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Georgia REALTORS® partners with the Local Boards and
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           Lions, Tigers, Ethics…Oh My!
                       #68300
                                             Sponsored by:
 Georgia Association of REALTORS®, GREC School #271

  Visit the Georgia REALTORS® website to learn about
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                          You may not reproduce or redistribute any portion of this packet
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                                                         2020
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STUDENT NOTICE
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                                                                                     6-2020
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Lions, Tigers, Ethics…
        Oh My!
     NAR Code of Ethics
   Meets the requirement for 2019-2021 Cycle

                Joi Bostic
                 Instructor
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History of NAR and Code of Ethics

Structure of NAR Code of Ethics – Review
 Three Sections

 Seventeen Articles

 Standards of Practice

Joi Bostic                  Lions, Tigers, Ethics…Oh My!   2|P a ge
What Should We Do…

Duties to Clients and Customers

Article 1 – Material Facts
As the exclusive agent of Steven, Realtor® Aleena offered Steven’s house for sale,
advertising it as being located near a bus stop. Martin, a prospective buyer, who
explained that his daily schedule made it necessary for him to have a house near the
bus stop, was shown Steven's property, liked it, and made an offer and earnest money
deposit. Two days later, Aleena read a notice that the bus line running near Steven’s
house was being discontinued.
     1. What should Aleena do with this information?

     2. Does Steven have any obligation concerning this information?

     3. Once informed, does Martin have any obligations?

     4. What should happen to the earnest money?

Article 3 – Negotiating Commission
The small commercial building is reasonably priced, in good condition, and located on
a high-traffic street in a quaint neighborhood of Chicago, so it is no surprise that two
offers are made only after a few days on market. John, the listing broker, presents
both offers to the seller, Kathy. One of the offers is from a client of John’s and the
other is an offer from Buyer Broker Bob’s client.
“These offers are both full price, with no contingencies, and there seems to be no
difference between them,” says Kathy to John. “Can we make a counter-offer for
more money?”, she asks. John explains that countering a full-price offer could result
in one or both buyers walking away from the table.
"Okay, I'll tell you what," says Kathy, "If you reduce your commission, I'll accept the
offer you procured. Although you will earn a little less than we agreed in the listing

Joi Bostic                         Lions, Tigers, Ethics…Oh My!                3|P a ge
contract, you'll still get more than you would if you had to pay the other buyer's
broker." John agrees.
Buyer Broker Bob learns from his client, who contacted seller Kathy directly to find
out why her full-price offer wasn’t accepted, that listing broker John had reduced his
commission to make the offer that he procured more desirable. Bob is very upset.

     1. Can John renegotiate his listing commission at the time he presents the two
        offers?

     2. By reducing the listing commission, can John present both offers in an
        objective manner, as required by Standard of Practice 1-6?

     3. Under Article 3, as established in Standard of Practice 3-4, is John obligated
        to inform Bob that he modified the listing commission prior to the offer
        being accepted?

Article 2: Protecting Owner’s Interest - Video

Article 1 – Legal Listing?
Edward contacted Realtor® Jack to list a small commercial property, explaining that
he desired at least $170,000 from its sale. Edward and Jack discussed the commission
and other selling costs. Jack concluded with, “Don’t worry. I feel confident that I
can get your property sold for more than $170,000. So all of the costs will come from
the proceeds above $170,000.” Edward felt assured and signed the listing.
Later the property was sold to Buyer Kimberly for $220,000. At the closing, Edward
realized that Jack’s firm would receive nearly $50,000 in commission.

     1. Is this legal in Georgia?

     2. What would have been the proper action to take?

     3. Is this allowed according to the Code of Ethics?

Joi Bostic                          Lions, Tigers, Ethics…Oh My!              4|P a ge
Article 1: Knowledge of Proposed Legislation
Realtor® Richard, received a letter from Allstar College located in Iowa, stating that
one of its graduates in Richard’s city had willed a vacant property in that community
to the college. The letter explained that the college had no use for the property, and
wanted Richard to list and sell it at its fair market value. The proceeds would go to
the endowment fund of the college. Richard suggested a price for the property, an
exclusive listing contract was signed, and in less than a month the lot was sold and
settlement made with the college. Two weeks later, a trustee of the college, who
handled its investments, learned of proposed local legislation which had resulted in
sale of the property at approximately one-eighth of its fair market value.
(1) The client’s property was in an area which had been approved for rezoning from
residential to commercial use in a general revision of the local zoning map and
ordinance that was in preparation. (2) Although specific sections of the revisions,
including the section involving the lot in question, had been tentatively approved,
final approval had not been given to the complete revision at the time of the sale, but
this action had been taken a few days following the sale. For several months prior to
the sale there had been a public notice of the proposal to rezone affixed to a sign
near one corner of the property. (3) In his one inspection of the property, Richard had
not noticed the sign. (4) Other sales in the rezoned area substantiated the client’s
belief that the shift to commercial zoning supported a value at approximately eight
times the price received for the lot.
      1. Did Richard have an obligation to investigate any possible actions that would
         affect the property?

     2. Since the rezoning had not gone in effect at the time of the listing or sale,
        did Richard have any obligation concerning such?

     3. Did Richard violate the Code of Ethics?

     4. Did Richard violate Georgia License Law?

Article 3: Listing or Love Shack - Video

Joi Bostic                         Lions, Tigers, Ethics…Oh My!                5|P a ge
Article 2: Obligation to Ascertain Pertinent Facts
Cindy was the listing broker of a house located on Park Green Lane. Buyer Sarah
expressed interest in the house and Cindy showed it to her multiple times in addition
to having several conversations about the property. Since public sewer was available
on the street and that the majority of the houses on the street for several blocks
were connected to public sewer, Sarah assumed that the subject property was
connected as well. Cindy and Sarah never had a direct conversation about the system
and Cindy did not include any reference to the house being connected in any of her
advertisements.
Sarah never asked Cindy directly whether the house was connected to public sewer or
on a septic system. Cindy never disclosed this fact to Sarah nor investigated whether
the house was or was not connected. Instead she relied on that the seller had said
the property was connected.
Shortly after closing, Sarah discovered that the house was in fact on a septic system
and filed a complaint against Cindy alleging that Cindy failed to disclose a substantial
fact concerning the property.
     1. What was Cindy’s obligation concerning the disclosure of the property’s
         connection?

     2. Did Cindy violate the Code of Ethics?

     3. Did Sarah have any responsibility in discovering whether the property was or
        was not connected?

Article 1 – The Offer of a Bonus
Realtor® Vincent was a sales associate with Get It Closed Brokerage. To promote Get
It Closed’s in-house listings, the firm offered $1,000 bonuses to the company’s sales
associates at time of closing on each of Get It Closed’s listings they sold.
Dr. Johnson, a recent transferee to the town, entered into a buyer representation
agreement with Get It Closed through Vincent. Dr. Johnson explained he had specific
needs, foremost of which was any home he purchased be convenient for and readily
accessible by Dr. Johnson’s spouse who was physically challenged. “Part of my wife’s
physical conditioning program is swimming,” said Dr. Johnson, “so in addition to
everything else, I am looking for a home with a pool or room to build a pool.”
Vincent knew there were a number of homes for sale meeting most of Dr. Johnson’s
general specifications, several of which were listed with Get It Closed.
Over the next few days, Vincent showed Dr. Johnson several properties in the
Blackacre subdivision, all of which were listed with Get It Closed, including one with
an outdoor swimming pool. Not included among the properties shown to Dr. Johnson

Joi Bostic                         Lions, Tigers, Ethics…Oh My!                6|P a ge
were several similar properties in Blackacre listed with other firms, including one with
an indoor pool.
After considering the properties shown to him by Vincent, Dr. Johnson made an offer
on the home with the outdoor pool. His offer was accepted and the transaction closed
shortly thereafter.
     1. Had Vincent acted in Dr. Johnson’s best interest?

     2. Did Vincent violate the Code of Ethics?

     3. Did Vincent violate Georgia law?

Article 1: Making Promises - Video

Article 1: Promotion to Client’s Interest
Zachary gave an exclusive listing on a house to Maxwell, stating that he thought
$132,500 would be a fair price for the property. Maxwell agreed and the house was
listed at that price in a 90-day listing contract. Maxwell advertised the house without
response over a few weeks, showing it to a few prospective buyers who lost interest
when they learned the price. In a sales meeting in his office, Maxwell discussed the
property, advised the other agents that it appeared to be overpriced, and that
advertising and showing of the property had proved to be a waste of time and money.
And it would be a waste of their time as well. As a result, the other agents would tell
prospective buyers inquiring about the house that it was overpriced.
      1. What should Maxwell have done, if anything, differently?

     2. What obligation does Zachary have in this situation?

     3. Should Maxwell have taken any additional actions concerning this property?

     4. What obligations do the other agents in Maxwell’s office have?

Joi Bostic                           Lions, Tigers, Ethics…Oh My!             7|P a ge
Article 1: Presentation of Subsequent Offer After an Offer to Purchase Has Been
Acceptance by the Seller
Cynthia, a seller, contacted REALTOR® India, a listing broker, to list her property.
During the listing appointment, India and Cynthia signed a listing agreement that
included the following provision: “Seller agrees that Broker’s responsibility to present
offers to purchase to Seller for consideration terminates with Seller’s acceptance of
an offer.”
India presented an offer to purchase to her client, Cynthia, 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 her presentation, India told Cynthia
that, in her opinion, the offer was a good one and Cynthia should consider accepting
it. “With interest rates on their way up again,” said India, “properties are just not
moving the way they did six months ago.” Cynthia decided to accept the offer and the
transaction closed. Several months after the sale, Cynthia learned that a second offer
had been made on the property after she had accepted the first offer but prior to
closing. This second offer had not been submitted to her by India and was for $2,500
more than the first offer.
     1. Were India’s actions appropriate?

     2. Did Cynthia have a real claim against India?

     3. Had India fulfilled her obligations to her client, Cynthia?

Duties to the Public

Article 11 – Scope of Expertise
It was a listing that Leo, a REALTOR®, now wished he had never taken. Keith, Leo’s
close friend, was selling his home and was adamant about having Leo list the
property. Leo appreciated the gesture, but repeatedly told Keith that his experience
was in commercial properties and not residential. In addition, Keith’s home was in an
area of the city that Leo didn’t know much about. Leo strongly urged Keith to have
the house appraised. Keith insisted he knew the area and that $166,000 was the
home’s fair market value. This amount seemed low to Leo, but he listed the house at
this price. It quickly sold to a young couple, Linda and Brian.

Five months later Leo received a call from Keith, who was upset. Keith told Leo that
he met the buyers, Linda and Brian, at a party and found out the two were moving
because Linda had been reassigned to another city by her company. The couple had
received an offer on the house for $190,000, which they declined, feeling they could

Joi Bostic                         Lions, Tigers, Ethics…Oh My!               8|P a ge
do better. Keith was upset at Leo for not giving him better advice concerning the
$166,000 sale price.

     1. In addition to Article 11, which other Article might apply to this case?

     2. Is Leo in violation of the Code?

Article 13: Ignorance is No Excuse - Video

Article 11 – Contemplated Interest
Sean considers refinancing a twenty three unit apartment building he has owned for
several years to unlock some of the equity. The lending firm, ABC Mortgage, orders
an appraisal for the property from REALTOR® Paul, who happens to be a licensed
appraiser and a commercial real estate broker. The appraisal report is complete with
the property address, date prepared, value, purpose, and market data. After
receiving the appraisal, Sean is surprised to learn how much the building has
appreciated and decides to sell the property instead of refinancing it.
Because Sean likes how thorough REALTOR® Paul was with the appraisal process and
knowing that he is a commercial broker, Sean hires Paul to represent him as his listing
broker. Within one week, an offer is made on the property and accepted.
During the loan application, the prospective purchaser informs the new lender that
the property was recently appraised for ABC Mortgage. The lender is surprised to
learn that Paul is both the listing broker and the appraiser, and that no disclosure was
made about his “contemplated interest” as established in Standard of Practice 11-1.

     1. As used in Standard of Practice 11-1, does Paul have a “present or
        contemplated interest” in the property when he does the appraisal?

     2. Is Paul in Violation of Article 11?

Duties to Others REALTORS®

Joi Bostic                          Lions, Tigers, Ethics…Oh My!               9|P a ge
Article 15: Refusal to Provide Information - Video

Article 15: Alleged Information - Video

Article 16: Not Sharing Info - Video

Joi Bostic                         Lions, Tigers, Ethics…Oh My!   10 | P a g e
Article 2 – Broker’s Responsibilities

Qualifying broker Paul, also a Realtor®, was asked to list a neglected house that obviously
needed a wide range of repairs. He strongly advised the owner that it would be to his
advantage to put the house in good repair before offering it for sale, but the owner wanted it
sold at once on an “as is” basis. Paul wrote a novel advertisement offering a “clunker” in
poor condition as a challenge to an ambitious do-it-yourself hobbyist.

A few days later, Sales Associate Carol, who was not a Board member, from Paul’s office
showed the house to a retired couple who liked the location and general features, and who
had been attracted by the ad because the husband was looking forward to applying his “fix-
up” hobby to improving a home. The sale was made. Shortly thereafter, Paul was charged by
the buyer with having misrepresented the condition of the property.

Paul accompanied Carol to the hearing, armed with a copy of his candid advertisement. The
hearing established that the buyer fully understood that the house was represented to be
generally in poor condition, but that while inspecting the house with a view to needed
repairs, Carol had commented that since the house was of concrete block and stucco
construction, there would be no termite worries since termites could not enter that type of
construction. Carol confirmed this and her belief that the statement was correct. However,
after the sale was made, the buyer ripped out a sill to replace it and found it swarming with
termites, with termite damage to floors in evidence. Further questioning established that
there had been no evidence of termite infestation prior to the sale, and that Carol had
volunteered an assurance that she thought was well grounded.

Paul, prior to the conclusion of the hearing, offered to pay the cost of exterminating the
building and the cost of lumber to repair termite damage in view of Carol’s failure to
recommend a termite inspection, which was the usual and customary practice in this area.
The complainant stated that this would satisfy him completely.

Joi Bostic                           Lions, Tigers, Ethics…Oh My!                  11 | P a g e
Article 7 – Compensation from Buyer and Seller

Edward engaged REALTOR® John to locate a small commercial property. Edward
explained his exact specifications indicating that he did not wish to compromise. They
agreed that if John could locate such a property within Edward’s price range, he—the
buyer—would pay a finder’s fee to John.

Two weeks later, John called Edward to advise that Linda, a seller, had just listed a
property with him that met all of Edward’s specifications except that the listed price was
a bit higher than Edward wanted to pay. Edward inspected the property and liked it, but
said he would adhere to his original price range. John called Edward three days later to
say that Linda had agreed to sell at Edward’s price. The sale was made and John
collected a commission from Linda and a finder’s fee from Edward which was not
disclosed to Linda, John’s client.

Several weeks later, Linda learned about the finder’s fee that John had collected from
Edward and filed a complaint with the Board of REALTORS® charging John with
duplicity and unprofessional conduct. The complaint specified that when John had
presented Edward’s offer at less than the listed price, she, the seller, was reluctant to
accept it, but John had convinced her that the offer was a fair one and not likely to be
improved upon in the current market; and that John had dwelt at length on certain
disadvantageous features of the property in an attempt to promote acceptance of the
offer. The complaint charged that John had actually been the agent of the buyer while
holding himself out as the agent of the seller. Further, Linda asserted that John had
never mentioned that he was representing the buyer or intended to be compensated by
the buyer.

At the hearing, John’s defense was that he had served both Edward and Linda faithfully;
that he had not accepted Linda’s listing until after he had agreed to assist Edward in
locating a property; and that in his judgment the listed price was excessive and the price
actually paid was a fair price.

Joi Bostic                          Lions, Tigers, Ethics…Oh My!                12 | P a g e
Article 15 – Misrepresentation of Competitor

Following a round of golf early one morning, Homeowner Curtis, approached
REALTOR® Lamar. “We’ve outgrown our home and I want to list it with you,” said
Curtis. “I’m sorry,” said Lamar, “but I represent buyers exclusively.” “Then how about
REALTOR® Sal?” asked Curtis, “I’ve heard good things about him.” “I don’t know if I
would do that,” said Lamar, “while he does represent sellers, he doesn’t cooperate with
buyer brokers and, as a result, sellers don’t get adequate market exposure for their
properties.”
Later that day, Curtis repeated Lamar’s remarks to his wife who happened to be a close
friend of Sal’s wife. Within hours, Sal had been made aware of Lamar’s remarks to
Curtis earlier in the day. Sal filed a complaint against Lamar charging him with making
false and misleading statements. Sal’s complaint was considered by the Grievance
Committee which determined that an ethics hearing should be held.
At the hearing Sal stated, “I have no idea what Lamar was thinking about when he made
his comments to Curtis. I always cooperated with other REALTORS®.” Lamar replied,
“That’s not so. Last year you had a listing in the MLS and when I called to make an
appointment to show the property to the buyer, you refused to agree to pay me.” Sal
responded that he had made a formal offer of sub-agency through the MLS with respect
to that property but had chosen not to offer compensation to buyer agents through the
MLS. He noted, however, that the fact that he had not made a blanket offer of
compensation to buyer agents should not be construed as a refusal to cooperate and that
he had, in fact, cooperated with Lamar in the sale of that very property.
In response to Sal’s questions, Lamar acknowledged that he had shown his buyer-client
Sal’s listing and that the buyer had purchased the property. Moreover, Lamar said, upon
questioning by the panel members, he had no personal knowledge of any instance in
which Sal had refused to cooperate with any other broker but had simply assumed that
Sal’s refusal to pay the compensation Lamar had asked for was representative of a
general practice on the part of Sal.

Joi Bostic                         Lions, Tigers, Ethics…Oh My!               13 | P a g e
Article 1 - Client’s Interest vs Personal Gain

Realtor® Don was a sales associate with Sell Now Realty. To promote Sell Now’s in-house
listings, the firm’s principals offered $1,000 bonuses to the company’s sales associates at
time of closing on each of Sell Now’s listings they sold.

Dr. Bryant, a recent transferee to the town, entered into a buyer brokerage agreement with
Sell Now through Don. Dr. Bryant explained he had specific needs, foremost of which was
any home he purchased be convenient for and readily accessible by Dr. Bryant’s physically
challenged wife. “Part of my wife’s physical conditioning program is swimming, so in
addition to everything else, I am looking for a home with a pool or room to build a pool.”

Don knew there were a number of homes for sale meeting most of Dr. Bryant’s general
specifications, several of which were listed with Sell Now.

Over the next few days, Don showed Dr. Bryant several properties in the Black Oaks
subdivision, all of which were listed with Sell Now, including one with an outdoor
swimming pool. Not included among the properties shown to Dr. Bryant were several
similar properties in Black Oaks listed with other firms, including one with an indoor pool.
After considering the properties shown to him by Don, Dr. Bryant made an offer on the
home with the outdoor pool. His offer was accepted and the transaction closed shortly
thereafter.

Several months later, Dr. Bryant learned about the home with the indoor pool from a
colleague at the hospital who lived on the same block. He filed a complaint alleging that Don
had put his interests, and those of his firm, ahead of Dr. Bryant’s by promoting Sell Now’s
listings exclusively and by not telling Dr. Bryant about a similarly-priced property with an
indoor pool, which suited his family’s needs better than the property he had purchased. The
complaint went on to indicate that Don had received a bonus for selling one of Sell Now’s
listings and that Dr. Bryant suspected that Don’s failure to tell him about the home with the
indoor pool was motivated by the opportunity to receive a bonus.

At the hearing, Don defended his actions stating that properties rarely meet all of potential
purchasers desires; that he had made Dr. Bryant aware of several properties that met most
of his requirements, including one with an outdoor pool; and that Dr. Bryant must have
been satisfied with Don’s service since he had purchased a home.

Upon questioning by Dr. Bryant’s attorney, Don acknowledged that he knew about but had
not shown the house with the indoor pool to Dr. Bryant. He conceded that a pool that could
be used year round was better suited to the family’s needs than one that could be used only

Joi Bostic                           Lions, Tigers, Ethics…Oh My!                  14 | P a g e
four months each year. He also admitted his failure to tell Dr. Bryant about the house with
the indoor pool had at least in part been motivated by the bonus offered by his firm. “But,”
he argued, “aside from the indoor pool, that house was no different than the one Dr. Bryant
bought.”

Joi Bostic                           Lions, Tigers, Ethics…Oh My!                 15 | P a g e
Article 16 – Prospecting Expired Listings

A property was exclusively listed with REALTOR® Jim who advertised it widely and invited
cooperation from other REALTORS®. The property was not sold during the term
of Jim’s listing, although both REALTOR® Jim and REALTOR® Barry, a cooperating
broker, had shown the property to prospects.
Sometime after the expiration of Jim’s listing, newspaper advertisements appeared
indicating that the property was exclusively listed with Barry. Shortly thereafter, the
property was sold by Barry to buyer, Kate.
Jim confirmed that it was listed with Barry and then charged Barry in having failed to
respect his exclusive agency status with the client by soliciting the listing. Jim’s specific
charge was that Barry knew that the seller-client had originally listed the property with him,
Jim, because he had discussed the property with Barry during the term of the original listing
contract; that during the term of Jim’s listing, Barry had shown the property to the same
individual, Kate, who had now purchased the property through Barry; and that with this
knowledge Barry’s action in soliciting the listing, even after it had expired, was a violation of
Article 16.
Jim told the Hearing Panel that when he had asked for an extension of the original exclusive
listing, the client told him that because of a family problem he intended to take the property
off the market for a few months, but would consider relisting at a later date.
Barry conceded that he had known of Jim’s exclusive listing at the time the listing contract
was current; that he had known the term of the listing contract and, hence, knew when it
expired; and that he had shown the property to Kate who eventually purchased it. However,
he explained, he had no continued contact with Kate who he had originally shown the
property. After the expiration date of Jim’s listing, he was approached by Kate who
indicated she was still actively interested in purchasing a home. In reviewing Kate’s
preferences and the market, the property in question seemed the only one that met most of
Kate’s desires. Knowing that the original listing with Jim had expired some time ago, Barry
simply called the owner to ask if the property had been relisted with Jim. Upon learning that
Jim’s exclusive listing had not been extended, Barry told the owner of his prospective buyer,
solicited the listing, and obtained it. Barry said he saw nothing unethical in having solicited
the listing when it was no longer exclusively listed with another broker and felt that Jim was
without grounds for complaint.

Joi Bostic                            Lions, Tigers, Ethics…Oh My!                   16 | P a g e
Article 12 – News or Advertising

Shortly after mailing his “Homeowners Neighborhood Newsletter” to local residents, several
complaints were filed against REALTOR® Scott claiming that he had engaged in deceptive
advertising in violation of Article 12’s “true picture” directive. These complaints were
reviewed by the Grievance Committee which determined that a hearing should be held and
that all of the related complaints would be consolidated in a single hearing. The appropriate
notices were sent and the hearing was convened.

REALTOR® Beverly, one of the complainants, introduced Scott’s “Homeowners
Neighborhood Newsletter” into evidence pointing out that, on the first page, Scott had
prominently shown pictures of, and addresses for, ten homes in an exclusive area of town
labeling each as “Recently Sold.” Beverly, the listing broker for several of these properties,
stated that, in her opinion, the average reader would readily conclude that Scott, by
advertising this way, was claiming to have listed and sold the properties and that his claims
violated Article 12, as interpreted by Standard of Practice 12-7. In response, Scott indicated
that Article 12 was limited in scope to “. . . advertising and representations to the public”
and that his “Homeowners Neighborhood Newsletter” was not, in fact, advertising but
rather a well-intentioned effort to make homeowners aware of current market values. “Sale
prices in our county become a matter of public record once a deed of sale is recorded,” Scott
argued, “and anyone who wants to find out about recent sales can get that information from
the recorder’s office.” “All I am doing,” he continued, “is reporting news—and saving
residents the time and effort of retrieving this information on their own. If someone
appreciates my efforts and later buys or sells through me, so much the better, but that is not
the reason for my newsletter.”

Joi Bostic                           Lions, Tigers, Ethics…Oh My!                  17 | P a g e
Article 1 – Renegotiating Commission

Realtor® Chase listed Brook’s house at a reasonable price and aggressively advertised the
property on the MLS, website and other methods intended to attract prospective buyers.
Several potential purchasers showed interest.

Buyer Gary saw Brook’s property on Chase’s website, called for information, and was shown
the property by Chase several times. After the third showing, Buyer Gary was ready to make
an offer and requested Chase’s assistance in writing a purchase offer. Chase helped Gary
prepare an offer and then called Brook to make an appointment to present the offer that
evening.

Buyer Patrick, looking for property in the area, engaged the services of Realtor® Carrie as a
buyer representative. Brook’s property was one of several Carrie introduced to Patrick.
Later that same afternoon, Carrie called Chase and told him that he was bringing a purchase
offer to Chase’s office for him to present to Brook. Chase responded that he would present
Patrick’s offer that evening.

That evening, Chase presented both offers to Brook and he noted that both were full price
offers with little difference otherwise. Chase responded, “They’re both good offers and
they’ll both net you the same amount.” Brook asked about the feasibility of countering one
or both of the offers. Chase cautioned that countering a full price offer could result in the
buyer walking away from the table. Besides, he reminded Brook, production of a full price
offer triggered Chase’s entitlement to a commission under the terms of their listing
agreement. Brook acknowledged that obligation but expressed regret that, faced with two
full price offers, there was no way to increase the proceeds he would realize from the sale of
his property. “I’ll tell you what,” said Brook, “if you’ll reduce your commission, I’ll accept the
offer you procured. While you’ll get a little less than we’d agreed in the listing contract,
you’ll still have more than if you had to pay the other buyer’s broker.”

Seeing the logic of Brook’s proposal, Chase agreed to reduce his commission by one percent.
Brook, in turn, accepted Gary’s offer and the transaction closed shortly thereafter.
Upset that his purchase offer hadn’t been accepted, Patrick called Brook directly and asked,
“Just to satisfy my curiosity, why didn’t you accept my full price offer to buy your house?”
Brook explained that he had accepted a full price offer produced by Chase because of
Chase’s willingness to reduce his commission by one percent.

Patrick shared Brook’s comments with Carrie the next day. Carrie, in turn, filed an ethics
complaint alleging that Chase’s commission reduction had induced Brook to accept the offer
Chase had produced, that Chase’s commission reduction made his presentation of the

Joi Bostic                             Lions, Tigers, Ethics…Oh My!                   18 | P a g e
competing offer less than objective and violated Article 1, as interpreted by Standard of
Practice 1-6, and that Chase’s failure to inform him of the change in his (Chase’s)
commission arrangement violated Article 3, as interpreted by Standard of Practice 3-4.

             Article 10 – Choose Your Neighbor

REALTOR® Lauren listed a property in a new subdivision. At the instruction of her client,
Delores, Lauren submitted information to MLS with instructions not to make public, did not
place a “For Sale” sign on the property and did not advertise the property on her website or
in the local newspaper. Delores had told Lauren that she wanted the sale handled quietly,
with the new purchasers being people who would “fit into the neighborhood—people with
the same socioeconomic background” as the other residents of the subdivision.

Based on her conversation with Delores, Lauren’s only marketing effort was mailing a letter
to the other residents of the subdivision, inviting them “. . . to play a part in the decision of
who your next neighbor will be. If you know of someone who you would like to live in the
neighborhood, please let them know of the availability of this home, or call me and I will be
happy to contact them and arrange a private showing.”

Lauren’s marketing strategy came to the attention of REALTOR® Ron, whose mother lived
in the subdivision. Ron filed a complaint charging Lauren with a violation of Article 10 of
the Code of Ethics.

At the hearing, Ron told the Hearing Panel of receiving a copy of the marketing letter from
his mother, who had recently moved to the subdivision. Ron advised the panel that he had
checked the MLS for information on the property, had driven past the house to look for a
“For Sale” sign, had viewed Lauren’s website and had scanned the Sunday real estate section
of the local newspaper for information on the property. Finding no mention of the property
in either the MLS, website or the newspaper and noting the absence of a sign on the
property, Ron concluded that Lauren’s marketing strategy was to limit access to the
property to individuals preselected by the current residents. “In my mind,” said Ron “this
could only mean one thing. Lauren was deliberately discriminating against home seekers

Joi Bostic                             Lions, Tigers, Ethics…Oh My!                   19 | P a g e
from other areas, or those with different backgrounds, who would never have the
opportunity to learn about the house’s availability. Obviously, Lauren was directing all of
her marketing energies into finding purchasers who would not disrupt the ethnic and
economic character of the neighborhood.”

Lauren defended her actions by advising the panel that she was acting on Delores’
instructions. Delores appeared as a witness for Lauren and confirmed this fact, adding that
she and the other residents of her block had an informal agreement that they would try to
find “suitable” purchasers for their homes if they ever decided to sell. Delores felt that by
broadening the marketing campaign to include all residents of the subdivision she had
increased the chances of finding such potential purchasers.

Joi Bostic                           Lions, Tigers, Ethics…Oh My!                  20 | P a g e
Article 12 – True Picture à “Sold” Sign

REALTOR® Michael, the listing broker, was charged by REALTOR® Rita Marie with giving
a false picture in his advertising by putting up a “sold” sign on property that had not been
sold. Michael was notified of the complaint and of the date of a hearing on it scheduled
before a Hearing Panel of his Board’s Professional Standards Committee.

Undisputed testimony offered during the hearing revealed that Michael was an exclusive
agent, offering Christina’s home for sale. Buyer Doug made an offer with earnest money and
Christina made a counter offer which Doug accepted. At that point, Michael put up his
“sold” rider on his yard sign. Several days later, Doug received an unexpected notice from
his employer that he was to be transferred to another city. Doug immediately contacted
Michael about his predicament. In an amicable discussion, it was agreed that everyone had
acted in good faith; that the property was readily marketable; that the earnest money
deposit would be refunded; and that Michael would put the property on the market again. A
week later, when REALTOR® Rita Marie was showing a number of houses to a prospective
buyer, they drove by Christina’s property, and the prospect casually said that she didn’t
understand the “sold” sign, since she had been taken to see the house that morning by
Michael.

Rita Marie contended that a “sold” sign is a measure of a Michael’s advertising, and that it
cannot give a true picture if it is put up prior to the closing and actual transfer of ownership.

Joi Bostic                            Lions, Tigers, Ethics…Oh My!                    21 | P a g e
ADDITIONAL NOTES:

 Joi Bostic         Lions, Tigers, Ethics…Oh My!   23 | P a g e
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