpromise on a home’s value when talking to a would-be seller. Not just because it increases our odds of getting the listing by giving the seller false hope that their home can sell for more, but also because it is simply hard emotionally to tell a seller the bad news that their home is not worth what they want for it. But we are bound by the Code of Ethics to make an honest and competent home value analysis.
Next it discusses disclosure. Specifically, in this instance, that we must disclose to each party if we are representing both parties AND get the signed consent of both parties to do so. In these cases, we would be acting as an intermediary, which is another discussion in itself for another blog post.
Next is our obligation to submit ALL offers or counter offers during the buying/selling process. It doesn’t matter how ridiculous I think the offer or counter is, if it is information that I am aware of, then it is my duty to ensure my client, the buyer or seller, is aware of it too. As a Realtor®, I am an adviser, not a decider. The deciding is up to the buyer and seller, and it is not my prerogative to respond to or create offers on my clients’ behalf.
Article 1-9 discusses confidentiality, guaranteeing that the information you share with me as a buyer or seller will remain with me alone. That may seem simple, but there can be cases when can be hard for agents to follow this instruction. For example, I might have two buyers making offers on the same house. That can get awkward! One might offer $150,000, the other $175,000. Even though I am aware that the $150,000 offer is likely weaker than my other buyer’s offer, I owe my other buyer confidentiality, and cannot share what he is offering on the home. In that case, I can only give both buyers the same advice and let them make the decision.
Articles 1-10 and 1-11 are about property management, which we won’t go into here (yes, property managers are Realtors® too).
Article 1-12 is a responsibility to ensure a seller is aware of the commission split, i.e. how much of the commission would go to me as the listing agent, and what portion would go to the buyer’s agent. That information is covered in the listing agreement, anyway, and should be very plain. Similarly, Article 1-13 discusses what information must be disclosed to the buyer concerning commissions, intermediary, and the fact that the listing agent might not keep the terms of offers confidential.
Article 1-15 is often confused. Many people I’ve run across, including agents, think that the listing agent MUST disclose the existence of multiple offers. That is true, unless the seller has specifically requested otherwise. 99% of the time, it is a good idea to disclose multiple offers, because usually it will bring out the highest and best offers from all the parties. But it is up to the seller. If you do disclose multiple offers, the listing agent must, if asked, disclose whether the other offers are their own or someone else in their brokerage (i.e. intermediary again).
Finally, Article 1-16 states that agents can only access or allow access and use of the property in accordance with the owner’s written wishes, usually contained within the listing agreement.
That is it for Article 1! It is a doozy. Next time will be Article 2, which concerns disclosure of defects with the property.
Questions about specific circumstances? Or would you like more info on buying and selling in Central Texas? Please give me a shout at my contact info below!
Brian E Adams, REALTOR®, GRI
StarPointe Realty Central Texas LLC
Licensed in the State of Texas