Dirty Little Secrets of Contract Confidentiality

By Monika McGillicuddy

Do you think that the purchase agreement /offer to purchase that you just wrote on your buyers behalf for their dream home is being kept confidential…   

If you answer Yes…think again because in New Hampshire it MIGHT not be.

REALTORS® have an obligation Ethically to disclose to their  buyer clients the fact that their offer may not be kept confidential and yes I am talking about the terms…i.e. offering price and or conditions…financing, deposit ,closing date all of which  MAY be released by the seller to competing buyers in hopes of getting a better /higher offer.

This is sometimes called “shopping offers” and is being done fairly routinely but secretively in New Hampshire and other states.  No one will talk about it because they feel uncomfortable about it…

I wrote about Article 1 SOP 1-13 in detail a while back in my blog  but the summary of the Code of Ethics involving this reads as follows….

 Standard of Practice 1-13

When entering into buyer/tenant agreements, Realtors^® must advise potential clients of:

5) the possibility that sellers or sellers’ representatives may not treat the existence, terms, or conditions of offers as confidential unless confidentiality is required by law, regulation, or by any confidentiality agreement between the parties.

I am curious as to how you all are handling this required disclosure if your state does not a have a law or regulation regarding contract confidentiality?  

Is it a routine procedure in your state/area to disclose the terms?  If so do the buyers you work with know this?

Does a prior (before purchase offer is released) confidentiality agreement work for you?

Every time I try to use one I get laughed at by the other REALTORS®…I mean who in their right mind would have their seller sign this type of stipulation.

Is this a problem in your area?  Many REALTORS® I’ve spoken with tell me they just ignore the whole thing because everyone knows that listing agents have an unfair advantage in a co-brokerage situation anyway.  

I think it’s interesting that our code of ethics removed the word fair a few years back and replaced it with the word honesty…

Your thoughts…

REALTOR COE Changes  

REALTOR Code of Ethics Changes for 2007.    

A number of new professional standards changes were approved at the National Association of REALTORS annual convention in New Orleans. Additions and changes were made to Articles 12, 15 and 17.  

Two new case interpretations were added for Article 6, one for Article 12, a white paper explaining why hearing panels decision do not include rationales and several forms were also revised.

While The Two most important changes were to Article 12, I have included all the changes…even the little ones that as I think all REALTORS should be aware of, especially if you like keeping track of your stats. These come directly from my committee member agenda and my copy of the BOD meeting handout. These changes become effective 1/1/07

Approved changes to Article 12:        

1.   REALTORS intending to share or sell consumer information gathered via the Internet shall disclose that possibility in a reasonable and readily apparent manner.

The rationale is "The proposed new Standard of Practice will protect consumers by giving them advance notice where information they give to REALTORS via REALTORS websites will be shared with, or sold to, third parties."

2.  REALTORS obligation to present a true picture in their
advertising and representations to the public includes the URLs and domain names they use, and prohibits REALTORS from:

 (1) Engaging in deceptive or unauthorized framing of real estate brokerage websites;

 (2) Manipulating (e.g. presenting content developed by others) listing content in any way that produces a deceptive or misleading result; or

 (3) Deceptively using metatags, keywords or other devices/methods to direct, drive or divert Internet traffic, or to otherwise mislead consumers."

The rationale is: "This new Standard of Practice is intended to clarify that Article 12's 'true picture' obligation prohibits deceptive and unauthorized framing of other real estate websites; manipulating listing content to
produce a deceptive or misleading result; and using Internet tools to deceptively direct, drive or divert consumers from their intended Internet destinations."

Article 15

The obligation to refrain from making false or misleading statements about competitors’ businesses and competitors’ business practices includes the duty to not knowingly or recklessly repeat, retransmit or republish false or misleading statements made by others. This duty applies whether false or misleading statements are repeated in person, in writing, by technological means (e.g. the Internet), or by any other means.

Rational: Article 15 prohibits REALTORS from knowingly or recklessly making false or misleading statements the new standard attempts to clarify two things.

1. The duty to refrain also includes repeating, republishing or retransmitting false or misleading statements.

2. The duty also applies these statements whether made personally, in writing or through technological means including the internet.

Article 17

Standard of Practice adopted clarifies the duty to arbitrate disputes between REALTORS in different states where no inter-association agreement exists but where complainants submit to the jurisdiction of the respondents association.

Amendments

Were made to the Code of Ethics Arbitration Manual regarding unauthorized disclosure relating to tribunal members and to parties and includes any report or publication not established in the manual.

Added as an Approved disclosure now includes:

“Where providing the decision of an arbitration panel to an association of REALTORS or  an MLS will enable that entity to correct records of sale or lease transactions or other historical records…in other words giving credit for a sale to someone prevailing in arbitration”

This last one will make people who are into keeping or tracking stats happy…I think.    

Please see my updated post on this subject here

REALTOR Code of Ethics Changes for 2007 

A few professional standards changes were approved at the National Association of REALTORS annual convention in New Orleans including one that requires REALTORS to give “customers advance notice if customer data may be shared with or sold to third parties”.  Another change says that REALTORS must present a “true picture” of where they’re directing customers on the Web and must not use Internet tools to deceptively direct consumers from their intended online destination. Other changes involve the handling of REALTOR arbitration proceedings.

The important changes to Article 12 that all REALTORS and members of the public working with REALTORS should be aware of are highlighted here and come directly for the National Association of REALTORS website. These changes become effective 1/1/07

Approved changes to Article 12:        

1.   REALTORS intending to share or sell consumer information gathered
via the Internet shall disclose that possibility in a reasonable and
readily apparent manner.

The rationale is "The proposed new Standard of Practice will protect consumers by giving them advance notice where information they give to REALTORS via REALTORS websites will be shared with, or sold to, third parties."

2.  REALTORS obligation to present a true picture in their
advertising and representations to the public includes the URLs and domain names they use, and prohibits REALTORS from:

 (1) Engaging in deceptive or unauthorized framing of real estate brokerage websites;

 (2) Manipulating (e.g. presenting content developed by others) listing content in any way that produces a deceptive or misleading result; or

 (3) Deceptively using metatags, keywords or other devices/methods to direct, drive or divert Internet traffic, or to otherwise mislead consumers."

The rationale is: "This new Standard of Practice is intended to clarify that Article 12's 'true picture' obligation prohibits deceptive and unauthorized framing of other real estate websites; manipulating listing content to
produce a deceptive or misleading result; and using Internet tools to deceptively direct, drive or divert consumers from their intended Internet destinations.".

 To take a Code of Ethics quiz visit JF Sellsius blog link here

This is an awesome tool! You can use  this   in your Buyer Tool Kit or as part of your listing presentation. 

Print  this out on pretty paper ...it will really impress your customers and clients.

Today I taught the new member ethics orientation class for our state association.  We hold this class once a month and have morning and afternoon sessions.  Interesting that the member numbers are way down this month. Usually we have about 100 new members come through the class but today both sessions came in under 50!

 I also teach orientation at my local board and at our last class the numbers were also way down. We had scheduled a class, thinking we would need one for October based on last years figures but ended up cancelling it. Hmm...I 'm thinking that it reflects the changing market and the realization that maybe easy money is not to be made in real estate sales anymore. 

Over the past 22 years that I’ve been in real estate sales, I've seen this cycle before...the lure of easy money will be replaced with the understanding that this is a job that requires hard work.  We'll see a weeding out of agents and only those committed to continued training and giving quality service will be left standing in the end. 

I don’t think this is such a bad thing at all. Never fear change…but look forward to experiencing the newness of change and the growth that comes along with it.

I welcome your comments.