Ethics are extremely important not only in business, but in life. On all real estate contracts, both agents and clients need to sign a disclosure form that outlines how the agent has a “fiduciary duty of utmost care, integrity, honesty, and loyalty in dealings.” In California, for example, this form is called the “Disclosure Regarding Relationships,” or California Association of Realtors® Form AD, as mandated by state real estate regulations and procedures. The reason I quote this form is because, unfortunately, some real estate professionals only think about themselves and what is best for them and their paycheck. This lack of real estate ethics is what gives agents and the industry a bad name, sometimes deservedly so. To ensure that I am putting my clients’ interests first—and living up to my “fiduciary duty of utmost care, integrity, honesty, and loyalty in dealings”—there are a few basic real estate ethics rules I use every single day on the job.
Use the following rules to improve your own real estate practice and reputation. Plus, sign up for McKissock’s Unlimited Learning Pass to access our 1-hour webinar, Crossing Ethical Boundaries: Stories of Real Estate Situations Gone Awry.
1. Establish strong communication
Every single time I am about to show a property for my buyer(s), I call the listing agent. One of my questions is, “Are there other offers on the property?” I ask this so I know what to tell my buyers. It is very important from the first time you meet your clients to take them through the process of buying or selling a house in general and the details of the house you are showing in particular. Communication is one of the most important things, along with honesty and integrity.
2. Don’t take an overpriced listing
Taking an overpriced listing has benefits to you as the agent, but it is a disservice to your seller. Sellers often believe their home is worth more than the market justifies. An explanation needs to be given as to why the home is overpriced, supported by comparative market analysis and actual recent sales, if any.
3. Show all available properties, regardless of commission
A property with less than “standard commission” is often viewed as not worth the agent’s time. However, not showing homes to a client because it is less than standard commission can be seen as acting in the interests of yourself instead of the client.
4. Don’t push clients toward a particular geographical area
Steering clients toward a certain neighborhood—or away from another—is not legal in California. Find out if this is the case in your state. If so, a clear effort must be made to avoid this immoral and illegal practice.
5. Don’t burn bridges with other agents
If you dislike a real estate broker/agent, it is still necessary to show their property. And that individual, in turn, must show yours. One thing that I like to say to my agents in the office is that it is important to not burn bridges with other professionals in the field. You clients never win in such cases. There is no point to having a disagreement and never doing business with another agent. If your clients decide that they want to buy a house or sell their house through another agent, you need to be gracious and accept their decision.
Ethical business practices will help you better serve your clients, improve your reputation, and bring in repeat and referral business. Follow these five real estate ethics rules to maintain or improve the ethical integrity of your real estate business on a daily basis.
Want to learn more about real estate ethics? Check out our 1-hour webinar, Crossing Ethical Boundaries: Stories of Real Estate Situations Gone Awry. To access this recorded webinar, as well as hundreds of other videos, webinars, and job aids, sign up for our Unlimited Learning Pass.
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About the author
David Ranish is the Broker/Owner of Coastline Real Estate Group in Laguna Beach, California. He is also an adjunct instructor at a California community college, where he teaches business and real estate courses.