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REAL ETHICS by Steve Stazel | December 2007 | Index of all Real Ethics columns
Your buyers bought a house without you!
So your buyers bought a house without you...what’s a REALTOR® to do in this sticky situation?
Believe it or not, this is not the important question. In this situation, the question you really should be asking is, “What SHOULD the REALTOR® HAVE DONE to reduce the possibility of this happening.?”
Standard of Practice 12-2 of the Code of Ethics states that: “REALTORS® may represent their services as ‘free’ or without cost even if they expect to receive compensation from a source other than their client provided that the potential for the REALTOR® to obtain a benefit from a third party is clearly disclosed at the same time.”
This clearly relates to buyer agents. However, from a practical matter, it also relates to transaction brokers as well. The problem starts with the attitude, “I couldn’t tell the buyers that they may be liable to pay me a commission. If I told them that, they would never use me as their buyer agent.” Any broker who takes this attitude is taking the first step on the road to violating Article 12.
So what do some brokers do? They say to their buyer, “I will be your agent, and I will get paid by whoever you buy a house from. Sign here. Press hard, the fourth copy is yours.” (Do you see a violation here?) The next weekend, the buyers are out for a drive (without their REALTOR®) and stop in a housing development. By the end of the day, they have purchased one of the builder’s homes. The next day the buyers call their broker and say, “We just bought a new home from ABC Builders. Contact the builder to get paid as you said you would.”
There are two chances the broker will be paid by the builder—slim and none. If the broker had done a proper job of informing the buyers of how commissions are paid/earned in our market, maybe this would not have happened.
It is in our own best interest (transaction broker and buyer agents) to inform the buyers how commissions are paid in our area.. If your buyers don’t know our rules, how can they be expected to follow them? I feel it is our obligation to the buyers and to ourselves to discuss exactly how brokers are compensated in a real estate transaction.
Each month, the Aurora Association of REALTORSŪ Web site features Real Ethics,
a column by Steve Stazel devoted to explaining Code of
Ethics issues for members. A REALTORŪ since 1974, Stazel is a Professional Standards
instructor and senior Ethics
instructor for the Colorado Association of REALTORSŪ.
If you have an ethical concern or an issue you would like
to see addressed, please call Stazel at (303) 773-3333 or e-mail him at
stazels@msn.com. The comments of this article reflect the understanding and
opinions of the author and do not represent an official expression of policy by the National Association
of REALTORSŪ.
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