In any job, it’s typically expected that you should be operating day-to-day in a professional and trustworthy way. In real estate, however, it goes one step further – there’s a code that REALTORS® must follow to ensure this happens. This is called the REALTOR® Code of Ethics. The Code, put forth by the National Association of REALTORS® (NAR), was implemented to guide association members in their work.
In real estate, having strong ethics is key to success and trust. This code provides the framework to make that happen. So, whether you’re new to real estate or have been in the field for years, knowing and following the ethical standards outlined in this code are crucial for your career and reputation.
Read on to explore the NAR Code of Ethics, why it matters, and how you can apply it in your daily work as a REALTOR®.
Learn More: Difference Between Real Estate Agents vs Brokers vs Realtors?
What Is the NAR Code of Ethics in Real Estate?
The NAR Code of Ethics is a set of guidelines established by the National Association of REALTORS® to ensure that real estate professionals conduct their business with integrity, fairness, and responsibility. It provides a framework for REALTORS® to follow to ensure they meet the highest standards of service. While the code was first adopted in 1913, it has been updated over time to address the more modern challenges in the industry today.
Why Do Ethics Matter in Real Estate?
Ethics are the foundation of trust in real estate. When REALTORS® follow ethical standards, they build trust with their clients, colleagues, and the public. Why is this important?
First, it can lead to a positive reputation and, ultimately, long-term success. Plus, maintaining ethical practices helps to avoid conflicts of interest. Beyond that, ethics help to ensure fair treatment during transactions and support a healthy market. For new REALTORS®, understanding (and practicing) good ethics can be the key to building a reliable and respected image in the industry.
Principles of the Real Estate Code of Ethics
The NAR Code of Ethics is based on a few core principles: honesty, integrity, fairness, and responsibility. What do these principles mean in day-to-day practice? Practically speaking, these principles suggest that REALTORS® must always prioritize their clients’ best interests. This involves being open and transparent in all transactions, providing truthful and complete information, and steering clear of any behavior that could be considered misleading or unethical. It also means respecting everyone involved in a deal, whether clients, other REALTORS®, or third parties, and ensuring fair treatment.
What Is Included in the Real Estate Code of Ethics?
The Real Estate Code of Ethics is organized into multiple sections, each highlighting responsibilities that you, as a REALTOR®, must uphold. These sections encompass duties to clients and customers, obligations to the public, and professional conduct towards fellow REALTORS®.
Here’s a closer look at each of these sections:
1. Your clients and customers
In real estate, your clients are your bread and butter. Think about it: without them, you wouldn’t have a career. With that in mind, REALTORS® must always act in their clients’ best interests. While this may seem obvious, it’s more nuanced than ensuring they get the best deal in any way possible. Acting ethically includes giving your clients honest advice, sharing all important information, and negotiating fairly. REALTORS® must also keep client information confidential and prioritize their needs in every deal. Following these rules builds strong and trusting client relationships, leading to repeat business and referrals.
2. The public
Acting ethically isn’t just about serving your clients but also how you treat the public. So, what does this look like in practice? For starters, REALTORS® must be honest and transparent in all their public communications. This means steering clear of any misleading ads or statements. It’s also crucial to ensure that everyone involved in a transaction is treated fairly and equitably. When REALTORS® prioritize honesty and fairness, they help maintain the integrity of the real estate market, which ultimately benefits everyone involved.
3. Other REALTORS®
It’s no secret that the real estate industry is competitive. But this doesn’t give you (or anyone else) the right to act unethically toward your fellow REALTORS®. Why? Professionalism and respect among REALTORS® are essential for a collaborative and efficient real estate market. After all, it takes two sides to complete a transaction. You wouldn’t want the REALTOR® on the other side of the negotiating table to act unfairly and vice-versa.
This is why the Code of Ethics is so crucial. It encourages REALTORS® to cooperate, share information openly, and resolve disputes amicably. REALTORS® should also avoid making false or misleading statements about their competitors. By maintaining a spirit of respect, REALTORS® can work together to better serve their clients and the industry.
NAR Code of Ethics Violations & Complaints
Like it or not, not every REALTOR® will act ethically 100% of the time. So, what happens when the REALTOR® Code of Ethics is violated? Despite best efforts, there may be instances where ethical violations occur. Luckily, the NAR has established a process for addressing these violations, fielding complaints, and enforcing the Code of Ethics. REALTORS® found in violation may face steep penalties. These include fines, mandatory education, or even a suspension of their membership.
This process is critical for REALTORS® to protect their professional integrity and address any issues quickly. By being aware of both the consequences and processes for resolving ethical breaches, you can uphold the high standards expected of you as a REALTOR® and maintain what’s most important – the trust of your clients, your colleagues, and your peers.
Are you required to take a continuing education course that meets the NAR or ethics requirements in your state? Colibri Real Estate School can help! Check out our state-approved real estate CE courses, many of which include narrated audio with adjustable speeds. Do you have questions about real estate licensing requirements in your state? Reach out to Colibri for help.
Source:
“2024 Code of Ethics & Standards of Practice.” www.nar.realtor, January 16, 2013. https://www.nar.realtor/about-nar/governing-documents/code-of-ethics/2024-code-of-ethics-standards-of-practice
