Case #1-3: Net Listing
(Originally Case #7-3. Revised May, 1988. Transferred to Article 1 November, 1994.)
Client A called REALTOR® B to list a small commercial property, explaining that he wanted to net at least $170,000 from its sale. He inquired about the brokerage commission and other selling costs. REALTOR® B’s response was: “You have indicated that $170,000 net to you from the sale will be satisfactory. Suppose we just leave it at that and take all of the selling costs from the proceeds of the sale above $170,000.” Client A agreed.
The property was sold to Buyer C for $220,000. After settlement, in which it was apparent that $50,000 would go to REALTOR® B as commission, Client A and Buyer C both complained to the Board of REALTORS® about REALTOR® B’s conduct in the matter, and a hearing was scheduled before the Board’s Professional Standards Committee.
REALTOR® B’s defense was that he had performed the service that Client A engaged him for precisely in conformance with their agreement. Buyer C had considered the property a good buy at $220,000 and was happy with the transaction until he learned the amount of the commission.
How would you decide on REALTOR® B?
Ethics Violation of Article 1 in the NAR Code of Ethics? or No Violation?
See below for how this hearing panel ruled…if you think a violation, how much discipline would you impose? Fine of $________ and ____ hours of education.
If you were the respondent (aka defendant) REALTOR® in this complaint would you have considered taking an offered citation (small fine and education) in lieu of a full formal ethics hearing or waiving your right to a full formal hearing and accepting the fine and education imposed by the ethics committee who takes into account your admission of unprofessional behavior (aka take a plea deal)?
SCR is receiving numerous reports of unprofessional behavior. Across the country, unprofessional behavior is the number #1 complaint by REALTORS® about their colleagues in the market.
There are several ways of addressing and trying to correct unprofessional behavior. Lead by example. If you see unprofessional behavior, say something. Discuss with the other REALTOR®. Discuss with the REALTOR®’s Broker-in-Charge (BIC). Consider filing ethics complaints at the appropriate association and filing license law complaints at LLR.
The Hearing Panel found REALTOR® B in violation of Article 1 of the Code. The panel concluded that REALTOR® B had departed completely from his obligation to render a professional service in fidelity to his client’s interest; that he had, in fact, been a speculator in his client’s property; and that he had not dealt honestly with either party to the transaction.
Posted by: Byron King on 09/05/19 (This information is only accurate as of 09/05/19. You must contact SCR for updates and changes to this information after 09/05/19 as laws and regulations may change over time. SCR 803-772-5206 or email info at screaltors.org)