What Can You Count as a Sale?

How to combine marketing and ethics.

November 1, 2006

Q: Is it a violation of the Code of Ethics for a broker to advertise that she has “sold” a certain number of properties when those totals include properties for which she was the listing broker but another broker was the selling broker, as well as properties for which she was the cooperating broker but not the listing broker?

A: The advertising you describe doesn’t violate the Code of Ethics. Article 12 of the Code requires that REALTORS® present a “true picture in [their] advertising and representations to the public.” Standard of Practice 12-7 specifies what the word sold means in the context of advertising, stating, “Only REALTORS® who participated in the transaction as the listing broker or cooperating broker (selling broker) may claim to have ‘sold’ the property.” So for the purposes of advertising, REALTORS® can add up all the properties in which they were the listing broker but not the selling broker, transactions in which they were the selling broker but not the listing broker, and transactions in which they were both the listing and the selling broker. Sales associates can use the same criteria when reporting individual sales numbers.

Q: I have a six-month exclusive buyer representation agreement with some clients. I clearly explained to the buyers that the agreement meant they could not work with another REALTOR® during the period of the contract, and they agreed. Another REALTORS® has tried to work with these buyers and show them homes. My buyer clients have told him they have exclusive representation, but he continues to call them. Isn’t his conduct a violation of the Code of Ethics?

A: Article 16 of the Code, as interpreted by Standard of Practice 16-13, prohibits this kind of conduct. Article 16 provides that “REALTORS® shall not engage in any practice or take any action inconsistent with exclusive representation or exclusive brokerage relationship agreements that other REALTORS® have with clients.”

Amplifying this obligation, Standard of Practice 16-13 requires that “All dealings concerning property exclusively listed or with buyer/tenants who are subject to an exclusive agreement shall be carried on with the client’s representative or broker, and not with the client, except with the consent of the client’s representative or broker or except where such dealings are initiated by the client.” Unless you consented to the other REALTOR® dealing with your client or the buyers initiated the dealings with the other REALTOR®, the other REALTOR® is committing an ethics violation.

In addition, because your buyer clients told the other REALTOR® they were exclusively represented, Standard of Practice 16-13 clearly applies. Even if your buyers hadn’t told the other REALTOR® they were exclusively represented, the other REALTOR® had an obligation under Standard of Practice 16-13 to ask the buyers before providing them with “substantive services” whether they were exclusively represented. (The Code defines substantive services as activities such as writing a purchase contract or presenting a CMA.)

If the other REALTOR® asks about exclusive representation and learns that your buyer is exclusively represented, the other REALTOR® can’t knowingly provide substantive services to your exclusively represented buyer without your consent, unless asked directly by the buyer.

With fewer buyers in many markets of the country today, buyer prospects will be solicited by more and more practitioners. That’s why an exclusive buyer agent agreement with clients is so critical to ensuring that your relationship with clients is protected.

Bruce Aydt

Attorney Bruce Aydt, ABR, CRB, SRS, is a national real estate educator, a Missouri real estate broker, and past chair of the National Association of REALTORS® Professional Standards Committee.