« Turn Your Credit Card Into Your Business Card
Real Estate Porn: Door Fetish »

You Be The Judge: Broker Non-Cooperation Under the Realtor Code of Ethics

Published by Joseph Ferrara (2) November 22nd, 2008 in NAR. Comments

According to Article 3 of the National Association of Realtors’ Code of Ethics (2008):

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)

OK, let’s apply this to a real case: Decide who wins.

REALTOR® A, who ran a brokerage business in many areas of a city, was also a homebuilder. For the homes he built, he had a separate sales force and refused to allow other REALTORS® to show his new homes.

A complaint was made to the Professional Standards Committee charging REALTOR® A’s policy violated Article 3 of the Code of Ethics.

REALTOR® A’s defense was Article 3 requires REALTORS® to cooperate with other brokers “except when cooperation is not in the client’s best interest.” He argued that when selling his own new homes, there was no client — therefore, he was not acting in the capacity of a broker but as an owner-seller; and that, under these circumstances, Article 3 did not apply to his marketing the houses he built.

Is REALTOR A’s argument valid or just a clever attempt to keep other brokers from a piece of the commission pie? You be the judge.

Answer on Monday.

Other ‘You Be The Judge’ Posts:

Time of the Essence Closing Date.

The Case of the Noisy Neighbor

Dual Agency v. Buyer Agent

Technorati Tags: , ,

Share This Post
  • ANSWER:

    The hearing panel concluded that REALTOR® A's defense was valid; that he was a principal; that Article 3 permitted him, as the builder-owner, to decide what marketing procedure would be in his best interest; and that although other REALTORS® might disagree with his decision, he was not in violation of Article 3.
    Case decided by Texas Association of Realtors.
  • This is an interesting one. I would say on the one hand it is a FSBO situation and therefore Article 3 wouldn't apply. On the other hand he is a QB so I'm not sure how he is separating the home building and the agency. In NM state law requires an agent selling their own personal property to have a sign rider showing that they are an owner/agent and list the office phone number which then muddles the line between a claim of FSBO and brokerage. OK will have to wait until Monday to find out the answer.
  • I like this one. It actually makes me think!

    I think I would have to side with the owner/seller argument. If the builder is the owner/seller than he is his own client and decide what is or is not in his own best interests.

    There is no obligation to allow another Realtor into the transaction. In fact, many FSBOs (who are not necessarily Realtors or builders) refuse to cooperate with other Realtors which is why we need forms (in the MD Suburbs of DC) that a FSBO must sign in order for a Buyer's Agent to show the FSBO home prior to entering the home allowing cooperation with or without the benefit of compensation.
  • I'm not an attorney, but I suppose the panel would have ruled that Realtor A has violated Article 3 of CoE, not because he's not sharing commissions, but because he's not cooperating with other Realtors (...refused to allow other REALTORS® to show his new homes.)
  • At the end of the day, what would be the true motivation behind his argument? That's right...100% of the commission. I'd say Realtor A's argument is pretty transparent.
  • I see your point. But did the panel?
blog comments powered by Disqus
Blog Widget by LinkWithin