Here is the 5th in a series of posts dedicated to Understanding the Realtor® Code of Ethics. These posts are designed to explain the Ethics that Realtors® are bound to. For the full Code of Ethics, please visit the National Association of Realtors®.
Before I delve into Articles 6 & 7, I would like to take a moment to bring up a few relevant posts that I have read recently that touched on the Code of Ethics, as well as provide links to the previous Code of Ethics posts that I have written. Please take a moment to check these out, if you haven't already...
- "I Promise" :: Those Are Some Strong Words -A very tought-provoking post by Jeff Turner.
- Does Our Code of Ethics make us LIARS??? -Written by a NAR Instructor Monika McGillicuddy
- Many Agents Need a Lesson in Etiquette -A great companion to the Ethics by Randy Prothero
- Let's All Understand the Realtor® Code of Ethics ... Article 1
- Understanding the Code of Ethics -Article 2: Disclosure
- Understanding the Realtor® Code of Ethics - Article 3: Cooperating & Compensation
- Understanding the Realtor® Code of Ethics: Articles 4 and 5- Disclosure of Ownership Interest
Article 6
REALTORS® shall not accept any commission, rebate, or profit on expenditures made for their client, without the client's knowledge and consent.
When recommending real estate products or services (e.g., homeowner's insurance, warranty programs, mortgage financing, title insurance, etc.), REALTORS® shall disclose to the client or customer to whom the recommendation is made any financial benefits or fees, other than real estate referral fees, the REALTOR® or REALTOR®'s firm may receive as a direct result of such recommendation.
A Realtor® MUST disclose, to their client, ANY and ALL commission, rebate or profit that they will receive if their client uses a particular service, company, etc.
For Example, Realtor® Rachael's husband, Lanny, owns a landscaping business. Realtor® Rachael's client, Seller Samantha, needs a new lawn put in, to boost the curb appeal of her house before putting it on the market. Realtor® Rachael is allowed to recommend her husband's company, as long as she discloses that she has an interest in the company, and will benefit financially from Seller Samantha using Lanny's Landscaping Company. Furthermore, Realtor® Rachael MUST disclose this at the time of recommending her husband's company. Again - disclosure, disclosure, disclosure.
Article 7
In a transaction, REALTORS® shall not accept compensation from more than one party, even if permitted by law, without disclosure to all parties and the informed consent of the REALTOR®'s client or clients.
A Realtor® must disclose, to their client, if they are receiving compensation from more than one party in a transaction.
Consider this: Realtor® Rachael successfully sells Seller Samantha's house. One month later, the buyers (who were represented by a different real estate agent) sends Realtor® Rachael a $100 gift card in thanks for helping make it "and easy transaction." Now, Realtor® Rachael MUST disclose this "gift" to Seller Samantha and get her consent for her (Realtor® Rachael) to keep the gift card. Please note: If Seller Samantha should decide not to allow Realtor® Rachel to keep the gift card, then Seller Samantha would be entitled to keep it.
Disclosure. The Golden Rule. Common Sense. ...The basic ingredients to the Code of Ethics.
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