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NAR's Changes to Code of Ethics and Standards of Practice

I am on the Texas (TAR) Professional Standards Committee and I was just emailed the changes that were adopted for 2008 from NAR, and I kinda chuckled. I'm not sure if others have read the changes, but this really caught my eye.

Article 12 used to say, "REALTORS® shall be careful at all times to present a true picture in their advertising and representations to the public..."

The revised Article says, "REALTORS® shall be honest and truthful in their real estate communications and shall present a true picture in their advetising, marketing, and other representations..."

What caught your eye? What caught my eye is what should have caught your eye too since I bolded the words, that we went from having to be "careful" to having to be "honest and truthful". When I see that, it shows that there were so many REALTORS® not being "careful" and they had to actually be told to be "honest and truthful." How sad is that.

I would think the two went hand in hand. If you're not being honest and truthful, you're definitely not being careful. And if you're being careful about not being caught being honest and truthful, then you're not very ethical which blows the entire Code of Ethics out of the water.

What do others think about this change, and have you witnessed reasons for this change? I would love to hear about your experiences with other agents who violated the original article making a need to change the verbiage (no names are needed in case they are members of this forum).

Posted by Donna Harris, REALTOR® & ASP - Hill Country Austin Lakeway Homes on 01/10/2008 12:39 PM

Comments (38)

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Originally posted at: Austin TX Real Estate - Hill Country Austin Lakeway Homes for Sale: NAR's Changes to Code of Ethics and Standards of Practice

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38 Comments on NAR's Changes to Code of Ethics and Standards of Practice

JAN

2008

Well my careful may not be your careful. While Honest and truthful may be (slightly) subjective - a lie - is still a lie.

Donna,

There are several realtors in my market that need to take note of these changes. I suspect that the market slowdown will remove many of these.

It's funny that they saw a need to change the wording of that article. I wonder what exactly sparked it.

Here is the case that is giving the example for the change:

Changes to the Interpretations of the Code of Ethics

•· The following new case interpretation related to Article 12 was adopted illustrating Standard of Practice 12-10's prohibition on use of deceptive metatags, key words, and other devices intended to direct/drive Internet traffic to REALTORS^Ò' websites.

REALTOR^ÒA, a residential broker in a major metropolitan city, spent several weeks each year in his cabin in the north woods where he planned to retire one day. Even while at home in the city, REALTOR^ÒA stayed abreast of local news, events, and especially the local real estate market by subscribing to the print and on-line editions of the local newspaper. He also bookmarked a number of north woods brokers' websites to stay current with the market and to watch for potential investment opportunities.

One evening while surfing the Internet, REALTOR^ÒA came across a URL he was unfamiliar with - northwoodsandlakesmls.com. REALTOR^ÒA was pleased to see the MLS serving the area where he vacationed for so many years had created a publicly-accessible website. Clicking on the link, he was surprised to find that the website he was connected with was not an MLS's website but instead was REALTOR^ÒZ's company website. Having had prior dealings with REALTOR^ÒZ, REALTOR^ÒA spent some time carefully scrutinizing the website. He noted, among other things, that the name of REALTOR^ÒZ's firm did not include the letters MLS.

REALTOR^ÒA sent an e-mail to the association's executive officer asking whether REALTOR^ÒZ had been authorized by the association to use the URL northwoodsandlakesmls.com and whether the association felt it presented a true picture as required by Article 12 of the Code of Ethics. The association executive responded that their association did not assign, review, or approve URLs used by their members, but added that if REALTOR^ÒA felt a possible violation of the Code of Ethics had occurred, the appropriate step was to file an ethics complaint. REALTOR^ÒA did just that, alleging in his complaint that when he clicked on what appeared to be a real estate-related URL that included the letters "MLS" he expected to be connected with a website operated by a multiple listing service. He stated he felt that REALTOR^ÒZ's URL was deceptive and did not meet Article 12's true picture test.

At the hearing, REALTOR^ÒZ defended his URL on a number of grounds including the fact that he was a participant in good standing in the MLS and that he was authorized under the MLS's rules to display other participants' listings on his website. "If I used ‘MLS' in the name of my firm, I could see how that might be perceived as something less than a true picture," he argued, "but by simply using MLS in my URL I am telling consumers that they can get MLS-provided information about properties in the north woods from me. What could be truer than that?"

The hearing panel disagreed with REALTOR^ÒZ's reasoning. While REALTOR^ÒZ's website included information about other participants' listings that the MLS had provided - and that REALTOR^ÒZ was authorized to display - the fact remained that a real estate-related URL that included the letters MLS would lead reasonable consumers to conclude that the website would be an MLS's, and not a broker's website. REALTOR^ÒZ was found in violation of Article 12 as interpreted by Standard of Practice 12-10.

Personally, once I found out about how NAR is allowing Move, Inc. to screw it's members, I don't hold very much faith in NAR being a source of ethics.

Bob Mitchell

ValueList Real Estate Services, Inc.

While I applaud any changes to the COE to make it more specific and harder to 'accidentally' circumvent, until realistic enforcement procedures are put in place, it's all semantics anyway. An ethical, honest agent will always be such.. a dishonest, unethical agent won't suddenly find 'religion' because NAR changes the wording in the COE.

I've met several Realtors who, unfortunately, take their oath of ethics with a wink and a nod. Many dishonest and unethical people truly believe we are all dishonest and unethical, just like them. I don't know if specific verbiage can ever make a difference in their behavior.

NAR does not have any trademark or copy-write on the term MLS. In fact MLS has other meanings then Multiple Listing Service (Major League Soccer come to mind) If this is the reason for changing Article 12, then I see it as a back-door way of trying to control the use of MLS. Problem is it only applies to Realtors, and non-Realtors are still free to use it as they wish. I know at least one honest and truthful Realtor who has had a url with MLS in it for a long time, has spent a lot of money promoting it, and has gotten a lot of honest and truthful business from it. What becomes of that? Who is going to prevent others from using MLS in a way that will bite us on our backside?

That is an interesting case. I never even considered using MLS in my domain name. I always assumed it was a no-no.

Interesting conversation, I'm bookmarking this post so I can follow along. . .

I understand that there are multiple industries with the initials MLS, but the point of the example is that Realtor A felt Realtor Z was being deceptive in his advertising since it wasn't actually an MLS system he was connecting to.

I agree that nothing will make someone ethical. Either they are or they aren't. And if they aren't, they're just going to find another way to go around the rules.

If a site with MLS in the url leads to MLS approved IDX or VOW I don't think that it is misleading.

You have a button on your site that says "MLS Property Search". You are breaking the new rule. Does anyone really think you own the MLS? Not likely. Are you misleading anyone? No. Can you be fined? Maybe, if someone gets jealous of your successful internet exposure?

When the agent who filed the complaint above went to the website he knew immediately that he was not on the MLS site. No harm done.

The reason this change was made is to take away opportunities from agents and put those opportunities/leads in the hands of third party lead generators.

This new rule will take the 2,000,000 internet searches that are made every year for the term MLS away from us Realtors and give those searches to the third party lead generators so they can sell them back to us.

There have already been conflicting interests found amongst the creators of this rule. Apparently some have monetary gains with the implementation of the new rule. See http://www.realestatewebmasters.com/thread19714.html for more.

To sign a petition against this absurd rule go to http://www.freethemls.com/

I'm just wondering if this new standard applies to agent photos as well. It's amazing to meet an agent in person and they look absolutely nothing like their glamour shot. That should fall under the category of marketing & advertising don't you think? If many agents honestly and truthfully posted their real pictures they'd have no business.

Aside from the bold effect, what caught my attention in the change was the addition of the words "...in their real estate communications..." My guess is that this was needed because of some other case in which a REALTOR tried to claim that his/her notes, calls, emails, whatever were not covered by the old version. Sad really.

Thank you for the post.

NAR regulates too much, and provides too little to its members. ie I am a member, but as a REALTOR I am not allowed to use the term in my web url. That is reserved for Move.com, a profit making concern acting to disintermediate me with my prospects and clients.

Now NAR wants to get into the use of the term MLS. If I were using NAMEMLS.COM I would be violating someone's copyright, but not NAR's.

NAR should help us weed out the deadwood, improve standards for entry and education, clean up the intentional ambiguity in procuring cause, improve the perception of our industry and do many other things before butting into the MLS nonsense.

It's crazy that they had to make that change. But really, what is that change going to do?

Donna,

I'm with Jesse and Kathy on this one!!! These are 'convenience codes'...not enforcement codes! Thanks, Fran

Perhaps they needed to specifically say you shall not lie, cheat or steal. Honest and truthful seem to be grey area for too many...

I have to go with Jesse & Kathy as well! We need words that are more FIRM than these and we need ENFORCEMENT! CAREFUL should read, 'It is MANDATORY...'! And we wonder how these fly-by-night agents get away with what they get away with!

Donna,

That is the best defense I have heard of the new standards as applied to the use of the term MLS. However, if real estate agent Z is not a member of the NAR, there is nothing that REALTOR(R) A can do but whine. What is worse is that a non-member organization could buy domains around the country NewYorkMLS, AtlantaMLS, LosAngelosMLS, etc) and thereby capture a tremendous amount of search volume and business FROM members. So, in effect, the NAR has instituted a practice which will actively damage its own members, while serving no benefit to the public.

The NAR has no right to control the term MLS, except by its members. Major League Soccer owns the commercial usage of the term, and many other groups and companies also have conflicting claims. To put it bluntly, the horse is out of the barn. Locking the door is asinine.

As stated earlier in the comments, the NAR needs to spend more time making sure that member agents are the cream of the crop, and are actually honest and ethical, as well as trained and effective, rather than worrying that the term MLS might be used by a feed aggregator.

Odddly, despite having access to all of the listings in the MLS, I can't advertise it on my site... but if I were not a member of the NAR (and local and state associations) I could advertise that very fact... and the NAR couldn't do a thing about it.

Kind of misplaced, don't you think?

I think that honest and truthful is also too vague. That is left up to the interpretation of each Realtor. Unless the advertising can be based on fact and not opinion, it won't be able to be regulated.

Honest and truthful is a step in the right direction. People will interpret and justify the circumstances to fit their situation. I am a member of the Professional Standards Committee and I am always amazed at the way the COE can be interpreted. However, we would all be in big trouble without a COE.

Hi Donna - what really jumped out at me was the very wording that tells us we "SHALL be honest and truthful". We actually NEED to be told to be honest?? Are not most people innately honest to begin with? And with that honesty also comes truthfulness........

Ann

Donna- The unethical won't read the changes. It must have come out of a court case and a judge interpreted the difference in the wording.

Well one could be carefully unethical.... I think we've all seen these types!

It is amazing that these words need to be added to the Code Of Ethics. Most people are brought up learning right from wrong and are encouraged to be truthful and honest. I don't think there is a great bandwagon of parent out there raising children to be pathological liars, but along the way somewhere it happens. It's either true or it's not.

Truth in advertising example -- We actually had a very well seasoned agent stand up at our MLS meeting one day and announce a listing. She had listed it as a single-family residence, but went on to say that it was actually a modular home, but she knew if she listed it as a modular home there wouldn't be that much activity on it.

One this is unethical, dishonest and untruthful

Two she basically admitted she understood that

Three she just wasted a whole lot of consumers and agents valuable time by them looking at what they thought they wanted only to get to the listing to discover it was specifically NOT what they wanted to look at.

Or how about the agent who lists a 3 bedroom home, when in fact it is only 2 bedrooms but in the agents mind there is this other room (down stairs family room) that could be used as a bedroom. They list the home as 3 bedrooms, don't say anything about any bedrooms being non-conforming. Again another BIG waster of time.

Ok - so they have made it official - all Realtors aren't ethical, honest and/or careful. Now what are they going to do about it? Agents pull things every day and claim they didn't know, it wasn't intentional or they won't ever do it again and all is forgiven. Why not hold them accountable for the problems? The real estate police should be doing the job of enforcing the ethics and we wouldn't need changes to the existing COE.

Interesting. Too bad that something must have happened to make it such that the words had to be changed.

JAN

2008

Someone must have made an example!

First, I have to agree with Bob Mitchell, the NAR should not be your source for something called "ethics" as they are only about making money at any cost (ie. Realtor.com). But secondly, it is sad that we need this change to actually spell out "honest and truthful" because if you don't, today's society will use that as a defense. Soon, we will list exactly what honest means.

If you say nothing, is that being "honest and truthful"?

I am a certified Ethics Instructor in Florida and find much of the code interesting. We find it necessary to codify things like being honest and truthful. Good grief, what does that say about us.

I never considered using MLS in my domain name! it doesn't make sense for me. NAR trying control a term, actually they don't have legal rights in that term!! Major League Soccer owns the commercial usage of the term!

Shucks. I know agents that are very CAREFUL to mislead, CAREFUL to use copyrighted content, CAREFUL to not include the broke's info, etc.

Honest and truthful is a high bar. It will help except with those who are CAREFUL to not get caught being dishonest and untruthful.

Hey Donna...Happy New Year!

I, too, serve on the Calif. Assoc. of Realtors Ethics & Grievances committee and frankly I'm amazed at the amount of dis"honest"y that occurs on a daily basis. There have been agents who have been brought up to our committee who have been selling real estate for their entire careers and yet don't seem to have that "ethics" thing down yet. I contend that you can't teach ethics, you either have them or you don't and trying to teach someone who doesn't is futile.

JAN

2008

Things that occurred to me when reading this post (thanks for it, by the way, always good to get the changes out there as many ways as possible, and in your blog is one of the more palatable and likely to be read ones):

I'm not sure, but I believe our MLS has a rule against using MLS on your website when it's in reference to their services. Have to check that one out.

Is the term MLS trademarked? If so, who holds it and gives the various MLS's around the country permission to use it? If it is, an agent using it on their website could be setting themselves up for a lawsuit.

Various people are correct that verbiage won't make a dishonest person honest, because dishonest people (a) always think they won't get caught, (b) think that the rules don't/shouldn't apply to them, and (c) will always make up justifications to themselves and others for doing what they're doing that is dishonest.

Lastly, reading people defending the practice makes me feel squicky about ever doing business with them. But that's just me - I've, as a new agent, been bitten by an agent who had a very creative definition of "honest and truthful" and I'm absolutely sure he would justify his behavior just as much as deception regarding the use of MLS is concerned if he thought it would be to his own advantage.

Donna,

In every State there are issues with Agents taking liberties. When approached the phrase "ignorance is bliss" comes to mind.

There is only one way to do business, at least for me......I need and like my sleep.

JAN

2008

Makes you wonder, huh?? I like your style. I'm subscribing!! :-)

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