Legal Issues and Ethics
A unique set of ethics goes along with conducting business in the real estate industry. A solid relationship with colleagues, clients, and affiliates are all important aspects of a successful business. Handshakes and trust have made real estate what it is today but in today’s society other legal issues can arise. As a real estate professional, you are depended upon to provide fair and honest service to clients, always having the client’s best interest at heart. When you went through the licensing process to become a realtor, you took an oath to be truthful, forthcoming and honest in all of your business dealings. Ethics should be your guide as you practice real estate.
The code of ethics was originally established in 1913 by the National Association of Realtors with updates made over the years. Not only does the National Association of Realtors have a code of ethics in which to operate by but additionally each state association of realtors also has a code of ethics that they expect licensees to follow and uphold. Clients, customers, and the public all depend on a realtor to be fair in business dealings and avoid any misrepresentation. To this end, professional service shall be given no matter what the situation. Being ethical doesn’t just go as far as the client but also within the real estate community. Among your peer group it is important to be fair in all of your business dealings.
When the public is searching for a realtor, they look for those established in the community as well as one that holds a high ethical standard. A realtor’s job is to both promote and protect their client’s best interest. Obviously, a realtor doesn’t just have a duty to a client but also other parties that are involved in the transaction. A main component of being ethical in the real estate business is not to be misleading. This can translate into, not being deceptive about the market value of a property or providing misleading information about a client. In the case of a realtor representing both sides of a transaction then full disclosure and informed consent must be provided.
Realtors must also handle correspondence regarding an offer in a timely manner, and furthermore all offers as well as counter-offers must be presented and not withheld from the buyer or seller. Clients trust realtors with confidential information. Information shared can come in the form of the amount of money that they can afford to spend to purchase a home or the bottom line that they can sell a home for, therefore as a realtor all such information shall be kept confidential.
Misrepresentation is also a key component of ethical business practices. A realtor shall not misrepresent a property or parties of the transaction. As a realtor, you should always disclose that you are a realtor and not misrepresent your interest in a transaction.
Legal issues also abound in the field of real estate. As a realtor, it is your job to try and eliminate potential legal pitfalls. Despite the National Association of Realtors Legal Affairs reporting that in a high percentage of lawsuit cases the licensee is found not liable, it is important to try and avoid the common legal pitfalls that are seen in the industry. Below are the most common types of legal pitfalls:
- Fair housing
- Misleading or false advertising
- Fiduciary duty breach or agency issues
- Environmental issues
- Americans with Disabilities Act
- RESPA violations
A major life event is represented in the purchase or sale of a home, and it can be extremely stressful to both the buyer and seller. Clients look to real estate professionals to be fair and honest in the way that they conduct business and lead the real estate transaction in an ethical manner. Your daily professional life as a realtor depends on ethical business practices and avoiding potential legal pitfalls.