Code of Ethics Case Interpretation: Acceptance of Compensation From Buyer and Seller
This ongoing series explores the NAR Code of Ethics through various case interpretations. Please read through the following case and try to decide if there was any Code of Ethics violations. Then click the box at the bottom to find out the answer. (These cases have been provided by the National Association of REALTORS®.)
Code of Ethics Case Interpretation – Article 7: Acceptance of Compensation From Buyer and Seller
Buyer A engaged REALTOR® B to locate a small commercial property. Buyer A explained his exact speciﬁcations indicating that he did not wish to compromise. They agreed that if REALTOR® B could locate such a property within Buyer A’s price range, he—the buyer—would pay a ﬁnder’s fee to REALTOR® B.
Two weeks later, REALTOR® B called Buyer A to advise that Seller C had just listed a property with him that met all of Buyer A’s speciﬁcations except that the listed price was a bit higher than Buyer A wanted to pay. Buyer A inspected the property and liked it, but said he would adhere to his original price range. REALTOR® B called Buyer A three days later to say that Seller C had agreed to sell at Buyer A’s price. The sale was made and REALTOR® B collected a commission from Seller C and a ﬁnder’s fee from Buyer A which was not disclosed to Seller C, REALTOR® B’s client.
Several weeks later, Seller C learned about the ﬁnder’s fee that REALTOR® B had collected from Buyer A and ﬁled a complaint with the Association of Realtors® charging Realtor® B with unprofessional conduct. The complaint specified that whenREALTOR® B had presented Buyer A’s offer at less than the listed price, he, the seller, was reluctant to accept it, but REALTOR® B had convinced him that the offer was a fair one and not likely to be improved upon in the current market; and that REALTOR® B had dwelt at length on certain disadvantageous features of the property in an attempt to promote acceptance of the offer. The complaint charged that REALTOR® B had actually been the agent of the buyer while holding himself out as the agent of the seller. Further, Seller C asserted that REALTOR® B had never mentioned that he was representing the buyer or intended to be compensated by the buyer.
At the hearing, REALTOR® B’s defense was that he had served both buyer and seller faithfully; that he had not accepted Seller C’s listing until after he had agreed to assist Buyer A in locating a property; and that in his judgment the listed price was excessive and the price actually paid was a fair price.
What do you think the Hearing Panel decided? Click here to find out.
A Hearing Panel of the Association’s Professional Standards Committee, which heard the complaint, concluded that REALTOR® B had acted in violation of Article 7 of the Code of Ethics. His efforts to represent the buyer and the seller at the same time, and the fact that he intended to be compensated by both parties, should have been fully disclosed to all parties in advance.
See more case interpretations here.