Realtor or real estate broker? You may have wondered, like I once did, what the difference is.
It’s time to clarify. There is a big difference and as a Buyer/Seller, you would benefit from knowing what it is.
Some background:
Pre -1900 there was no licensing of real estate practioners. Caveat Emptor (let the buyer beware) governed real estate transactions and a situation of speculation and exploitation reigned.
In 1908 a national association was formed. It was named National Association of Real Estate Exchanges. Today we call it the National Association of Realtors (NAR). We also benefit from a Colorado Association of Realtors (CAR) and local associations too… Mine being the Boulder Area Realtor Association (BARA)
In 1913, a Code of Ethics was adopted. Realtors were only the 4th or 5th group in American society to publish a Code of Ethics.
However, unlike doctors or lawyers, people with real estate broker licenses are NOT required to join the Realtor Association. Those that are members of a local, state or national association are designated a Realtor – with a capital R. Those that don’t, are real estate brokers.
Like every professional association with a strict Code of Ethics, there exists an enforcement arm. The ethics code is NOT law, it is peer review. The enforcement arm is made up of a panel of people, the names of whom, are confidential. A Realtor is unlikely to know who the members of the grievance committee are, unless they have been a party to a hearing or disciplinary action. In other words, we don’t want to find out!
The purpose of the Code of Ethics is to modify a persons behavior, if their background has not taught them the appropriate ethical responses. Interestingly, the majority of the real estate laws in Colorado have been derived in some way from the Code of Ethics.
In 2000, Realtor Boards in Colorado researched what groups of people were responsible for the most violations of the Code of Ethics. The results lead to the conclusion that the culprits were largely in the “over 10 years of experience” bracket. On average… 14 year veterans.
Other states have reported that experienced Realtors are not keeping up with changes to the Code of Ethics.
This research lead to the creation and implementation of a new rule, for Realtors. As of 2000, Realtors need to take the Code of Ethics class at least once every 4 years. I just completed the class… and hence this post.
If I might be so bold as to try to sum up the Code of Ethics, it would go something like this:
Use the Golden Rule. “Whatsoever ye would that others should do to you, do ye even so to them.”
When faced with a question on what to do, let the Golden Rule be your guidance and you will undoubtably do the right (ethical) thing. The decision might cost you money and it might be tempting to let something slide, but it will keep you on the right side of the Code of Ethics.
And finally… a true story from a recent transaction. A shining example of ethical behavior.
I was the Buyer’s Agent. My clients were very sweet, most enthusiastic and altogether wonderful. The Seller’s Agent was responsive, efficient and easy to work with. The Seller, whom I would never normally meet until closing, was a friend of a friend… by coincidence… and there had been the occasional contact when the Buyer’s and I visited his house during the buy process. It was, by all accounts, a smooth and friendly transaction.
At closing, the Seller admitted that he had run the dishwasher one final time as he was finishing the packing, just a night or two earlier. In his words, “It sounded like a growling old man”. While not (yet) broken, he knew it was not quite right. He debated what he could do.
I’m guessing his options went along the lines of:
1. Say nothing and pretend you don’t know anything if the dishwasher is topic of conversation at closing.
2. Admit the dishwasher might need servicing and wish the Buyers luck.
3. Offer to help with fixing the aging dishwasher.
At the closing table, the Seller presented the Buyers with a $200 Home Depot gift certificate. He admitted that while the dishwasher was still running and had never been a problem, it now sounded like it might be headed that way. He understood that the Buyers might want to replace it, given its age and felt compelled to contribute some toward the new purchase.
The Buyers were thrilled. Not by the potential problem or outlaying of cash that would likely ensue, but because the Seller was so generous and thoughtful and because ultimately they felt this guy wasn’t hiding anything from them, from start to finish.