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By Shannon Allen<\/div><\/div>\n

A listing broker didn\u2019t tell their seller they received a finder\u2019s fee from the buyer \u2013 but the fee didn\u2019t impact the Realtor\u2019s honest and ethical advice. Why is it an issue under the Code of Ethics if the finder\u2019s fee was negotiated before taking the listing?<\/p>\n<\/div>\n

ORLANDO, Fla. \u2013 Dear Shannon<\/strong>: I\u2019m a highly professional, well-respected commercial broker, and I negotiated a finder\u2019s fee with a potential buyer to locate a small commercial property. The buyer had specific requirements and said they didn\u2019t have room to compromise. We agreed the buyer would pay me a finder\u2019s fee if I found their perfect property.<\/span><\/span><\/span><\/p>\n

Weeks later, I took a great commercial listing that just so happened to meet almost all of the buyer\u2019s specifications. I say almost all because the listed price was a little higher than the top end of the buyer\u2019s price range.<\/span><\/span><\/span><\/p>\n

I told the seller that, in my experienced professional opinion, the listed price was a little too much, and that the buyer\u2019s offer, again in my educated experienced opinion, was a fair market price. A few days later, the seller agreed to the buyer\u2019s price. The sale closed, and I collected a commission from the seller and a finder\u2019s fee from the buyer. <\/span><\/span><\/span><\/p>\n

Days later, though, the seller filed an ethics complaint against me for not disclosing the finder\u2019s fee from the buyer. Standing before the professional standards hearing panel, I explained that I represented both buyer and seller faithfully; that I didn\u2019t take the listing until after I agreed to help the buyer find a property; and that in my opinion, the property was overpriced and that the price the buyer paid was a fair market price. However, the panel decided that I violated the Code of Ethics.<\/span><\/span><\/span><\/p>\n

I want to follow the Code and boost Realtor\u00ae professionalism, but I didn\u2019t think this was a big deal. No harm no foul for the seller who got fair market price. How exactly is this unethical? \u2013 Frustrated<\/span><\/span><\/span><\/p>\n

Dear Frustrated<\/strong>: Thank you for reaching out and for your efforts to elevate the professionalism in this industry. I don\u2019t doubt that you represented both the buyer and seller to the best of your ability.<\/span><\/span><\/span><\/p>\n

I hear your frustration, but you\u2019re not accurate in your understanding of what the Code says about disclosing these types of compensation arrangements. It is<\/em> a big deal, so let\u2019s take a look at what the Code of Ethics says about your situation.<\/span><\/span><\/span><\/p>\n

Article 7 states: \u201cIn a transaction, Realtors\u00ae shall not accept compensation from more than one party, even if permitted by law, without disclosure to all parties and the informed consent of the Realtor\u2019s\u00ae client or clients. (Amended 1\/93)<\/em>\u201d<\/span><\/span><\/span><\/p>\n

In your case, you negotiated a finder\u2019s fee with the buyer and also compensation for the listing from the seller, but you didn\u2019t tell the seller about your arrangement with the buyer \u2013 both parties in the same transaction. You defended that decision by saying that disclosure shouldn\u2019t matter because:<\/span><\/span><\/span><\/p>\n

\n
You represented both of them faithfully<\/span><\/span><\/span><\/li>\n
You took the listing after you secured a finder\u2019s fee agreement with the buyer<\/span><\/span><\/span><\/li>\n
The seller initially overpriced their listing<\/span><\/span><\/span><\/li>\n
The seller ultimately sold the property for a fair market price<\/span><\/span><\/span><\/li>\n<\/ul>\n
Notice the language of Article 7 doesn\u2019t have exemptions. It doesn\u2019t say Realtors don\u2019t have to disclose as long as they provide exceptional service to both parties. It doesn\u2019t say anything about an exception based on the timing of the compensation agreements. It doesn\u2019t have anything about an excessive list price waiver. It doesn\u2019t say you don\u2019t have to disclose if neither party has been harmed.<\/span><\/span><\/span><\/p>\n
The concept of \u201cno harm no foul\u201d doesn\u2019t exist in Article 7. Realtors cannot accept compensation from more than one party without disclosing to all parties. Unfortunately, your understanding of the Code\u2019s requirements is inaccurate.<\/span><\/span><\/span><\/p>\n
Thank you for bringing this situation to light and please continue to focus on elevating the level of professionalism in our industry.<\/span><\/span><\/span><\/p>\n
Inspired by Case #7-1: Acceptance of Compensation from Buyer and Seller. Other laws and rules may apply.<\/span><\/span><\/span><\/p>\n
Shannon Allen is an attorney and Florida Realtors Director of Local Association Services<\/em><\/span><\/span><\/span>
Note: Advice deemed accurate on date of publication<\/span><\/span><\/span><\/p>\n
\u00a9 2024 Florida Realtors^{\u00ae<\/sup><\/span><\/span><\/span><\/p>\n<\/div><\/div>\n}
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\nAuthor: izaakh<\/p>\n","protected":false},"excerpt":{"rendered":"
By Shannon Allen A listing broker didn\u2019t tell their seller they received a finder\u2019s fee from the buyer \u2013 but the fee didn\u2019t impact the Realtor\u2019s honest and ethical advice. Why is it an issue under the Code of Ethics if the finder\u2019s fee was negotiated before taking the listing? ORLANDO, Fla. \u2013 Dear Shannon: I\u2019m a highly professional, well-respected commercial broker, and I negotiated a finder\u2019s fee with a potential buyer to locate a small commercial property. The buyer had specific requirements and said they didn\u2019t have room to compromise. We agreed the buyer would pay me a finder\u2019s fee if I found their perfect property. Weeks later, I took a great commercial listing that just so happened to meet almost all of the buyer\u2019s specifications. I say almost all because the listed price was a little higher than the top end of the buyer\u2019s price range. I told the seller that, in my experienced professional opinion, the listed price was a little too much, and that the buyer\u2019s offer, again in my educated experienced opinion, was a fair market price. A few days later, the seller agreed to the buyer\u2019s price. The sale closed, and I collected a commission from the seller and a finder\u2019s fee from the buyer. Days later, though, the seller filed an ethics complaint against me for not disclosing the finder\u2019s fee from the buyer. Standing before the professional standards hearing panel, I explained that I represented both buyer and seller faithfully; that I didn\u2019t take the listing until after I agreed to help the buyer find a property; and that in my opinion, the property was overpriced and that the price the buyer paid was a fair market price. However, the panel decided that I violated the Code of Ethics. I want to follow the Code and boost Realtor\u00ae professionalism, but I didn\u2019t think this was a big deal. No harm no foul for the seller who got fair market price. How exactly is this unethical? \u2013 Frustrated Dear Frustrated: Thank you for reaching out and for your efforts to elevate the professionalism in this industry. I don\u2019t doubt that you represented both the buyer and seller to the best of your ability. I hear your frustration, but you\u2019re not accurate in your understanding of what the Code says about disclosing these types of compensation arrangements. It is a big deal, so let\u2019s take a look at what the Code of Ethics says about your situation. Article 7 states: \u201cIn a transaction, Realtors\u00ae shall not accept compensation from more than one party, even if permitted by law, without disclosure to all parties and the informed consent of the Realtor\u2019s\u00ae client or clients. (Amended 1\/93)\u201d In your case, you negotiated a finder\u2019s fee with the buyer and also compensation for the listing from the seller, but you didn\u2019t tell the seller about your arrangement with the buyer \u2013 both parties in the same transaction. You defended that decision by saying that disclosure shouldn\u2019t matter because: You represented both of them faithfully You took the listing after you secured a finder\u2019s fee agreement with the buyer The seller initially overpriced their listing The seller ultimately sold the property for a fair market price Notice the language of Article 7 doesn\u2019t have exemptions. It doesn\u2019t say Realtors don\u2019t have to disclose as long as they provide exceptional service to both parties. It doesn\u2019t say anything about an exception based on the timing of the compensation agreements. It doesn\u2019t have anything about an excessive list price waiver. It doesn\u2019t say you don\u2019t have to disclose if neither party has been harmed. The concept of \u201cno harm no foul\u201d doesn\u2019t exist in Article 7. Realtors cannot accept compensation from more than one party without disclosing to all parties. Unfortunately, your understanding of the Code\u2019s requirements is inaccurate. Thank you for bringing this situation to light and please continue to focus on elevating the level of professionalism in our industry. Inspired by Case #7-1: Acceptance of Compensation from Buyer and Seller. Other laws and rules may apply. Shannon Allen is an attorney and Florida Realtors Director of Local Association ServicesNote: Advice deemed accurate on date of publication \u00a9 2024 Florida Realtors\u00ae \u2715 ADVERTISEMENT Go to Source Author: izaakh<\/p>\n","protected":false},"author":4,"featured_media":9240,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"_links":{"self":[{"href":"https:\/\/nwfl4sale.com\/wp-json\/wp\/v2\/posts\/9239"}],"collection":[{"href":"https:\/\/nwfl4sale.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/nwfl4sale.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/nwfl4sale.com\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/nwfl4sale.com\/wp-json\/wp\/v2\/comments?post=9239"}],"version-history":[{"count":0,"href":"https:\/\/nwfl4sale.com\/wp-json\/wp\/v2\/posts\/9239\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/nwfl4sale.com\/wp-json\/wp\/v2\/media\/9240"}],"wp:attachment":[{"href":"https:\/\/nwfl4sale.com\/wp-json\/wp\/v2\/media?parent=9239"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/nwfl4sale.com\/wp-json\/wp\/v2\/categories?post=9239"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/nwfl4sale.com\/wp-json\/wp\/v2\/tags?post=9239"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}