Realtors pay dues. They adhere to a Code of Ethics. They work together under local MLS rules. But you said in last month’s column that I must work with real estate licensees who aren’t part of the Realtor organization. Why in the world would I willingly do that?
ORLANDO, Fla. – Dear Anne: Last month you talked about Article 3 in the Realtors Code of Ethics. It focused on what you should do when a seller tells the listing broker to roll up the welcome mat for a brokerage and refuse to work with them because due to bad blood between the home seller and this other brokerage.
Personally, I’d like to roll up the welcome mat for nonmembers who want to show my listings. It isn’t right! I pay my dues and contribute to RPAC. Why do I have to cooperate with someone who doesn’t abide by our Code of Ethics? Signed – Percival
Dear Percival: Well, because Article 3 obligates you to do so, that’s why. Article 3 says, and I quote:
“REALTORS® shall cooperate with other brokers except when cooperation is not in the client’s best interest. The obligation to cooperate does not include the obligation to share commissions, fees, or to otherwise compensate another broker.”
If you ask me, the Code is clear: You have an obligation to cooperate with other brokers.
The word “shall” means “used in laws, regulations or directives to express what is mandatory” (Merriam-Webster). It’s not a suggestion, it is a commitment you agreed to follow when you became a member. Article 3 doesn’t say, “Realtors shall cooperate only with Realtors,” which is what you’re reading into it. Instead, Article 3 uses the term “brokers,” and the definition of brokers as it relates to the Code of Ethics is:
“Broker” means a real estate licensee (including brokers and sales associates) acting as an agent or in a legally recognized non-agency capacity.
To further clarify, the definition of member as it relates to the Code is:
“Member” means REALTOR® and REALTOR-ASSOCIATE® members of this Board (State Association). REALTORS® who participate in MLS or otherwise access MLS information through any Board in which they do not hold membership are subject to the Code of Ethics in that Board.
A Realtor principal is defined as “licensed or certified individuals who are sole proprietors, partners in a partnership, officers or majority shareholders of a corporation or office mangers (including branch managers) acting on behalf of principals of a real estate firm who subscribe to the Code of Ethics as a condition of membership in a local Board, State Association and the National Association of Realtors.”
To understand the Code of Ethics, you need to know the intent behind each obligation, and one way to know intent is to be knowledgeable of the definitions related to the Code.
Beyond the Code itself, limiting your cooperation to Realtors can be problematic on several levels:
- Antitrust: A possible antitrust violation comes to mind first. Don’t forget, Realtors are competitors. They compete for business amongst themselves and with nonmembers. Having a “rule” that discourages members from cooperating or doing business with a nonmember borders on antitrust, and the U.S. Department of Justice pays close attention to how competitors conduct themselves in the marketplace.
- Duties to Clients and Customers: To analyze the Code of Ethics further, Article 3 falls under the Category, “Duties to Clients and Customers.” If you’re playing keep-away with a nonmember broker, who gets hurt? Your seller – the person who hired you to sell his or her property. For the most part, I suspect sellers don’t care who you cooperate with, as long as a buyer is brought to the closing table with the desired sales price. When members get territorial over a listing, it’s a disservice to not only the seller but also the buyer. Ask yourself: Are you in the business of selling real estate or not?
- Reputation: One of the key words for real estate success is “reputation.” Imagine what a buyer thinks of a member who refuses to work with their agent because he’s not a member. Like the seller, the buyer wants to purchase real estate, and again, this is the reason you’re in business. The same thing comes into play when a member from another Board sets foot on a property located in another Board’s jurisdiction. I’ve already tackled this in a recent article, “Dear Anne: My Seller Won’t Work with Broker X. Now What?”
I know this sticks in your craw, but it causes unnecessary dissention. Selling real estate in the middle of a pandemic is challenging enough, not to mention a market with too little inventory to sell. Why add fuel to the proverbial fire?
And remember, the obligation to cooperate does not include the obligation to pay a commission. Many of our members embrace the ability to conduct business and gladly pay a nonmember for their efforts.
In closing, Florida is an “open” MLS state which, means nonmembers can participate in the MLS here; as a result, an offer of compensation in the MLS extends to them as well as member participants. Keep in mind, if there is a challenge to collect a commission offered in the MLS by a nonmember MLS participant, you’re obligated to arbitrate per NAR’s MLS Policy Statement 7.4 which states:
“Arbitration facilities of an association of REALTORS® may be invoked by a nonmember participant in the multiple listing service, who can also be compelled to arbitrate using the association facilities.”
Take note, the operative word in this policy is “also.” Both member and nonmember can be compelled to arbitrate.
Let’s move on and concentrate on the job at hand, bringing buyer and seller together to consummate a transaction rather than playing Hatfield’s and McCoy’s. Why risk your professional reputation? Is it worth it? And remember, if you do refuse to cooperate with a nonmember, you could end up before an ethics hearing panel for a possible violation of everyone’s favorite Article, Article 3.
Anne Cockayne is Director of Local Association Services for Florida Realtors
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