Code of Ethics violators will be hung out to dry, but is it enough?

Many California real estate professionals are probably saying, “it’s about time.” Just last month, at the meeting of the California Association of Realtors® directors in Sacramento, the Ethics and Professionalism Task Force issued a report which called for “significantly more robust enforcement of the Code of Ethics.”

The current protocol for Code of Ethics violations calls for the publication of violations when a Realtor® has received disciplinary action two times within a three year period. However, the Ethics and Professionalism Task Force requested that this policy be overhauled in the following ways: (1) “Punishment for unethical behavior should be swift and streamlined”; and (2) “Punishment for unethical behavior should be published and significant enough to deter future unethical behavior.”

In order to achieve these goals, the Task Force called for plans to develop a database to which local associations would be required to post Realtors® with any disciplinary action whatsoever. And, the Board of Directors approved this and other recommendations with only minor changes.

What Is a Code of Ethics Violation?

According to Jim Hamilton, the Chairman of the Ethics and Professionalism Task Force, “The NAR code of ethics was adopted in 1913 to establish and encourage professionalism within the real estate industry. There’s a difference between everyday ethics and business ethics and NAR lays out the very specific rules by which Realtors® are supposed to abide.”

Common Code of Ethics violations include the following:

• Taking certain types of pocket listings
• Misrepresenting listings in the MLS or in writing
• Not presenting all offers
• Double-ending a deal and putting other offers in a bad light
• Working in an area where you have no expertise
• Not communicating information to other agents.

Changes have been made to the current policy because people have complained that the process for reporting violations is too slow and time consuming. With such a time consuming policy, the task force feels that there is no deterrent to future violations by current violators. These changes (which include publishing a photo of the violators as well) have been created with the goal of deterring the violators from making the same violation again.

Is It Enough?

I’m not entirely certain whether prospective home buyers and home sellers will actually check the database before hiring a real estate professional. Since most consumers are seeking what’s in it for them (how they will get the most bang for their buck), there would need to be a significant campaign to coax consumers to actually check the website before hiring a real estate professional. And, even then, if the “professional” purports that he or she will save them significant cash by cutting fees, double-ending the deal, or not advertising the property on the MLS, will the consumer still move forward?

The goals of these CAR changes to disciplinary action of Code of Ethics violators are sound. But, in an age where consumers are frequently hyper-focused on getting the best deal and what’s in it for them, I’m just not sure that the changes will be enough.