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Confidentially Speaking



The Standard of Practice

REALTORS® shall not knowingly, during or following the termination of professional relationships with their clients:
1) reveal confidential information of clients; or
2) use confidential information of clients to the disadvantage of clients; or
3) use confidential information of clients for the REALTOR®’s  advantage or the advantage of third parties unless:
    a) clients consent after full disclosure; or
    b) REALTORS® are required by court order; or
    c) it is the intention of a client to commit a crime and the information is necessary to prevent the crime; or
    d) it is necessary to defend a REALTOR® or the REALTOR®’s employees or associates against an accusation of wrongful conduct.

Okay – so we have all read the Standards of Practice before, hopefully!

What is Confidential?

What does confidentiality mean? How do we protect our client’s confidential information? What information is confidential? 

For my clients, it is anything which has no bearing on the facts of the contract or does not need to be disclosed. Period!  The buyer of my client’s property has no need to know anything about my client’s personal life; their marital status, children, job, their spouses’ job, whether they have bought another home or anything else, unless my client has given permission for me to disclose. Confidentiality is not limited to what their bottom line is!

Our Clients Trust Us

When we create a relationship with a client, we learn a lot about them. We may know they are facing a divorce or have had a death in the family. We know where they work and what their financial status is. Sometimes, we are privy to more detail than we even care to know about. ? For me, that’s okay, because sometimes my clients just need someone to talk to. One thing for sure, they do not expect me to tell anyone else.

We advise our clients not to talk to buyers or other agents if they happen to be home during showings. They will always say too much! We need to do the same during our communication with the buyer or seller’s agent. Besides the obvious of not talking too much and revealing specific information, how can we protect our client’s confidentiality?

Common Sense Practices

Get rid of the diplomas – a buyer who sees the seller is a doctor, engineer, attorney, etc. assumes they have money and can afford to take less. I once hid my client’s medical coats to the back of the hall closet and advised him to keep them there.

Don’t be lazy – when your client emails you with a cover sheet from their employer, remove the cover sheet before forwarding the necessary documents and black out the return fax number and any identifying info.  I had a buyer who determined the seller was wealthy because of where they worked. They knew because the cover sheet was attached with the other documents and hey, I represent my client, so any bit of information I can get is forwarded.

Have your clients keep bills and private mail in a secure place. No need for the buyer to see a past due notice sitting on the kitchen counter or know the balance of the current mortgage.

These are just a few ideas. I‘m sure there are many others; please share your best practices for protecting your client’s confidential information.

Paula is team leader for The "Home to Indy" Team in Indianapolis . She is passionate about education and client care and believes an empowered client is better prepared to make good decisions for themselves. You'll find her online at Agent Genius,Twitter and sharing her insights about her local real estate market at Home To Indy.

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  1. Jim Reppond

    October 1, 2008 at 8:45 am

    There are times when sharing personal information with the other party is important or helpful, particularly during negotiations. But it’s a Realtor’s duty to be absolutely clear with their client about what and how they are going to use this information, and make sure the client is on board and agree with the strategy.

    A good example might be to sharing the Buyer’s approximate credit scores with the listing agent to have them feel comfortable and confidant in the Buyer’s ability to secure a loan, especially these days.

    I like to think of a virtual mini-version of my client sitting on my shoulder watching and listening to me. If I get the feeling the mini-client might be uncomfortable with my behavior or what I am going to say, it’s time to stop and check in with my real client.

  2. Jason Sandquist

    October 1, 2008 at 8:46 am

    Get this, this is funny, not really but I was working on a transaction and the other agent works in the company. The other agent is the Zipforms admin for the company and I wasn’t by a computer at the time when we were going back and forth. The agent brought up the idea of going into MY ZIPFORM ACCOUNT and drafting up an addendum for my client. Couldn’t believe it. Had to throw the hammer down on that one.

  3. Steve Simon

    October 1, 2008 at 9:01 am

    Every two years I attend the Florida Real Estate License Law Instructor’s CE Seminar.
    This topic is discussed in one way, shape or form or another each time. The amount of complaints relative to this subkect is very large.
    It isn’t that complex a problem.
    It’s having the initial understanding of:
    What must I say,
    What may I say,
    What I must not say.
    Then remembering it during the course of discussion.
    If you remember to put your client first, you should be fine.
    By the way, one civil action for breach of confindentiality (violation of fiduciary responsibilities), can, In Florida and elsewhere, result in the aforementioned civil action, as well as administrative action and or criminal penalty; it all depends upon what you said that you should not have, or what you didn’t say and you sould have:)

  4. Kim Wood

    October 1, 2008 at 12:41 pm

    … and this applies forever and ever and ever… not just the life of the transaction !

  5. Matt Stigliano

    October 1, 2008 at 2:42 pm

    On my first ever transaction, the seller’s agent gave me some important info without even thinking about it. Of course, when I went back to my client and explained the potential meaning of this information, we made an offer that was almost 50% below asking price. And it was accepted. And we thought it would be, because of the info the agent gave us. We were prepared to work back and forth if necessary, but because we knew more about the seller than he probably wished we knew, we were able to second guess him and feel confident in what we were doing. Amazing what a slip of the tongue (and in this case, it was a very slight slip) can do. Best thing I was ever taught by a CPA was to always answer the question, but never answer anything with your answer that wasn’t asked. Of course, with confidentiality, you can apply this MUCH more strictly, as you shouldn’t answer any question that would reveal info you shouldn’t be giving out.

  6. Missy Caulk

    October 1, 2008 at 6:11 pm

    When I first meet with people before any client relationship is started, I go over the different ways people can be represented in MI. I tell them then I want them to know upfront about confidential information. I see it violated all the time, with comments like, “bring and offer, my clients HAVE to sell”, “they are closing on their home next week”, or something else that says, they are desperate.

  7. Paula Henry

    October 1, 2008 at 10:48 pm

    Jim – A virtual mini client sitting on your shoulder will definately work 🙂

    Jason- Sure, I’ll share my clients files with you – I can see it already, but would not be surprised to hear it happens.

    Steve – Thanks for your teacher insight. Putting your client first is an excellent test of what is proper.

    Kim – Yep!

    Matt – How sad for that seller, but wonderful for your buyer. I wonder how many times this same scenario occurs.

    Missy – When I hear comments like that I shudder. I had someone call me today about one of my listings – he asked what was going on with the home, are the owners elderly, do they want to move. I simply said, of course they want to move, their house is for sale.

  8. Lori

    November 23, 2008 at 8:29 pm

    If anyone can help me out with the answer to this one, I’d appreciate it. I’ve been working with an agent since June. Over the past few weeks, I withdraw an offer on a house and was trying to get my deposit back. Unfortunately, my agent didn’t have me sign a form to get me out within 7 days of the inspection, but ultimately, I did get my deposit back, because the sellers goofed too. That’s not the issue. The issue is that last week, I received an email to my work email and in the subject it said, “Blank Blank Agent”, (I’ll keep the name of the agency private). I thought it was my agent’s boss, so I opened it. The email was from a former client of my agent. This woman stated that she was very friendly with a lot of the agents in the office and heard the trouble that my agent caused me. She said she begged one of her friends who works at this agency to give her my contact information because she wanted to tell me exactly what she thought of my agent and how my agent handled her daughter’s real estate search. I KNOW it’s not legal (i think) for someone in that real estate agency to just give my contact information out to a friend. But I want to know what recourse I have here. If I decided to file a claim against the agency, can I do that? And how?

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The problem with a self-policing industry: you have to be a narc

Ethics violations in the real estate industry can make or break a Realtor’s career, depending on the severity, so it would stand to reason that all would be mindful of the rules, but there are always individuals in the field that act as if the Code of Ethics is irrelevant.



An animated discussion on ethics training

“Does anyone else find it ironic that NAR – the trade association for Realtors – has to mandate that members take an ethics class every four years?” An agent who attended one of my company’s broker opens yesterday posed that question to the wine and cheese grazing attendees. Of course, that opened up an animated discussion on the value of etchics training and the lack of enforcement when the rules are violated.

One agent volunteered that the guy sitting next to her in her last ethics class played games on his cell phone and then cheated during the test at the end of the class. Seriously, dude? You cannot even pay attention long enough to pass what should be the easiest test you’ll ever have to take in your career? Perhaps he was just seeing how far he could push it by cheating during an ethics test, to see if anyone else around him caught the extreme irony there. None of the other agents around him – including the agent he cheated off – turned him in and the instructor didn’t notice.

This same agent later called one of my sellers and tried to convince him to break a listing contract with me, because he had a “guaranteed buyer” in the wings. The seller was an attorney, and this bozo tried to get me cut out of the deal, offering the seller a reduced fee to dump me. The seller held firm and directed the agent to call me, then the seller called to let me know about the conversation.

“But you know if you file something the other agent will know.”

It gets better. After the deal closed, I requested paperwork from our local Board of Realtors to file an ethics complaint. The person in charge said, “But you know if you file something the other agent will know.” Gee. Really? I asked her to send the paperwork over anyway.

I called the seller/attorney and asked him to repeat the conversation to me, because I was documenting it to file a complaint. He turned wishy washy on me at that point and his story changed from “The other agent tried to get me to dump you as the listing agent to cut you out” to “Well he really only asked a few questions and I told him to call you. He probably didn’t mean any harm by it.” So there goes my star witness, who doesn’t want to rock the boat.

I didn’t file the complaint. I resorted to the “turn the blind eye but never trust the sleazeball again” path. And that is what happens to almost all ethics issues I hear about / see in person.

That’s what happens when you have a self-policing group of “professionals” who would rather not “narc” on a fellow agent. After all you’re probably going to end up on the other side of a deal from this guy some day, right? The guy in my example has sold two of my houses since that run-in. Why tick him off by filing a complaint and going through all that hassle? If he stops bringing buyers to my properties then my sellers ultimately lose, right?

Boiling down the CoE

The NAR Code of Ethics takes up pages and pages of tiny print, and it runs each year in their trade magazine (I think it’s the January issue). Does anybody read that? Probably not many. I’d argue none of us ever should have to read it again. Simply follow this advice instead. The thousands of words in the Code boil down to one thing: Do unto other agents, and consumers, and clients, what you would have them do unto you. It’s the Golden Rule. Simple. Well, obviously not, for many agents and brokers.

The sad part is the agent in my example had no clue how close I was to filing that compaint, and if he did know he’d probably scratch his head and wonder why his actions were “wrong.” Making us take a one-day class every few years won’t “make” the unethical agents suddenly operate ethically. Most of them just don’t get it.

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Ethics hearings in private a disservice to consumers?



Fight Club and real estate

For those of you that saw the movie ‘Fight Club’ you’ll remember that Rule #1 is “You do not talk about fight club,” followed closely by Rule #2, “You DO NOT talk about fight club.” Which, believe it or not, brings me to today’s topic: The Real Estate Code of Ethics and Arbitration. Article 17 obligates Realtors to resolve fights disputes with another Realtor through arbitration (not litigation). Arbitration is conducted at the local board level, and I am not aware of a local board that doesn’t require arbitration to be confidential.

I respect that public internecine warfare amongst Realtors isn’t in the interest of our industry, and doesn’t belong in the public spotlight. I’m not here to advocate the collective airing of our dirty laundry. That said, I wonder if our collective agreement to keep our concerns confidential can inadvertently harm the consumer and ultimately makes all of us look a little shoddier?

To find the first arbitration guidelines created by NAR and distributed as a set of suggested rules for boards to follow, we have to travel all the way back in time to 1929. NAR’s first Code of Ethics & Arbitration Manual wasn’t created until 1973, and it credited a 1965 California Association of Realtors version as its model.

Appalling conduct

I can think of two instances in the past year where I was so appalled by the conduct of a fellow Realtor that I went to the trouble to inquire about how to lodge a Code of Ethics complaint with my local board. After weighing the time required to make a competent complaint and comparing it with the best case outcome (a closed-to-the-public hearing in which they were found to have violated the code of ethics), I decided not to pursue a complaint in both cases. My association’s bylaws (and probably yours) give it the power to discipline any member based on the results of a Code of Ethics hearing, “provided that the discipline imposed is consistent with the discipline authorized by the Professional Standards Committee of the National Association of REALTORS® as set forth in the Code of Ethics and Arbitration Manual of the National Association.”

“Sanctioning Guidelines” – (Appendix VII of Part 4 of the 2011 manual for the very curious), guides member boards to impose disciplinary consequences that are progressive and fair, taking all considerations into account. Sample first-time disciplinary actions include suggestions of a letter of warning, a fine (amounts range from $200 to $5,000 depending on the severity of the violation), and attendance at relevant education sessions. Not to sound defeatist, but a confidential letter of warning and a fine of around $200 doesn’t seem like an outcome worth investing much of my time in.

Practicing in the internet era

Given that we live and work in the internet era, and review sites like Yelp abound, it seems a bit odd to me that a local board might know of an agent with problem behavior that is documented yet choose to make that information unavailable to consumers. My understanding is that the results of a code of ethics hearing are confidential with disclosure authorized in a few situations, none of which deal with informing the public.

Many of my fellow colleagues feel that the best response to a bad agent is to be patient and give them enough time to work themselves out of business. I can respect and understand their hands-off approach. But what about the damage that individual does to our industry as a whole? While we whisper, warn in confidence and know amongst ourselves how awful they are, the public doesn’t get the benefit of our perspective. Deprived of it, they turn to consumer review sites like Yelp.

How do you think we, as an industry, can help consumers in their quest to find a trustworthy agent?

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Realtors, we really need to get over ourselves already



A letter from the child of a Realtor.

Real estate now vs. 1987

In Real Estate, some things are always changing, like financing, education, laws, rules and technology. The two that will always remain constant, as long as they are within the law, are following our clients’ directions, and working with their best interests in mind.  I’m not sure we always follow through with this, though.

Some of us knowingly take over priced listings.  Some of us take listings that are out of our area of expertise.  Some of us won’t show short sales or REOs.  Some of us won’t show homes with low co-op splits.  Some of us don’t have Supra/e-Keys, and miss out on those listings entirely.

Putting our interests first

When these things occur we are putting our own interests first, not our clients’.  We may think that by having as many listings as possible is a good thing, that’s what we’re taught after all, isn’t it?  It may not matter that some are overpriced, eventually, whether one month or four months down the line, the price will be reduced.  It’s just a matter of time and money, for our clients, after all.  The same can be said when we take listings outside our area of expertise, just to add on to our inventory.  If we don’t know what we’re doing, on a short sale listing, for example, it will only cost our clients a lot of time and money.  A lot.

By eliminating certain houses our clients see, that may already fit their criteria, we’re taking away their choices.  Distressed sales account for close to 40% of the market.  This is probably higher in some local markets.  There is no legitimate way to ignore roughly 1/3 of the homes being sold.  Co-op fees are often a touchy subject, especially when they are, not “enough.”  If everyone utilized a Buyer Broker Agreement that stipulated what their fee was, the issue would take care of itself.  Not being able to access listings with the use of Supra/e-Keys is a choice.   Choosing not purchase one will mean agents will not be able to access Fannie Mae (and eventually, probably additional Gov REO homes) along with the listings that are already using them.

Our priorities versus theirs

We totally need to get over ourselves already.  We are not bigger than our clients.  Our priorities are not more important than theirs when it comes to the actual listing and selling of homes.

Recently, my awesome parents dug through a few boxes and rounded up one of my first art projects. About 25 years ago I did the poster featured above about my Mom, and her Real Estate career.  It was for an Open House (no pun, honest!!!) for the elementary school where I attended first grade.  It was just, what she did according to me way back then.  Things are way more complicated now, than when I was six.  There’s a heck of a lot more paperwork for one.  But the same basic principle still applies.

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