10 situations that could lead to ethics violations for new real estate agents, lawsuits or even more serious consequences


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Even the most serious real estate agents can accidentally take the wrong move that could end violation of ethics, lawsuit or even revocation of their license. This is why it is so important to understand ethical issues and potential legal issues, especially if you are a brand. new real estate agent

Take a look at the following common hazard situations that agents face and the possible consequences.

Scenario 1

The potential buyer is especially concerned about the risk termites in the object that you represent. She asks if the house has ever been affected by termites, to which you reply, “No, not at all.”

But you didn’t mention that in the past there was evidence of the presence of termites in the area, although to date they have never caused significant damage.

Verdict: You could face legal action or even lose your license.

Agents who misrepresent property information, mislead customers, or fail to disclose property defects quickly become vulnerable to prosecution.

If the aforementioned potential buyer ends up buying a home, then after a few months they begin to see termite damage on their property and wonders why, they will probably go back to the listing agent and accuse them of not disclosing the presence of termites.

The seller or listing agent could also potentially be held liable even if the refusal to disclose the termite information to the buyer was not intentional. Other common related elements that an agent may run into problems about because of not disclosing information include foundation issues, improvements made without permits, or leaks.

Common misrepresentation issues also include property boundaries or roof issues, or even the agent’s relationship with a buyer, seller, or anyone else involved in a transaction.

Scenario 2

Your buyer is thrilled with the “perfect” home you helped find, and you meet on Friday afternoon to pick them up. deposit for escrow.

You grab their check, put it in a secure inside pocket in your work bag, and immediately forget about the check until you spot it in your purse the following Tuesday.

Verdict: You may be sued and possibly revoked your license if you encounter such misuse of funds.

The collateral needs to be deposited into escrow in a timely manner and agents should not take it lightly. They should also avoid moving money, giving up accounting, or borrowing money from clients (big ban).

The bottom line is that when it comes to handling customer money, keep it tidy and deliver it to the appropriate parties as quickly as possible.

Scenario 3

The agent is calling you about the property you have listed and for which there is currently an accepted offer – with unforeseen circumstances. The agent wants to know what the status of the proposals and contingencies is, and you reply briefly, “I am not entitled to discuss.”

Verdict: You just violated the code of ethics.

Article 3 of the Code of Ethics of Realtors states: “Realtors should cooperate with other brokers, except in cases where cooperation is not in the interests of the client. The obligation to cooperate does not include the obligation to share commissions, fees or otherwise compensate another broker. ”

As such, it is your responsibility to advise if the offer was pending and what the current status is in case the agent and his client wish to submit a backup offer.

Scenario 4

Your clients are buying houses in a new city and want to know the crime rate in different areas to help them make a home buying decision. Thus, you compile crime reports with various crime statistics for each area of ​​the city and provide them to your client.

Verdict: You violated the code of ethics and fair housing rules.

This practice, which could potentially induce a buyer to want to live in one area rather than another, is considered a violation of the rules. Fair Housing Act and the Ethics Guidelines of the National Association of Realtors (NAR).

To avoid potential slipping into steeringThe agents can make sure to do things like offer listings to clients based on objective characteristics of the house or price bracket, and refer clients to third parties if they have questions about things like schools or ethnicity in the area.

Scenario 5

Your salesperson receives a one-sentence buyer’s love letter to their home that amazes them personally – a couple of buyers report that they have two children the same age as the salesperson, and now the seller pretends that their family is growing up in their home. …

The seller accepts their offer, and later, a lone competing buyer finds out that the seller accepted another buyer’s offer because he had a family.

Verdict: Seller and / or Listing Agent may be sued, and this is a violation of fair housing laws

When buyers provide personal information to buyer’s love letters this may affect the sellers, and this makes the sellers liable in a lawsuit about the fairness of the housing conditions.

At the 2020 Realtor Conference, Barbara Betts, broker-owner of Betts Realty Group and director of the National Association of Realtors, California Association of Realtors and the Pacific West Realtors Association, encouraged listing agents to speak with their sellers about not accepting such emails at all due to their potential liability. …

Of course, if the letters only discuss the merits of buyers who hope to win, that’s a completely different story. But it is impossible to know the content of a love letter in advance.

Scenario 6

You notice that a pop-up appears in the Multiple Listing Service (MLS) stating what your buyer wants from their new home. But you also noticed that the listing agent works through a discount brokerage company known for offering less than usual compensation for buyer’s agents.

So you’ve decided not to warn your client about the listing. There are many other lists anyway.

Verdict: This practice can quickly lead to prosecution of agents if caught, and this is considered a violation of fair housing laws.

In fact, lawsuits have recently been filed against several real estate agents in the Houston area. by REX Real Estate when the discount broker acquired agent records showing that they would not show buyers the houses listed by the discount broker because of the lower commission they would receive. Buyers have the right to be aware of all the options available to them.

Scenario 7

You list the properties and clearly state in the MLS that no impressions will be available until a certain date specified by sellers when they plan to take their extended vacation.

The day before departure, the salespeople inform you that they left early and have already left the house.

A prospect has reached out to you wanting to see the house as soon as possible, so you contact them and let them know that you can now show them the house this afternoon, the day before you told MLS that it would be open for display.

Verdict: You have violated the Realtor’s Code of Ethics.

In accordance with the Realtors’ Code of Ethics, realtors are required to cooperate with other brokers if this is not in the interests of their clients.

By showing a home the day before publicly declaring when it will be viewable, you distort the availability of the property and violate their obligation to share property information and make it available to other brokers.

Scenario 8

You are in a dry season and you can indeed use a few new holds. You remember the old lead list that was in your database even before you started texting through CRM, and you think, “Bingo! Why didn’t I send these messages earlier? ”

You add their cell numbers to your text campaign plan and wait for those leads to warm up.

Verdict: You just did something illegal and was sued.

According to Federal Communications Commission (FCC) Regulationsconsumers must give their consent to receive marketing communications. Just because someone previously agreed to receive messages from you does not mean that they now want to start receiving new text messages from you.

“This is a serious ban,” Robbie Trefetren, an internal sales instructor (ISA) at Hatch Coaching, told Inman. “You are subject to serious legal and financial liability, and I do not recommend anyone to do this.”

Scenario 9

Your client is interested in the property and has viewed the listing several times, but would really like to be able to get a video tour of the house before deciding whether to go see it in person.

The only problem is there is no video in the listing or virtual tour at home with him. You tell your clients that there is no problem, you can follow them to the hotel and shoot some videos on your iPhone while you are there to transfer to them.

Verdict: You made yourself vulnerable to a lawsuit.

By recording video footage of a house without the seller’s consent, you give them the opportunity to take legal action against you.

Of course, it’s possible that the listing agent simply didn’t have the technology or know-how to create a video tour of the home, but it’s also possible that sellers were reluctant to post videos of their home online. Without asking, you have no way of knowing.

Scenario 10

Some friends of one of your current clients turn to you because they are unhappy with their current realtor, to whom they say, “He’s just not doing his job.”

Since you are responsible and kind and want your clients to see that you are ready to help their friends, you tell them that you would be happy to help and regret that their current realtor does not do his job properly.

Verdict: You have just violated Article 16 of the Code of Ethics for Realtors.

If the client already has a representation agreement with another realtor, you are in breach of Article 16 by agreeing to work with him until the expiration of their existing contract with another realtor.

However, it is okay to discuss with someone like this who is reaching out to you what you could do to help them after their existing contract expires.

“If they contact me, I can absolutely talk about what I will do for them after their contract expires,” Betts told the aforementioned Realtors conference 2020… “You cannot speak right now. You cannot tell them that their realtor is not doing his job. “

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