Understanding the Realtor® Code of Ethics: Article 16 – Sign Crossing

Welcome to Article 16 – the next post in my series of Understanding the Realtor® Code of Ethics
(<< Check them out!).

The Code of Ethics is a set of ethical guidelines designed by the National Association of Realtors® for its members.

Ah! Sign Crossing… This article affects Realtor® to Realtor® relationships and business practices. This post is a doozy … as there are 20 different Standards of Practice to consider.

Article 16:
REALTORS® shall not engage in any practice or take any action inconsistent with exclusive representation or exclusive brokerage relationship agreements that other REALTORS® have with clients.

Basically … No Sign Crossing. But what IS Sign Crossing, really?
Simple: If there is a sign in the yard, do not “cross” it to try and get the business of another Realtors® client.

Lets’ start by discussing what sign crossing ISN’T:

  • This article was “not intended to prohibit (ethical) aggressive or innovative business practices” and has nothing to do with Realtor® to Realtor® disputes about commissions, fees and such.
  • This article “does not preclude REALTORS® from making general announcements to prospects describing their services and the terms of their availability even though some recipients may have entered into agency agreements or other exclusive relationships with another REALTOR®.”

    What is considered “general”…?
    A telephone canvass or a mailing or distribution of some kind addressed to all prospects in a given geographical area/in a given profession/ business/ club/ organization …etc. even if it reaches someone who is currently in a contractual relationship with another agent is considered acceptable and not considered sign crossing.

    A good idea is to put a disclaimer on the bottom of every “general” marketing piece that says something to the effect of:
    “*If you are already working with a Realtor® please disregard this advertisement.”

  • A Realtor® is allowed to approach a person who is currently a client of another broker as long as the approaching Realtor® is not offering the same services that the other broker is offering.

    For example: Realtor® Rigby has an exclusive Right To Sell (Listing) Contract with Seller Shahara. Realtor® Reginald is a Licensed Realtor® and Property Manager. He is allowed to approach Seller Shahara offering his services as Property Manager, should she want to rent out her home.

What are the other Guidelines surrounding Article 16?

  • If a Realtor® refuses to disclose the expiration date or nature (like an exclusive right to sell, an exclusive agency, open listing, any buyer/tenant agreements … ) of their contract with a client, then another Realtor IS allowed to contact the client directly and discuss the opportunity of doing business in the future – after the expiration of the existing contract.

    In the case of Colorado Springs Real Estate practices, the expiration date and nature of the contract is displayed prominently in the MLS listing, thereby eliminating the option of another agent contacting a buyer/landlord/seller/tenant directly for any reason during the contract period.

  • A Realtor® is allowed to speak with clients of other Realtors® about anything that they wish – as long as the client contacts the 2nd Realtor® first.

    For example: Realtor® Roland is sitting at his desk, (…writing a blog post for Active Rain) when the phone rings. He answers it. Sally is on the other line, and starts asking Realtor® Roland what his marketing plan is for his listings. As he talks to her, he find out that Sally already has her home listed with Realtor® Rochelle. Realtor® Roland is allowed to continue speaking with Sally about the services that he offers because she contacted him.

  • A Realtor® is allowed enter into a contractual relationship with a client who is already in a similar contractual relationship, as long as the new contract starts after the current one expires.

    For example: Sally (from before) would like to list her home with Realtor® Roland after her contract with Realtor® Rochelle expires, in 2 weeks. Realtor® Roland is allowed to draw up a listing agreement and have Sally sign it, as long as the effective date is after the expiration of Realtor® Rochelle’s listing agreement.

  • Before entering into a new contractual agreement with a client, a Realtor® has an “affirmative obligation to make reasonable efforts to determine whether the prospect is subject to a current, valid exclusive agreement to provide the same type of real estate service.” Ignorance is not bliss. Not here.
  • If a Realtor® is representing a buyer/tenant, they MUST disclose their relationship with the buyer/tenant to the seller/landlord and/or seller/landlord agent no later than the “execution of a purchase agreement or lease.” And, request for anticipated commission from the seller or landlord MUST be made at first contact.
  • A Realtor® may not deal directly with a client of another Realtor®, unless the representing Realtor® gives the “ok”. This does not apply to situations where a client makes first contact with another agent.
  • A Realtor® may not knowingly provide “substantive services” (like preparing a purchase offer, presenting a CMA…) to a client of another Realtor®.
  • A Realtor® may NOT “knowingly obligate (their client) to pay more than one commission except with their informed consent.”
  • The only people allowed to be compensated by the commission co-op are the Realtors® involved in the transaction. Any other compensation, directly or indirectly” must have the consent of the cooperating Broker.
  • The commission paid is an agreement between the Listing Broker and the Seller. No Buy-Sell/Lease contract is allowed to negotiate commissions, whatsoever.

    For example: Realtor® Randy’s buyer (and friend) Ben, wants to make an offer on a property, but wants Realtor® Randy to get a higher commission. Realtor® Randy may NOT ask for that in the offer. How much commission is being paid and HOW the commission is being split between Listing agent and Selling agent is determined in the listing contract between Listing agent and Seller. The end.

  • A Realtor® is not allowed to share information about other agents’ listing co-op’s to other agents, without the cooperating agents’ permission. Huh? I had a problem understanding this one, too. So, I called on Doug Barber, who explained it perfectly:

    Let’s say Realtor® Rowena belongs to the Smalltown Board of Realtors® and sees, in the MLS, that Realtor® Rick is offering X.X% co-op to the Selling Broker. She is not allowed to call up a broker in BigCity, who is NOT a member of the Smalltown Board of Realtors® and tell them about Realtor® Rick’s offer of Co-op, without Realtor® Rick’s permission. That “promotion” is strictly up to Realtor® Rick.

  • A Realtor® is not allowed to place a For Sale/ For Lease sign on a property w/o the Sellers or Landlords permission. It is not ok to “assume” that it is ok.
  • If a Realtor® leaves a real estate company, they are not allowed to try and “take” their listings with them, nor are they allowed to induce their sellers to resign with them at their new company. Many brokerages DO allow for an agent who is leaving to take their listings with them, but ultimately that decision is up to the broker of the company where the listings were originally signed.

Please take a moment to read through my previous Understanding the Realtor Code of Ethics Posts. Ok, it will take more than a “moment” for this…

Posted by: Mariana Wagner – ‘Springs Realty Scoop Colorado Springs Real Estate and Monument Real Estate

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About Mariana

I am a Mom, Wife, Real Estate Agent Trainer and Mortgage Lender. Find me at http://www.marianawagner.com
This entry was posted in Colorado Springs Real Estate, Realtor® Code of Ethics, Seller Info.. Bookmark the permalink.

2 Responses to Understanding the Realtor® Code of Ethics: Article 16 – Sign Crossing

  1. Hey Alex,
    No problem. I hope it was useful to you!
    -Mariana

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