Real Estate Ethics in 2019: How Will It Play Out?

When someone says anything about ethics, many think it’s going to result in one of two things:

  1. A snooze fest brought about by a philosophy professor, or
  2. A “debate” where it turns into a name calling match.

Sometimes it can devolve into either one of those events. However, what about when it’s your career at stake? Are you going to be asleep then or try to argue with an intangible force? Neither is suggested; just get the CE credits before the year is out.

If that’s still incomplete or the career is just starting out, this is what you need to know about not only what’s in the ethics code but also how it’s changed and what REALTOR®s can expect going into 2019.

What exactly are “ethical complaints”?

Ethical complaints are motions that are set forth from someone to someone or something else. It’s marked with an “…offense against the board and its members… which involves a dispute between individual members, arising from some common transaction.” If REALTORs are involved in the same transaction, then a complaint can be issued if there is a reasonable cause of some trespass. Within the ethics section, there are myriad different types of complaints that all agents need to be aware of that spread from housing discrimination to unscrupulous business practices and criminal offenses. These are detailed in the 3-hour CE course that must be completed by December 31st. Failure to do so will result in suspension of their credentials as a REALTOR.

The major takeaways that REALTORs must know are:

  • Client confidentiality can’t be stressed enough. It could be labeled as being the most important aspect REALTORs must keep unless not doing so would result in criminal offense.
  • Transparency is also a big deal. They placed emphasis on people using misleading verbiage in any exchange. This is especially true in the wake of several companies dealing with issues of transparency, including Facebook and some retailers.
  • Directly related to transparency, NAR listed disclosure agreements and their importance. There are special cases where the buyer does not have to be disclosed but those are few and far between. One last note was that a failure to disclose such a thing does NOT constitute a violation.

So suppose that there is something that causes a problem. What happens then?

The parties that are at odds can go through up to 4 stages, all them leading up to a more serious mode of solving the issue up to involving the courts.

  1. Try to solve it amongst themselves
    1. Many times, the two that are at odds can find a way to make sense of their situation or figure out where matters got misunderstood. Then there is no need to involve the board or any other authorities
  2. Mediation
    1. This is involved more through a facilitator from another REALTOR qualified to do so. A majority of those complaints that are brought up are solved in this way. It doesn’t involve more than one other person to help resolve the issue.
  3. Arbitration
    1. This is a more subjective route to take as it has one person (i.e. the arbitrator) who listens to testimony given by each side. They function similarly to a judge but without the public inclusion and less formal than a courtroom.
  4. Litigation
    1. If none of these options has appeased any of the involved parties, they may decide to take litigation. This is discouraged, as it becomes expensive and time consuming for everyone involved.

So what are the updates to the code itself?

There hasn’t been that much that’s changed since 2014 when NAR added a few more articles to the code itself. That code itself can be found on the NAR website here.

The one update that is most important is the maximum monetary penalty for violations is now up to $15,000. That’s much more than your broker fees, so think wisely and don’t do something stupid and unethical. Other penalties include but are not limited to suspension of membership, termination of MLS rights, and expulsion from their local association. There is also the possibility of revocation from the association if the REALTOR has multiple offenses recorded. And NAR developed a policy change to start taking effect that is going to affect repeat offenders.

NAR has instituted that in 2019, local REALTOR associations will be publishing the names of those members who have two or more violations in a three-year period. This follows their newest show of transparency as semi-public knowledge of these offenders has not had its place. Now, other REALTORs will know with whom they are conducting business and expect who’s capable of what. However, this knowledge will not be released to the public (hence, semi-public). REALTORs will be able to access it, however, the general public will not. Yet Yelp, Zillow, and other various review sites can help potential buyers and sellers find their match.

Do keep this in mind as you all are out there. Complaints can come from a broker to a REALTOR, another REALTOR, a customer, a client, the board, or any variation there within the real estate industry.

How can REALTORs handle a complaint against them?

Should a REALTOR find themselves in the mix of a complaint, there are a few things that have to happen.

  1. Know your rights and the violation.
  2. Figure out which of the 4 methods previously stated will best deal with the situation.
  3. Get advice. I don’t care how well you think you know the code of ethics. There’s usually someone who has thought of something that you haven’t. This could be from an attorney or a more experienced REALTOR that won’t be forced into the middle of it.

Getting hit with an ethics violation is no simple manner and should not be treated as such either, even if the offense seems minor. Remember that those violations will now be listed for other REALTORs to see, meaning that the other person doesn’t have to be Sherlock Holmes to figure out if they should even bother doing business with someone who has a checkered past. It’s within the Code of Ethics itself that REALTORs are to place clients’ interests above their own in this regard. Would you rather be known for holding up the code or disrespecting it? The choice is yours.

A special thanks to David M. Jacobs, Broker Associate at Realty Partners and member of the RASM Grievance Council, for his advice and knowledge contribution to this topic. You can find him at or email him at David at