Real Estate Ethics - A Two Way Street

The subject of ethics and ethical behavior is a sensitive one. In real estate, with such large transactions being involved, there needs to be the expectation that everyone involved is acting in an ethical manner.

Realtors are bound by a strict Code of Ethics and risk significant penalties should they fail to adhere to this code. These penalties can include monetary damages and the loss of their license. That's not to say that everyone working as a licensed realtor is 100% ethical. That would be an unrealistic assumption. However, there are guidelines in place to prevent unethical behavior and to punish those that are found to have breached that code.

Clients, however, have no written code that they must adhere to. As a realtor, I have to assume that everyone I work with is being completely honest and straightforward. In 99 out of 100 cases, that is true. Every now and then, though, a situation will arise where information is provided that is patently false. Or, in other scenarios, a client will omit certain facts that ultimately have a bearing on the transaction. One result is that the transaction doesn't close and money and time is wasted.

Another result is something that I am currently experiencing. Sellers sign listing agreements that provide written evidence of the relationship between the client and the realtor. During the term of that agreement, the seller cannot reach out to another agent (nor would another agent want to be in contact with the seller - see Code of Ethics above). It's clearly defined and easy to manage.

The actions of buyers, on the other hand, are not so clearly defined, unless a realtor compels a new client to sign an Exclusive Buyer's Agreement. I, personally, have chosen not to go that route. I find it to be oft-putting to the client when they show up to see their first house only to find a legal document thrust in their hand by a person they have never met before, asking for their signature. It has been my experience that, once I meet the client and we've made a connection, that trust has been established. As I said, that's true in 99 out of a 100 cases.

Some clients are truly unaware of the reciprocal process of the Multiple Listing Service (MLS) and believe, for example, that they need to talk to a RE/MAX agent to see RE/MAX homes and a Century 21 agent to see what they have to offer. Once I explain the MLS and how it works - that all agents have access to everyone's MLS-listed homes, it usually isn't a problem after that. If they continue to contact multiple agents at that point, I can only assume that they have some ulterior motive.

The frustrating point is that a client can choose to work with any agent they choose. If at some point they no longer feel comfortable with that agent or aren't happy with the service the agent is providing, then they have the right to look elsewhere. It's the client who has two agents working simultaneously, unbeknownst to each other, who I really find bothersome. These are the clients who will call the first agent about seeing a house on Saturday afternoon, only to find out the agent is already booked for that time period. The client then turns around and calls the 2nd agent to make the appointment.

This situation can go on for a long time, with both agents putting in countless hours and driving untold miles while trying to help "their " client. The matter is discovered when the client has one of the agents submit an offer that is accepted. Only one of the agents is on the contract and is due the commission. The other agent (in this case ME) is shut out and receives nothing for the work done to that point.

There are remedies for this, however. Negotiations between brokerage firms many times result in a split of commission. Or, if all else fails, arbitration by the real estate board can resolve the issue. However, both agents were fully expecting to receive the full commission once they closed and now are in a battle to get the maximum split they can. Both end up with a really bad taste in their mouth. The client, however, happily closes on their property and moves on. The commission is paid by the seller, so they don't even have to worry about it.

My recommendation to prospective buyers: choose a realtor, meet with them and, if you like how they work and they are responsive, work solely with them and they will help you find your dream home. There is no advantage in working with multiple agents as we all have access to the same properties. If, however, you aren't happy with your realtor, be upfront and tell them so. It doesn't have to be a loud, emotional discussion. You have the right to work with anyone you choose. Your buying experience will be much smoother and when you finally get handed the keys at the closing table, you will have gained a trusted professional that you may choose to work with again, or to refer to your family and friends.

Dennis Scaman invites you to visit his blog, Real Estate 101, at, to learn more about the process of buying and selling real estate. Our information is clear, concise and written in layman's terms to provide a benefit for the largest number of readers possible.


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