Professional Standards - As a REALTOR® member of
the Marin Association of REALTORS®, you have agreed to abide by the NAR Code of
Ethics. This Code of Ethics is comprised of a Preamble and 17 Articles. Most
Articles have corresponding Standards of Practice that support and interpret
the Article. In addition, Case Interpretations provided by NAR demonstrate the
application of the Articles to particular situations.
Article 6 - REALTORS® shall not accept any commission, rebate, or profit on expenditures made for their client, without the client’s knowledge and consent.
When recommending real estate products or services (e.g., homeowner’s insurance, warranty programs, mortgage financing, title insurance, etc.), REALTORS® shall disclose to the client or customer to whom the recommendation is made any financial benefits or fees, other than real estate referral fees, the REALTOR® or REALTOR®’s firm may receive as a direct result of such recommendation.
Article 6 - REALTORS® shall not accept any commission, rebate, or profit on expenditures made for their client, without the client’s knowledge and consent.
When recommending real estate products or services (e.g., homeowner’s insurance, warranty programs, mortgage financing, title insurance, etc.), REALTORS® shall disclose to the client or customer to whom the recommendation is made any financial benefits or fees, other than real estate referral fees, the REALTOR® or REALTOR®’s firm may receive as a direct result of such recommendation.
Case #6-6: Disclose Affiliated Business
Relationships Prior to Recommending Real Estate-Related Products or Services
Realtor® Z, a broker and sole proprietor, had invested
considerable time, money and energy into developing her website. Seeking to
recoup some of her costs, she approached virtually every provider of real
estate-related products and services in her area, including financial
institutions, title insurance companies, home inspectors, mortgage brokers,
insurance agencies, appraisers, exterminators, decorators, landscapers,
furniture and appliance dealers, rug and carpet dealers, moving companies, and
others about advertising on her home page. As a condition of having a link to
their own sites appear on her home page, Realtor®
Z required that a fee be paid to her each time a consumer “clicked through”
from her site to an advertiser’s.
Ads for providers
of real estate-related products and services who agreed to Realtor® Z’s terms appeared
on her home page under the heading “Preferred Providers”. Immediately under
that heading read “These vendors provide quality goods and services. Please
patronize them.”
Buyer A frequented
Realtor® Z’s website
seeking information about available properties. Using that website, he became
aware of a property on Elm Street that he made an offer on through Realtor® Z, which was
accepted by the seller. The sale closed shortly afterwards.
Buyer A was an
avid remodeler and, using Realtor®
Z’s website, linked to the Real Rug company website, among others.
Interested by what he found there, he subsequently visited their showroom in
person and purchased wall-to-wall carpeting and several expensive area rugs.
Given the size of
Buyer A’s order, one of the owners of Real Rug came to oversee the delivery and
installation. In the course of conversation with Buyer A, he commented
favorably on the amount of referral business received from Realtor® Z’s website. “And to
think I only pay a small fee for each customer who’s referred to me by Realtor® Z,” he added.
Buyer A was
somewhat surprised that Realtor®
Z would receive money for referring clients and customers to providers of
real estate-related products and services and contacted the local association
of Realtors®. The
association provided him with a copy of the Code of Ethics. Reading it
carefully, Buyer A concluded that Realtor®
Z’s actions might have violated Article 6, and he filed an ethics complaint
against Realtor® Z.
At the hearing, Realtor® Z defended herself
and her website, stating that the advertisements for real estate-related
products and services on her website were simply that, only advertisements and
not recommendations or endorsements of the products and services found there.
She acknowledged she collected a fee each time a visitor to her website clicked
on the links found under “Preferred Providers” but claimed that simply
referring to those advertisers as “preferred” did not constitute a
recommendation or endorsement of the products and/or the services offered.
The hearing panel
disagreed with Realtor® Z’s
reasoning, pointing out that a reasonable consumer would certainly conclude
that referring to a provider of real estate-related products or services as
being “preferred” by a Realtor®
constituted a recommendation or endorsement. Further, since Realtor® Z received a fee
each time a consumer “clicked through” to one of Realtor® Z’s “Preferred Providers”, Realtor® Z received a referral fee, and
disclosure of that fee was required under Article 6. Realtor® Z was found in violation of Article 6.
