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Article 11 of the NAR Code of Ethics

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Commercial Real Estate Agent

Article 11 of the NAR Code of Ethics

I wrote this post earlier this year after the National Association of REALTORS(R) modified Article 11 to include land brokerage to the code of ethics. Excerpt from Article 11:

REALTORS® shall not undertake to provide specialized professional services concerning a type of property or service that is outside their field of competence unless they engage the assistance of one who is competent on such types of property or service, or unless the facts are fully disclosed to the client. Any persons engaged to provide such assistance shall be so identified to the client and their contribution to the assignment should be set forth. (Amended 1/10)

Article 11 emphasizes the importance for working within our area of competence. Should this situation come up, work with someone who is competent in the particular field of real estate.

Don’t Jeopardize Your Real Estate Career

NAR recently modified Article 11 of the REALTOR® Code of Ethics to include adding raw land as a real estate discipline.

What does this mean to us as REALTORS® should we come in contact with someone who wants to either purchase or sell a parcel of raw land? If we wish to work in areas that requires know-how beyond our level of competence; we should do one of three things:

  1. Get appropriate training.
  2. Get assistance from a person who has the required expertise.
  3. Disclose to your clients that you don’t have the necessary skills.

Warning!!!

Preferring to ignore these items and choosing to work outside of our area of expertise is an Article 11 violation of the Code.

I would like to add one more item to the list. Before getting involved in any transaction that is beyond your area of expertise and capability, refer it to a REALTOR® who has the required knowledge to do the job. Leave areas of this business where you lack sufficient knowledge to the experts. Take the referral fee. It’s a lot easier and more financially rewarding than jeopardizing your real estate career.

(Source VAR Commonwealth Online)

Michael Setunsky is the Broker and owner of Michael's Commercial LLC serving the Northern Virginia commercial real estate market. He has been licensed since 1985 and a Broker since 1990. As a commercial real estate and business broker, he has earned the distinction for being one of the top commercial real estate producers in the Mid-Atlantic Region. He also serves on the Mid Atlantic Real Estate Marketing Association's (MAREMA) Board of Directors, and is a Commonwealth of Virginia licensed Instructor. He teaches Pre-licensing, Post Licensing Education, Broker's and Continuing Education courses. Visit his company web site at http://michaelscommercial.com/.

 

 

 

 ©2011 Michael’s Commercial LLC, All Rights Reserved – Article 11 of the NAR Code of Ethics – December 10, 2011

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Comments(52)

Donald Reich
Madison Specs - New Rochelle, NY
Cost Segregation Specialist

This is a little vague, and has to be hard to enforce. The reality is, most Realtors have no idea what they are doing. Most licensed agents, are part time, do one or two (or no) deals a year, hardly qualifying them to be 'specialized' in any area of Real Estate.

Dec 12, 2011 03:03 AM
Michael Setunsky
Woodbridge, VA
Your Commercial Real Estate Link to Northern VA

Michael: I agree! When I taught classes, I often hear the same thing.

Dec 12, 2011 03:42 AM
Michael Setunsky
Woodbridge, VA
Your Commercial Real Estate Link to Northern VA

Donald: I agree to a large extent; however, Article 11 is very specific. Work outside of your area of expertise and you will need to get someone to help you or you are obligated to tell your client you don't know what you are doing in that specific area of expertise. The client can then make the decision at that point. I don't think it is hard to enforce at all, if we police our own industry. This is what mentors and brokers are for when it comes to training.

Dec 12, 2011 03:47 AM
Michael Setunsky
Woodbridge, VA
Your Commercial Real Estate Link to Northern VA

Erica: I would shake my head too. When agents work outside of their area of expertise it gives us all a bad name. Not to mention violating our fiduciary duty to our client.

Dec 12, 2011 12:07 PM
Endre Barath, Jr.
Berkshire Hathaway HomeServices California Properties - Beverly Hills, CA
Realtor - Los Angeles Home Sales 310.486.1002

Michael as I have 24 Land Listings in the MLS today and about another 10 in my hip pocket I really appreciate this Post!

Dec 12, 2011 01:31 PM
Michael Setunsky
Woodbridge, VA
Your Commercial Real Estate Link to Northern VA

Endre: Sounds like you are the land expert in Beverly Hills. Experience is a must.

Dec 12, 2011 03:23 PM
John Mosier
Realty ONE Group Mountain Desert - Prescott, AZ
Prescott's Patriot Agent 928 533-8142

Thanks for your post, Michael.  I own the domain PrescottsLandMan.com as I work as a specialist on raw land. A few weeks ago, an Agent in my office was doing floor time and found a potential buyer who liked several of my vacant land listings. These were recreation properties in a remote area SW of Seligman, AZ. This agent was working outside his area of expertise.

  • He had no knowledge of the neighborhood
  • He could not read a map nor did he know N S E and W
  • He got lost on an earlier trip to the area and
  • he was two hours late meeting his Buyer Clients.

He wanted me to act as his guide and show the properties to HIS clients and did not want to pay me a referral of any kind. I suggested he refer his clients to me so I could show them the properties. It takes me two hours to drive to the area and another two hours to return home. He wanted me to do this as a favor.

He is no longer with our firm, specifically because of his attempts to work outside of his area of expertise.

Dec 12, 2011 04:03 PM
Michael Setunsky
Woodbridge, VA
Your Commercial Real Estate Link to Northern VA

John: This is a perfect example where this agent was definitely trying to work outside of his area of expertise. You were right in asking for a referral and he should have jumped at the opportunity to pay one. Not to mention he probably had no knowledge of zoning, storm water management, etc.

Dec 12, 2011 11:56 PM
Not a real person
San Diego, CA

Any time you're in an industry where lots of money is involved, including as commission, it is so tempting to try to do the job whether you're qualified or not.

Dec 13, 2011 03:50 AM
Michael Setunsky
Woodbridge, VA
Your Commercial Real Estate Link to Northern VA

Russel: I believe you are right especially in our industry where it isn't monitored that closely.

Dec 13, 2011 05:13 AM
Roy Kelley
Retired - Gaithersburg, MD

I hope you are having a most productive year.  Best wishes for continued success.

Happy Holidays!

Holiday Wreath in Colonial Williamsburg IMG_1308

 

Photograph by Roy Kelley using a Canon PowerShot G11 camera.

Roy and Dolores Kelley Photographs

Dec 19, 2011 12:27 AM
Michael Setunsky
Woodbridge, VA
Your Commercial Real Estate Link to Northern VA

Roy: Thanks for stopping by. Merry Christmas and Happy New Year to you and your family.

Dec 19, 2011 01:23 AM
Pacita Dimacali
Alain Pinel - Oakland, CA
Alameda/Contra Costa Counties CA

Michael

Thanks for the post. Certainly should remind ourselves not to take on assignments without the necessary skills, or the necessary guidance/partnership of someone who is a subject matter expert.

Also thanks for the alert that a new group was formed regarding Code of Ethics. Just joined.

Dec 19, 2011 06:16 PM
Michael Setunsky
Woodbridge, VA
Your Commercial Real Estate Link to Northern VA

Pacita: This is one of the most important Article's in COE. Lenn's new COE Group should be very educational and keep us attuned to the Code.

Dec 20, 2011 12:02 AM
Renée Donohue~Home Photography
Savvy Home Pix - Allegan, MI
Western Michigan Real Estate Photographer

SO TRUE!  I had someone BEG me last week to take on a commercial deal for them.  I have to refer that stuff out because commercial and I don't play well together and it is a completely different world than residential!  It's a darn good thing I did because what he was doing requires a special use permit and the commercial agent I sent him to was able to tell him about it!

Dec 25, 2011 04:30 AM
Michael Setunsky
Woodbridge, VA
Your Commercial Real Estate Link to Northern VA

Renee: One of the things we have to look for when dealing with commercial properties. Zoning, and highest and best use play an important role. Have a great holiday! Merry Christmas!!

Dec 25, 2011 06:13 AM
Not a real person
San Diego, CA

Time to get back to work!

Dec 26, 2011 11:35 PM
Michael Setunsky
Woodbridge, VA
Your Commercial Real Estate Link to Northern VA

Russel: Thanks, hope you had a nice holiday. Happy New Year!!

Dec 26, 2011 11:48 PM
Jennifer Mackay
Counts Real Estate Group, Inc. - Panama City, FL
Your Bay County Florida Realtor 850.774.6582

Late to the show but after reading your reponse I found this in a bing search for "Article 11 of the NAR Code of Ethics", good advice Michael Setunsky 

Sep 16, 2016 11:24 PM
Michael Setunsky
Woodbridge, VA
Your Commercial Real Estate Link to Northern VA

Jennifer Mackay Agents who venture outside of their area of expertise should be thoroughly familiar with this Article.

Sep 16, 2016 11:30 PM