Any English majors who are reading this are leaping to their feet and yelling “oxymoron!” (the combining of incongruous or contradictory terms). A favorite example when I was in school was “military intelligence”. Many people would add “real estate ethics” to the top of their oxymoron list. But believe it or not, real estate agents are ruled by ethical guidelines. Whether or not we follow these rules is another matter.
Anyone who has a license to sell real estate in California is regulated by the Department of Real Estate (DRE). But just because you hold a license does not mean you are a Realtor®. This title denotes membership in the California and National Associations of Realtors®. Membership in these associations means that you are bound by their rules as well as all DRE regulations.
So exactly what kinds of rules are we talking about? The most basic deals with who is required to be licensed. You do not need a license to buy or sell your own property. But the moment you perform any real estate act for another for compensation (property management, holding open houses, etc.) a license is required. And not just any license…you must either have a broker’s license or have a salesperson’s license and work for a broker.
Once a client-agent relationship is formed, that agent owes his client an obligation of absolute fidelity to the client’s interests. This includes the obligation to provide the client with material facts in order to make informed decisions about the sale or purchase of a home.
One example of this rule which has been very much in the industry news of late concerns “pocket listings”. When a broker takes a listing, the owner can chose to not have the home listed in the Multiple Listing Service. If she chooses, the owner can go a step further and allow only that broker to sell the home. No other broker will be allowed to show or sell the property.
If the broker gets the correct signatures from the client on the appropriate forms, this is legal. But in my opinion, it is rarely in the best interests of the client, because this type of listing, which limits the marketing and competition for the home, seldom brings the seller the highest and best offer on her property. This places the broker at odds with his fiduciary duty, the most basic obligation a broker has to his client.
As a real estate consumer, you have the right to demand that your representative not only have the legal qualifications to represent you, but the ethics to represent your best interests.