Case #1-12: Presentation of Subsequent Offers After an Offer to Purchase Had Been Accepted by the Seller

258_29[1]_gifNAR

The Code of Ethics of the National Associate of Realtors® (NAR) establishes a public and professional consensus against which the practice and conduct of Realtors and Realtor-Associates may be judged.

Each month we will provide Case Interpretations directly from NAR®. The case interpretations offer examples of the practical application of the Code in professional standards enforcement and help Realtors understand the ethical obligations created by the Code of Ethics.

Case #1-12: Presentation of Subsequent Offers After an Offer to Purchase Had Been Accepted by the Seller

(Adopted November, 1987 as Case #7-16. Transferred to Article 1 November, 1994.)

REALTOR® A, the listing broker, presented an offer to purchase to his client, Seller X, which was $20,000 less than the property’s listed price. The property had been on the market for several months and had not generated much interest. In his presentation, REALTOR® A told Seller X that, in his opinion, the offer was a good one and Seller X should consider accepting it. “With interest rates on their way up again,” said REALTOR® A, “properties are just not moving the way they did six months ago.” Seller X decided to accept the offer and the transaction closed. Several months after the sale, Seller X filed a complaint against REALTOR® A alleging a violation of Article 1, as interpreted by Standard of Practice 1-7. It had come to Seller X’s attention that a second offer had been made on the property after Seller X had accepted the first offer but prior to closing. This second offer, alleged Seller X, had not been submitted to him by REALTOR® A and was for $2,500 more than the first offer. Seller X’s complaint stated that by not presenting the second offer to him, REALTOR® A had not acted in his (the seller’s) best interest, as required by Article 1.

At the hearing, REALTOR® A produced a copy of the listing contract, which contained a provision reading: “Seller agrees that Broker’s responsibility to present offers to purchase to Seller for his consideration terminates with Seller’s acceptance of an offer.” REALTOR® A told the Hearing Panel that he had explained this provision to Seller X at the listing presentation and that Seller X had agreed to it, as indicated by Seller X’s signature on the listing contract.

Seller X admitted that he had understood and agreed to the provision at the time he listed the property, but he felt that REALTOR® A should have advised him of the second, higher offer nonetheless.

The Hearing Panel found REALTOR® A not in violation of Article 1. In their decision, the panel noted that REALTOR® A had explained the contract provision relieving him of the obligation to submit subsequent offers to Seller X; that Seller X had agreed to the provision and had signed the listing contract; and that, while it was unfortunate that Seller X had received less than full price for the property, REALTOR® A had fulfilled his obligations under the listing contract once the first offer to purchase had been accepted by Seller X.

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The Power of Social Media Marketing

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The Power of Social Media Marketing

The ultimate goal of utilizing social media for business is to create your brand. Do you know what your online brand looks like? Are you taking control of it or leaving it to chance? Before you launch a social media campaign, you need to know what your goal is. Without a firm plan in mind, you’re almost certainly setting yourself up for failure. It’s important to identify not only what you want to accomplish, but also the audience you’re targeting and how you want to connect with them. Our course “The Power of Social Media Marketing” can help you answer these questions and more.

The course is NOT about the technical details of how to use social media. The material is concentrated on WHY you should use the free platforms available to locate and expand your market. We investigate the technology available to be used to leverage your voice, connect, and create relationships. It’s all about the fundamental shift of how people are communicating – the way this affects how and what and when they buy. 

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Case #1-10: Obligations Under Exclusive Listing

258_29[1]_gifNAR

The Code of Ethics of the National Associate of Realtors® (NAR) establishes a public and professional consensus against which the practice and conduct of Realtors and Realtor-Associates may be judged.

Each month we will provide Case Interpretations directly from NAR®. The case interpretations offer examples of the practical application of the Code in professional standards enforcement and help Realtors understand the ethical obligations created by the Code of Ethics.

Case #1-10: Obligations Under Exclusive Listing

(Originally Case #7-12. Reaffirmed May, 1988. Transferred to Article 1 November, 1994. Revised November, 2001.)

At the time Client A signed an exclusive listing agreement with REALTOR® B, they discussed market conditions and prevailing prices, and agreed on listing at $156,900. After six weeks with no apparent interest in the house, Client A called REALTOR® B to learn why his property was receiving scant attention from prospective buyers. REALTOR® B said, “It’s not hard to diagnose the trouble. Your property is overpriced. That was clear to me by the time we had it listed for ten days. In this market, it would take a really interested buyer to go as high as $149,000 for it. That’s why it hasn’t been possible for us to push it.” “When you reached that conclusion, why didn’t you tell me?” asked Client A. “Because,” said REALTOR® B, “it wouldn’t have done any good. I know from experience that sellers can’t be convinced that they are overpricing their property until they get tired of waiting for an offer that will never come. Now that the market has taught you something that you would not take as advice, let’s reduce the price to $148,900 and push it.”

Client A complained about REALTOR® B to the Board of REALTORS®, detailing these circumstances, strongly insisting that REALTOR® B had fully agreed with him on the price at which the property was originally listed.

Client A reiterated this point strongly at the hearing of his complaint which was held before a Hearing Panel of the Board’s Professional Standards Committee. REALTOR® B did not contest this, taking the position that at the time of the listing it was his judgment that a price of $156,900 was fair and obtainable in the market. He stated that a strong immediate sales effort had convinced him that the listed price was excessive, and he defended his action of reducing his sales effort as he had done in his discussion with the client. He said that many years of experience as a broker had convinced him that once a seller decides on a definite price for his property, no argument or analysis will shake his insistence on getting that price; that only inaction in the market is convincing to the sellers.

The Hearing Panel concluded that REALTOR® B’s conduct had violated Article 1 of the Code of Ethics, which requires REALTORS® to protect and promote their clients’ interests. The panel also found that since REALTOR® B honestly felt the original listing price of $156,900 was the fair market value at the time he listed it, REALTOR® B had not violated the Code of Ethics by suggesting that the price be lowered. However, since REALTOR® B later concluded the property was overpriced, he should have immediately notified Client A of his conclusion and not waited for Client A to call him six weeks later.

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Case #1-9: Exclusive Listing During Term of Open Listing

258_29[1]_gifThe Code of Ethics of the National Associate of Realtors® (NAR) establishes a public and professional consensus against which the practice and conduct of Realtors and Realtor-Associates may be judged.

Each month we will provide Case Interpretations directly from NAR®. The case interpretations offer examples of the practical application of the Code in professional standards enforcement and help Realtors understand the ethical obligations created by the Code of Ethics.

Case #1-9: Exclusive Listing During Term of Open Listing

(Originally Case #7-11. Revised May, 1988. Transferred to Article 1 November, 1994. Revised November, 2001.)

During a Board of REALTORS® luncheon, REALTOR® A described to those at the table an old house in a commercial area which was open listed with him and invited the others to cooperate with him in selling the property. REALTORS® X and Y said they also had the property open listed but had found very little interest in it. REALTOR® B made no comment, but feeling he could find a buyer for it, went to the owner and discussed the advantages of an exclusive listing. The owner was persuaded and signed an exclusive listing agreement with REALTOR® B, telling him at the time that he had listed the property on an “open” basis for 30 more days with REALTORS® A, X, and Y. REALTOR® B’s comment was, “Just don’t renew those open listings when they expire.”

A few days later, REALTOR® A brought the owner a signed offer to purchase the property at the asking price. The owner told REALTOR® A that he now had the property exclusively listed with REALTOR® B, and asked him to submit the offer through REALTOR® B. Before REALTOR® A could contact REALTOR® B, REALTOR® B had taken another offer to purchase the property at the asking price to the owner. Confronted with two identical offers, the owner found both REALTOR® A and REALTOR® B expected full commissions for performance under their respective existing listing agreements. The owner filed an ethics complaint with the Board of REALTORS® alleging violations of Article 1 of the Code of Ethics because of the difficult position he had been placed in by REALTOR® A and REALTOR® B. The owner alleged neither of them had warned him that he might be liable for payment of more than one commission.

A hearing before a panel of the Board’s Professional Standards Committee established the facts to be as outlined above. In reviewing the actions of REALTOR® A, the Hearing Panel found that he was not at fault; that he had performed as requested under his listing agreement. On the other hand, it was the conclusion of the Hearing Panel that REALTOR® B had violated Article 1 by failing to advise the owner of his potential commission obligation to the other listing brokers when the client told him other listing agreements were in force.

The Hearing Panel pointed out that because of REALTOR® B’s omission his client, through no fault of his own, may have incurred legal liability to pay two commissions; that REALTOR® B should have advised the owner of his potential liability for multiple commissions; and that by not doing so REALTOR® B had failed to protect his client’s interests as required by Article 1.

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Case #1-8: Knowledge of Essential Facts

258_29[1]_gifThe Code of Ethics of the National Associate of Realtors® (NAR) establishes a public and professional consensus against which the practice and conduct of Realtors and Realtor-Associates may be judged.

Each month we will provide Case Interpretations directly from NAR®. The case interpretations offer examples of the practical application of the Code in professional standards enforcement and help Realtors understand the ethical obligations created by the Code of Ethics.

Case #1-8: Knowledge of Essential Facts

(Originally Case #7-10. Reaffirmed May, 1988. Transferred to Article 1 November, 1994.)

Client A listed a small house with REALTOR® B who obtained an offer to buy it and a deposit in the form of a check for $2,000. Client A agreed to accept the offer, then heard nothing from REALTOR® B, the listing broker, for three weeks. At that time REALTOR® B called him to say that the sale had fallen through and that the buyer’s check had been returned by the bank marked “Not Sufficient Funds.”

Client A complained to the local Board of REALTORS® against REALTOR® B charging him with dilatory and unprofessional conduct and apparent unfamiliarity with essential facts under laws governing procedures in real estate transactions.

At the hearing, it was established that two days after making the offer the buyer had refused to sign escrow instructions, and that REALTOR® B had not deposited the buyer’s check until ten days after receiving it.

REALTOR® B’s defense was that since the return of the check he had received numerous promises from the buyer that it would be made good, and that the buyer’s reason for refusing to sign escrow instructions was to give the buyer’s attorney time to read them. Questioning during the hearing established that the check had not been made good, the escrow instructions had not been signed, and that the delay had caused great inconvenience and possible loss to Client A.

The Hearing Panel concluded that REALTOR® B should have deposited the check immediately, in which event it would either have been accepted, or its NSF status could have been known and reported to the client at once; that REALTOR® B should have advised his client immediately of the buyer’s refusal to sign escrow instructions; that in this negligence REALTOR® B reflected a lack of adequate knowledge of essential facts under laws governing real estate transactions, and was in violation of Article 1 of the Code of Ethics, having failed to protect the client’s interests.

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Valuation, Marketing, and Listings

316_18[1]_gifOur course Valuation, Marketing, and Listings is a comprehensive outline on obtaining and managing listings, determining value through a comparative market analysis, pricing, negotiating offers and determining the strongest offer for a seller. The student will learn about market conditions and how they affect pricing, financing and marketability and environmental conditions. Finally, tips on the successful closing of a transaction and how to avoid pitfalls are addressed.

Currently Available in CT, GA, KY, OR, RI and TX. Coming soon in many other states.

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