Is it ethical to tell your clients to lie?

By
Real Estate Agent with Weichert, Realtors

I recently came across Real Mart Realty's website.  Real Mart Realty is a discount broker in my area which in the past has just dealt with listing houses on the MLS for a fee, but the seller basically sells their house on their own.  Well recently we are seeing customers coming to our open houses that say they are working with a Realtor from RealMart Realty.  So I decided to check out their website.  Basically what happens is, the buyer is pretty much on their own, and they go to open houses, saying they are working with a Realtor from Real Mart.  If they like the house and put an offer in on it, and they get the house, and let's say the buyers commission is 3%, Real Mart will pay a rebate to the buyer of 2% and keep 1% for themselves.  Paying rebates to buyer's is now legal in New Jersey.  However, on this website, there is a section called Buyer's Tools, and how to get a 2% rebate.  Here is the link to this page:  http://realmartrealty.com/BuyerFAQs.aspx#Top

If you look at paragraph 8, last part, Real Mart is telling their clients not to disclose they are getting a rebate because it might affect the negotiations.  Isn't this un-ethical?  Don't we have to abide by Full Disclosure?  However, now that I know this, if a potential customer has a Real Mart agent, I will know they are getting a 2% rebate, mention this to my seller, and we can adjust our negotiations accordingly.

If you look at paragraph 9, it states that if there is no open house at a house that a buyer wants to see, to use the "Wrong Address Approach" and go to the house, meet up with the home owners and say that you thought they were having an Open House and that you must have gotten the wrong information from Realtor.com .  Isn't this a lie?  Check out this link, and read paragraph 9: http://realmartrealty.com/BuyerFAQs.aspx#Top

ISN'T THIS UN-ETHICAL?  DOESN'T IT VIOLATE THE CODE OF ETHICS THAT WE AS REALTORS SUBSCRIBE TO?

I am curious to know your thoughts.

Comments (7)

Andrea Bedard
Thompson Company, REALTORS® 240.593.2860 - Silver Spring, MD
Fluent in German and Real Estate * M.A. ABR ASP

Gerald, great post, you should get quite the discussion going. (suggested) Very unethical IMO! I'm really put off by the "advice" they are providing in order to view a house. It most certainly sounds like why bother with an agent, all you have to do is lie. I would advise my clients to not show the house to strangers who show up unannounced and without an agent.

Lets hope their "business model" wont be very successful. Knowledge is power, however.. being able to advice your sellers about the rebate, puts you in a good spot. 

 

Jul 11, 2011 08:04 AM
Eric Crane -- Your Full Service, Discount Fee Realtor®
DPR Realty LLC - Gilbert, AZ
Greater Metro Phoenix Arizona

Hi, Gerald -- without knowing whether it is an illegal practice, it doesn't pass my own 'smell test' as to how I would choose to do business.  I actually operate a reduced fee/rebate business model in Arizona, but I still provide traditional full service -- which I believe my clients are entitled to and expect.  Good luck to you in the 2nd half of '11

Jul 11, 2011 08:06 AM
Robert Amato
Bob Amato of Empire Home Mortgage Inc - East Meadow, NY

Wow Gerald, all great questions. It will be interesting to see what everyone thinks. I did suggest also and will subscribe.

Jul 11, 2011 08:07 AM
Daniel H. Fisher
www.FisherHermanRealty.com (704) 617-3544 - Charlotte, NC
MCRP - Charlotte Real Estate, NC or SC

It is wrong to advise: if there is no open house at a house that a buyer wants to see, to use the "Wrong Address Approach" and go to the house, meet up with the home owners and say that you thought they were having an Open House and that you must have gotten the wrong information from Realtor.com

but that is not quite what they say:

Once you sign a Buyer Rebate Agreement with us, you must disclose, let other parties know you are being represented. If you are asked if you have an agent, the most appropriate response is "YES, I/we have an agent at this time". Never mis-represent yourself to a realtor and/or homeowner or trick him/her into showing you the property, then switch agencies, it's unethical. We will not be able to represent you if that occurs and you will lose out on the rebate.

 After you sign the agreement, we will represent you as your buyers' agent, We will provide you with business cards, and you can use them to show agents and/or give them out at public open houses to inform other parties you're being represented. If when driving thru neighborhoods you see a home of interest, call us for availability. Only if we are not available and if the home owner(s) are outside, introduce yourself to them and provide them with our business card, ask them to give it to their agent, if any, so an appointment can be made.  Always ask them when is the next open house scheduled. You do NOT need to tell listing agent or seller that you are getting a Rebate, but you must disclose you are represented.Once you sign a Buyer Rebate Agreement with us, you must disclose, let other parties know you are being represented. If you are asked if you have an agent, the most appropriate response is "YES, I/we have an agent at this time". Never mis-represent yourself to a realtor and/or homeowner or trick him/her into showing you the property, then switch agencies, it's unethical. We will not be able to represent you if that occurs and you will lose out on the rebate.

 A large national company that paid a rebate had a legal opinion and a letter from the state licensing board and banking commission in NC and SC, the buyer's disclosure was required to the lender, but not the Seller or the Listing agent during negotiations.  It of course had to show on the HUD-1.  Not sure if this would hold true in NJ, but they used the same form nationwide.

 

Jul 11, 2011 10:44 AM
Jennifer Blanchard
Berkshire Hathaway HomeServices NJ Properties - Basking Ridge, NJ
No Obligation, Just Information

Paragraphs 8 and 9 are the  ones I have the most issue with...  I didn't think we were supposed to discussed other broker's fees.  And to state that traditional listing agreements are 100% biased toward the realtors?? I thought we were supposed to help each other out - have each other's backs...nope, this brokerage is completely devaluing our role in the process.

The dialog in paragraph 9 - where they are telling their customer (NOT client) how to get into a house if it isn't being hosted open.... I can't believe they are telling people to lie.  Step by step even...."hang up and call back"... pretending that they called their agent to ask about a referral???

I finally got over the issue I had with prospective buyers who insisted on working directly with the listing agent - I "solved" that by working with a partner and pledging not to work both ends of a deal.  That didn't eliminate the problem in general but it alleviated the aggravation I was creating for myself in trying to explain to people that there is no discount if they work directly with me.  This, I think, might be worse.

 

Jul 11, 2011 12:00 PM
Suzanne McLaughlin
Sabinske & Associates, Inc. (Albertville, St. Michael) - Saint Michael, MN
Sabinske & Associates, Realtor

This is so scary on so many fronts.  I am keeping tabs on this.  And, I think that perhaps someone ought to call a Board.

Jul 11, 2011 12:24 PM
Gerald Light
Weichert, Realtors - Basking Ridge, NJ

Many Boards have already been contacted and are looking into this.

Jul 18, 2011 04:26 PM