ethics in todays world2
TRANSCRIPT
Know the Code:
Real Estate Ethics By Doris Barrell, GRI, DREI
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T: (908) 415-6138 400 West Main Street, Freehold, NJ
07728
Email: [email protected]
www.mulroyschoolofrealestate.com
ETHICS IN TODAY’S WORLD
Ethics: Doing What is Right This text will prepare you for future ethical dilemmas.
“Real integrity is doing the right thing, knowing that no one’s going to know whether you did it or not.” Oprah Winfrey
Ethics, Morality & the Law Ethics vs. Morals
Ethics are rules set down by man / Morals come from a higher being.
Right vs. Wrong / Good vs. Bad
Situational Ethics – behavior determined by circumstances.
Albert Schweitzer “Reverence for life” – the name we give for our concern for good behavior. Ethics vs. Law – Law draws a firm black and white line between right and
wrong.
Ethics tend to come in shades of gray. Stealing is wrong. Stealing a loaf of bread to feed your family is an ethical dilemma.
Does a sense of ethics or morality come naturally? Must it be learned? Mark Twain: “Morals are acquired – no one is born with them.”
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ETHICS IN TODAY’S WORLD
Ethics and the Boardroom: The American public is highly suspicious of big business – Enron, WorldCom, etc.
Corporate Scandals: Where do the Wall Street fines go? Case Study #1 – The mighty have fallen
Should family members be personally responsible for corporate debt?
What responsibility does the auditor have?
Who else should share the responsibility?
Why is Mr. X still loved by town?
Corporate Code of Ethics: Guidelines for ethical business operations Laws: LIC – disclosure – cis, lead paint, environmental issues
Rules and Procedures: Escrows – mls – lockboxes – client representation – policy manual
Values and Conscience: Come from Broker – (giving listing fee to expired broker)
Promises: “under promise and over deliver”
Heroes: Are you a hero to your client? Who do you respect?
Professional Associations & Companies: Does your company want to follow these guidelines or is the marketplace “a place set apart where we may deceive one another” There are seven professional organizations on page 6 including NAR
Ethics & the Classroom Mark Twain, “it is noble to be good – nobler to teach others to be good.” Every salesperson
should take this course.
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ETHICS IN TODAY’S WORLD
Case Study # 2 – The duo of deceit, “everybody does it.” Don’t let
success inflate your ego.
Does wealth lead to unethical behavior?
Are students more or less apt to listen to felons?
Why were the couple convicted? (fraud – tax evasion)
Does John Q’s teaching imply forgiveness or condoning bad behavior?
Cheating: Have you ever downloaded information for a term
paper?
Passing a student because parents are contributors?
Ethics and the locker room
Steroids
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ETHICS IN TODAY’S WORLD
Case Study # 3 – Is winning everything?
If a school is going bankrupt -- should it lower its academic
standards?
Would it be right for the broker to provide – laptop – PDAs –
cameras – cell phones for new agents?
Would other agents have the right to complain?
Will everyone benefit?
What would be a better way to achieve results?
Outlook: a published code of ethics is a good start –
reading about ethics will not make you do the right thing.
Conclusion: time devoted to honest discussion of ethical
principals can make a difference – mandating continuing
education will help.
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ETHICS AND THE REAL ESTATE PROFESSIONAL
Realtors come from other fields: business world (ATT/Lucent), teachers, nurses, retirees, sales. Lessons learned from past experience will be carried into real estate.
The Need for Ethical Behavior Your home is your greatest financial asset
Code of standards is required – broker – appraiser – lender – closing agent – because it represents the hopes and dreams of a better way of life and status in the community
Professional Associations National Association of Realtors – Code of Ethics
Appraisal Institute Code of Professional Ethics & Standards of Professional Appraisal Practice
Mortgage Brokers Association Canons of Ethics
Primary goal of these associations is to increase public’s awareness of the values and integrity that can be expected from dealing with these professionals.
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ETHICS AND THE REAL ESTATE PROFESSIONAL
State Regulators A real estate license is required in all 50 states and Canada
Membership in state and national associations is voluntary. However, once a member – mandate is required (in most states) to take 2.5 hours of ethics training.
Arello: association of real estate license law officials promotes uniform standards for administering and enforcing state license laws – including ethics.
Customer & Client Relationships National Association of Realtors formed in 1908 – first code: 1913.
1924 pledging to subscribe to the code became requirement of membership. Applied to approximately 1,000,000 members today.
The code makes “who do you represent” very clear. Late 1980s legislation required disclosure of agency.
1990s – buyer agency became law – “client/customer.” Do you know the difference?
“Payment of commission can be buyer, seller, LL, tenant, but not both in a dual agency
“Conflicts of Interest” (Dual Agency)
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ETHICS AND THE REAL ESTATE PROFESSIONAL
Agency Issues for Residential Agents Client = agency relationship. Must be in writing to be enforced. Other
party is customer.
The Agreement List & B.A. contracts are an agreement between a broker and client
(buyer-seller-LL-tenant)
Conflicts may arise when two agents from same office have offers on a company listing
Designated Agent: when selling a company listing – one agent represents buyer / one represents seller – broker = dual
Dual Agent: Sell your own listing: “limited dual” / or sell a company listing.
Disclosure
Understanding Ethical Dilemmas through Case Studies Part 1: residential agents
Case Study #1 – multiple clients Should you call (follow-up) with an interested client when you have an offer on a
property you have showed to her?
For discussion: 1-8, page 16
(Answer case study questions: page 16) 8
ETHICS AND THE REAL ESTATE PROFESSIONAL
Case Study #2 – For sale by owner
Should we make clear who is going to pay our commission?
(Answer case study questions page 17)
Case Study #3 – Selling your own listing
When selling your own listing – should you always be a dual agent?
(Answer case study questions page 18)
Case Study #4 – Megan’s Law
Should we reveal what we know even if it will jeopardize our client’s
interests?
(Answer case study questions page 19)
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ETHICS AND THE REAL ESTATE PROFESSIONAL
PART II
Other real estate specialties
Commercial Real Estate Agents
SIOR – Society of Industrial & Office Realtors
CCIM – Certified Commercial Investment Member
CRE – Counselors of Real Estate
RLI – Realtors Land Institute
IREM – Institute of Real Estate Management
Code of Professional Ethics of CPM
Code of Professional Ethics of Accredited Management Organization
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ETHICS AND THE REAL ESTATE PROFESSIONAL
Case Study #5 – How much must I say?
Whose interest comes first?
Property Managers and Leasing Agents
Property managers who negotiate leases and receive commissions –
must be licensed
In multiple leases financial qualifications come first
“Everyone’s green”
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ETHICS AND THE REAL ESTATE PROFESSIONAL
Case Study #6 – The get-out-of-lease card
Whose interest is served if you let her out of the lease?
Case Study #7 – Illegal or unethical? Or both?
Can you – tie a lease to a buy arrangement?
Real Estate Appraisers
Society of Real Estate Appraisers & American Institute of
Real Estate Appraisers share a common goal to elevate
the profession by establishing high standards – by making
business practice and ethics a required course in
continuing education – carried out by appraisal institute in
an area where they are doing an appraisal – cannot
appraise your own listing. “value check.” Realtors who are
also appraisers should not list property they have prepared
an appraisal for. 12
ETHICS AND THE REAL ESTATE PROFESSIONAL
Case Study #8 – Is it worth it? Should we be totally objective?
Home inspectors The American Society of Home Inspectors (ASH) has its own code of
ethics
Be careful – recommend three
Case Study #9 – Take it or leave it This is a dilemma
Settlement Agents “neutral person” Title must reveal their interest
Lenders The Mortgage Bankers Association and the American Association of
Mortgage Brokers have a code of ethics
RESPA / Reg Z (Apr)
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ETHICS AND THE REAL ESTATE PROFESSIONAL
Case Study #10 – Up to the limit If you are starting out – should you maximize the loan to reach the
full potential of future growth?
Global Real Estate Practitioners In Norway the Supreme Court ruled that anti-discrimination laws do
not cover real estate agents who sell private property.
Conclusion Ethics is recognized by state regulators and professional
organizations.
Many ethical dilemmas revolve around agency and the responsibility
of the agent to clients and customers.
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NATIONAL ASSOCIATION OF REALTORS – CODE OF ETHICS
Introduction: 2.5 mandatory hours – how many of you have viewed the DVD?
From the beginning: 1913 – 1st code – mandatory 1924
“Under all is the land,” page 74 preamble
A living document: edited every year (NAR Professional Standards Committee), (SOP) Standards of Practice created to clarify intent of article
NAR strongly encourages mediation in lieu of arbitration
Required ethics training (every article is designed to better serve the public - members of local/state/national NAR must take 2.5 hours of ethics every four years. Available online – final exam 75%
Enforcement of Code: local level: hearing panels of Professional Standards Committee – guidelines: NAR code of ethics and arbitration manual (NAR)
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NATIONAL ASSOCIATION OF REALTORS – CODE OF ETHICS
The NAR Code of Ethics Original (1913) code contained 22 articles. 1970s 5 articles
moved to preamble. 17 were grouped into 3 categories (1) duties to clients & customers (2) duties to public (3) duties to realtors
The Preamble: model for professional behavior (read page 74)
Realtors are challenged to: Maintain and improve standards of their calling
Share responsibility for integrity and honor
Strive to remain informed on issues affecting real estate
Share experience and study with others
Assist regulatory bodies – to eliminate practices that damage public or discredit or dishonor the profession
Inform board or association of conduct involving misappropriation of funds or property – discrimination – fraud.
Urge exclusive representation of clients
Avoid attempting to gain unfair advantage over competitors
Refrain from making unsolicited comments about other practitioners
Offer objective opinions not influenced by personal motivation or gain
Follow the Golden Rule
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Duties to Clients/Customers (article 1-9) Article 1: protecting the client / treat all parties honestly
SOP 1-2
Client: agency relationship or legal non-agency Customer: non-contractual relationship
Agent: license (s.p. – broker)
Other SOP: prohibit misleading owner regarding market value or buyers as to perceived benefits if using a specific realtor
How long realtor must continue to present offers (closing), unless seller objects
How long info must remain confidential / continues after termination of agency – latent defect is not confidential info
1-10 manage property with due regard for rights – safety and health of tenants
1-11 protect against foreseeable contingencies and losses
1-12 listing: advise LL or seller: com splits (2.5/2.5)
Buyer agent represents buyer not seller
Disclosed dual agency conflict or interest
1-13 appraisers fees shall not be based upon amount of value
1-15 disclose offers with sellers approval and if offer is in list office.
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NATIONAL ASSOCIATION OF REALTORS – CODE OF ETHICS
Article 2 – disclosure – avoid exaggeration – misrepresentation or concealment of pertinent facts. We are not obligated to discover latent defects.
Article 3 – cooperation Realtors shall cooperate with other brokers except when cooperation is
not in clients best interest. (multiple offers)
Cooperation does not include obligation to share commission.
3-1 cooperating broker shall ascertain compensation before acceptance of offer to cooperate.
3-2 changes in cooperation shall be communicated prior to offer
3-3 broker can agree to change compensation
3-4 disclosure of different splits “affirmative obligation”
3-5 licensees are obligated to disclose all pertinent facts
3-6 List broker shall disclose existence of accepted offers including offers with unresolved contingencies
3-7 realtors shall disclose status and personal interest
3-8 realtors shall not misrepresent availability or access to show or inspect a listed property
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NATIONAL ASSOCIATION OF REALTORS – CODE OF ETHICS
Article 4 & 5 personal interest / buy or sell
Article 6 No Kickbacks No commission – rebate – profit may be accepted without
clients knowledge and consent (respa) service must be rendered – referred (mort) home warranty. 1 stop brokerage.
Articles 7 & 8 Commissions & Escrow (7) informed written consent (disclosure) for dual
compensation
(8) trust account must be separated from business account
Article 9 get it in writing /if it’s not in writing it doesn’t count Extensions on mortgage commitment – list agreement copies
to client immediately.
SOP 9-1 Written extensions
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NATIONAL ASSOCIATION OF REALTORS – CODE OF ETHICS
Duties to the Public (articles 10-14)
Article 10: discrimination “equal opportunity in housing” Reiterates fed state and local laws: race, color, religion,
nationality or gender – handicap – familial status marital status
Fed laws do not apply to commercial – state law applies to all real estate
SOP 10-1 realtors shall not volunteer information regarding race / religion
Ethnic composition of any neighborhood – engage in panic selling
10-2 demographic info is ok
10-31 cannot advertise – preference or limitations “no Irish”
10-4 applies to employees & independent contractors
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NATIONAL ASSOCIATION OF REALTORS – CODE OF ETHICS
Article 11: area of expertise: don’t try to handle properties beyond your expertise (shopping center) SOP 11-1 sets info details for buyers & sellers re: value
11-2 sets fiduciary obligations
11-3 fee – not a commission for consultation (“objective”)
11-4 competency is required
Article 12: advertising: “true picture in ads” SOP 12-1 May use “free”
12-2 “free” to buyers when compensation comes from seller
SOP 12-3 It is not unethical to offer free services however it is against license law to make free offering “contingent” on list or purchase.
12-4 cannot adv property without authority
Cannot quote a different price in an add
12/5 name of firm should be in ad
12/6 ownership interest in unlisted property advertised must mention ad “you are a realtor / licensed”
12/7 List broker should agree to let sell broker (under contract) place a sign on property.
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NATIONAL ASSOCIATION OF REALTORS – CODE OF ETHICS
Article 13: Don’t practice law – recommend legal counsel when necessary
Article 14: code enforcement Realtors are obligated to cooperate with board or association when
charged with unethical practice
SOP 14-1 can only be subject to disciplinary proceeding in 1 board for same offense
14-2 shall not make unauthorized disclosure of findings
14-3 shall not obstruct proceedings by instituting or threatening to institute actions for libel-slander etc 14-4 shall not file multiple complaints for the same event
Article 15: competitors – do not make false or misleading statements about competitors SOP 15-1 Shall not file false or unfounded ethics complaints
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NATIONAL ASSOCIATION OF REALTORS – CODE OF ETHICS
Article 16 – representation Shall not engage in any practice or take any action inconsistent with
exclusive representation or exclusive brokerage relationship agreements that other realtors have with clients.
SOP
16-1 not intended to prohibit ethical innovative business practices
16-2 general announcements – tel – marketing – mailing etc ok
16-3 calling another broker’s client to offer different services (prop manager) is ok
16-4 cannot solicit a listed property however if list broker does not reveal ex. date or type of listing it is ok to call seller.
16-5 ditto for buyer agency
16-6 realtor who did not initiate call may discuss listing
16-7 realtors can prospect for future business
16-8 realtors can prospect expired listings
16-9 realtors should make sure buyer/seller does not have obligation on a prior agency
16-10 disclosure of agency (buyer/sellers agent – must be made prior to contract
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NATIONAL ASSOCIATION OF REALTORS – CODE OF ETHICS
Article 16, cont’d 16-11 written disclosure to unlisted property owners upon
first contact
16-12 written disclosure to buyers / sellers of agency with seller /(cis) must be presented at contract
16-13 all dealings shall be between buy or sell agent
16-14 informed consent for dual compensation
16-15 compensation from your broker only
16-16 shall not offer to change compensation with offer
16-17 shall not extend listing broker compensation to other brokers
16-18 shall not refer listing brokers clients to other realtors
16-19 signs placed on property only with seller / LL consent
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NATIONAL ASSOCIATION OF REALTORS – CODE OF ETHICS
Article 17: arbitration – mandates resolution of money disputes through arbitration not litigation Procuring clause
17-1 filing of litigation = refusal to arbitrate
17-2 not required to arbitrate if all parties agree
17-3 realtors who are principles do not have to arbitrate
17-4 listing broker may not have to be involved
Mediation – all boards offer mediation as a way to resolve disputes Mediation may result in both brokers receiving a part of the
commission,
Arbitration results in procuring cause receiving all the money.
Pathways to Professionalism
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NATIONAL ASSOCIATION OF REALTORS – CODE OF ETHICS
ENFORCEMENT OF THE NAR CODE OF ETHICS
Introduction: NAR Code of Ethics handled local / sometimes state level by grievance and professional standards committees.
NAR provides policies and procedures in NAR Code of Ethics and arbitration manual / purpose is to ensure due process for all parties.
Due Process: Rights Include: Right to know nature of complaint / arbitration in advance
Opportunity to prepare defense.
Right to call witnesses
Right to present evidence
Right to cross-examine
Right to have legal counsel
Right to have panel of impartial peers.
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Role of the Grievance Committee Complaints can come from realtors or general public
SOP can be cited as evidence
Grievance committee reviews and may dismiss or forward to professional standards hearing panel.
In a request for arbitration – complaint goes to arbitration hearing panel.
Professional Standards Hearing Panel Members chosen based on experience and ability to provide unbiased
and objective resolution.
Hearing panel made up of uneven number selected from professional standards committee
Both parties given opportunity to present their side and may bring legal or realtor counsel. Standards of proof: clear, strong and convincing evidence. Decision may be appealed to local board of directors.
Recommended Sanctions
No specific sanction or discipline is mandated.
However recommended sanctions can be found in the Code of Ethics and arbitration manual.
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ENFORCEMENT OF THE NAR CODE OF ETHICS
Professional Standards Hearing Panel, cont’d Sanction imposed may be influenced by past track record of
ethics:
Letter of Warning in member file
Letter of reprimand to member file
Requirement to attend ethics portion of board indoctrination course:
Or other appropriate ethics course
Appropriate and reasonable fine up to $5,000
Probation 30 days – 1 year
Suspension 30 days – 1 year
Expulsion 1- 3 years
Suspension of MLS rights 30 days – 1 year
Termination of MLS rights 30 days – 1 year
Processing fees up to $500
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ENFORCEMENT OF THE NAR CODE OF ETHICS
Arbitration Hearing Panel
Article 17 – requires members to resolve financial disputes through arbitration rather than court.
Based on C of E arbitration manual panel will determine which of the 2 parties was the procuring cause. Proof is preponderance of the evidence – decision is not subject to appeal.
NAR case interpretations:
Case #1-28 (article 1 Case #28) (violation of 1-15 to reveal all offers).
Case #2-7 (article 2 case 7) (you are committed to avoid misrepresentation)
Case #3-7 (article 2 duty to cooperate) timely communicate (no violation)
Case #11-4 Disclosure of Limited Appraisal Experience
No violation a client was aware of realtors lack of experience
Case # 16-18 Assumed consent for direct contact. Violation of Article 16
“realtors shall not engage in any practice or take any action inconsistent with exclusive representation.
Case #17-1 Obligation to submit to arbitration. Violation – board of realtors is a voluntary members accept binding arbitration.
Conclusion: We are obligated to support the code of ethics and bring unethical behavior to the attention of the local board.
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ENFORCEMENT OF THE NAR CODE OF ETHICS
CURRENT ETHICAL ISSUES
Unethical or Just Aggressive: the hot market is cooling -- Pocket Listings:
Not unethical if seller allows brokers to market this way – does not meet standard of broker cooperation – see article 3 – also agency – whose interest is served by not going to MLS
No offers considered until next Tuesday:
Article 1, SOP 1-6 all offers shall be presented objectively and as quickly as possible
Raising the Ante – escalation addendum, see app. B, page 83
Cannot counter at the max price if you do not have a matching offer.
Multiple Offer Protocol: All offers should be presented objectively & fairly – price, financing terms & contingencies – closing date – should be considered.
Highest & Best – primary contract should be set.
Shopping the Contract
When Demand outreaches supply- auction atmosphere can be created.
Highest price is not always the best offer.
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CURRENT ETHICAL ISSUES
Case Study #1 – shopping the contract Not illegal
Not unethical
Sellers are not obligated to accept any offer
“highest & best” and designate 1 offer as primary.
Answer case study questions page 55
Case Study #2 -- ESL Clients (English as second language) Raising listing price $30,000 not ok
Negotiating for things not in listing – ok
9.5 rate in 6% market
6 points on mortgage
HUD 1 - “misc repairs” - seller blaming listing agent/answer case study questions page 57
New Real Estate Business Models: It is unethical and illegal to “bad mouth” a broker because of a
different business model.
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CURRENT ETHICAL ISSUES
The A Team – $150 million – 600 units / tell the truth if this is a team effort.
Is Bigger Better: “Mega Firms” have been created thru mergers / buy outs – w/ 80-150 agents
Discount Brokers: discount to client only – contributing to a charity / supporting local school, ok
Fee-for-service: Menu – MLS – ADV – Open House – Contract Negotiation – advantage is to knowledgeable – buyer or seller
Helping the Owner: Limited service for FSBO’s / not full services
Unethical, Illegal or What? Boycotting limited service brokers is unethical buyer agent should be prepared to do all the work – not fair
But it’s the law: do not call is ethical – no longer legal.
Don’t Call Me: 10/1/03 – FTC – FCC – Do not call list Does not apply to: existing relationship – 18 months after transaction or 3 months
after inquiry.
As of 1/1/05 – broker is required to search every 31 days
$11,000 fine – broker has to have a do not call policy
Poster: www.realtor.org
FSBO’s are ok to discuss potential purchase – not to solicit listing
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CURRENT ETHICAL ISSUES
You’ve Got Mail: email-junk use only if necessary However – buyers want listings
General Mailings Legal however – can spam act requires all commercial
messages include:
Return email and P.O. address
Opt out with 30 days notice
Message in an advertisement is a solicitation
To Fax or Not to Fax: 7/9/05 Junk Fax Prevention Act – unsolicited fax messages illegal
I’ll Never Tell: we must keep confidential info received even beyond termination of the relationship.
FACTA: (Fair & Accurate Credit Transaction Act 6/1/05) Requires all CO and individuals to destroy sensitive info prior to disposing.
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CURRENT ETHICAL ISSUES
Understanding RESPA “old dog, new tricks”
1974 – purpose: to provide consumers with disclosures of closing costs and eliminate kickbacks and referral fees – Dept of HUD is responsible for administering RESPA
Entities Subject to RESPA
Real estate brokers and agents
Mortgage bankers and brokers
Title company and agents
Home warranty companies
Hazard insurance agents
Appraisers
Flood and tax service providers
Home and pest inspectors
RESPA: prohibits real estate agent or broker from receiving a “thing of value” for referring business
A realtor “shall not accept any commission, rebate or profit or expenditures made for their client without clients knowledge and consent. When recommending products or services realtor shall disclose any financial benefits or fees (other than referral fees).
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CURRENT ETHICAL ISSUES
Exceptions to RESPA Rules:
RESPA prohibits splitting of fees except for a service performed. Exceptions:
Promotional and education activities
Payments in return for goods and services – see table 5.1 page 62
Affiliated business arrangement.
Referral brokers and agents are permitted to own an interest in a mortgage and title company as long as relationship is disclosed and customer is not obligated to use the company – no payments can be received other than those based on ownership interest.
See: NAR website: www.realtor.org under RESPA dos and don’ts
See: 5.1 page 62 for prohibited activities.
On the web: 75% of people use the internet to find a new house
Realtor.com
Cannot copy info from another broker’s listing without permission.
Such a Deal I Have for You
Predatory lending: characteristics: high interest rates, unnecessary fees, pre-payment penalties, premium credit insurance.
Lender may encourage borrower to falsify income or debt.
Conclusion: Change is inevitable, we have a responsibility to make an effort to observe, study and work to understand current ethical issues.
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CURRENT ETHICAL ISSUES
Sub Prime Lending: (high risk borrowers) high interest / more down / shorter term / bad credit
Interest can be lowered with prompt payment. Ethics become involved when a lender forces a borrower into a subprime loan when he can qualify for a regular loan.
The Role of the Realtor: We have a duty and a responsibility to assist our clients in finding a good mortgage source.
Source: center for responsible lending. www.responsiblelenaing.org
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MAKING ETHICAL DECISIONS
Behaving in an ethical manner is easy as long as you go by the Golden Rule: “Do unto others as you would have them do unto you.”
The Platinum Rule – “Do unto others as they would like to be done unto.”
Self-Testing for Ethical Decisions: Whenever faced with making an ethical decision – take a good look at yourself. Start by answering questions – Tom Morris’ Six Tests for Ethical Action
Six Tests for Ethical Action: Tom Morris is a philosopher / consultant – NAR The publicity test: “Would I want to see this action in press”
The transparency test: “Do I have a clear explanation for action – What are my motives?
The moral mentor test: What would my mentor do?
The admired observer test: “would he/she be proud of decision?”
The man/woman in the mirror test: Will I be able to look myself in the mirror and respect the person I see?
The Golden Rule test: Would I like to be on the receiving end of this action and consequences?
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MAKING ETHICAL DECISIONS
Into the Looking Glass: View ethical dilemma from 4 perspectives:
Look at yourself – do you have ulterior motives – do you stand to gain or lose by outcome – are you letting previous experience influence your thinking.
Look at the parties involved: do you favor one over the other. Is there a pattern to behavior – is this influencing your decision – are outside influences affecting the actions of parties.
Look at the circumstances. Do you know all the details that led to the problem. Are there extenuating circumstances. Have you personally experienced a similar situation.
Look at the outcome – how will each party be affected by your decision. Will this decision have an ongoing effect on other parties. Will your decision alter your relationship with any of parties.
The Bottom Line: Can I make a fair and unbiased decision that I am willing to live with? If there is even the slightest hint that there could be a perceived conflict of interest the problem should be turned over to someone else.
Real estate conflict of interest – actual or perceived
Dual agency has the potential for conflict of interest. To consumer – perception is reality. 38
MAKING ETHICAL DECISIONS
Avoiding Conflict of Interest
Consider: Can you make the same unbiased – independent
judgment that would be expected from anyone in your position.
Is there anything about this situation that someone might question
your ability to be objective.
Do you have a personal interest in the outcome?
Could you defend your decision?
Right vs. Wrong or Right vs. Right Killing vs. war – stealing vs. eating
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MAKING ETHICAL DECISIONS
Principles for Decision Making
The most commonly used principles for decision making fall into three categories Ends-Based – doing what is the greatest good for the most people
Rule-Based – following established rules regardless of consequences
Care-Based – following the Golden Rule
Applying the Principles:
Truth vs. Loyalty – Megan's Law -- Case #4, page 18
Gloria could make a rule based decision by saying nothing. An end-based decision would require her to take into consideration what is best for all parties.
Individual vs. Community: - How much must I say? Case #5 , page 20
Katherine could continue with sale - say nothing and consider her rule based decision ok. Trying to work out the best solution for the greatest number of persons would be end-based.
Short Term vs. Long Term: joint vs. common – when 1 of clients is getting married consider common – suggest discussion with attorney.
Justice vs. mercy: when one of your clients dies. Read M/M Hamilton’s story.
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MAKING ETHICAL DECISIONS
Help in Making Decisions – “When in doubt – disclose) – seek help (ethical decision)
Code of ethics – state laws – rules and regulations- published standards of conduct
Results from previous cases can provide guidance
A Final Word:
After careful study and thoughtful consideration you should reach a decision that you feel in your heart is fair and unbiased and conforms to the best standards of ethical business practice.
Learn to live with your decision and be ready for the next ethical challenge.
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