For much of the public, the terms “real estate agent” and “REALTOR®” are used interchangeably. In reality, they are not the same. All REALTORS® must be licensed agents, but not all licensed real estate agents are REALTORS®. What is the difference, and why is it important to you as a buyer or seller?
REALTORS® are held to high standards
Studying for and passing the real estate licensing exam is merely the first step in becoming a real estate professional. Although it is voluntary, an agent should also become a member of the National Association of REALTORS® (NAR), the largest professional services association in the U.S. with over one million members. Members of NAR are known as REALTORS®. REALTORS® must be licensed agents in good standing in their state who have sworn to abide by the REALTOR® Code of Ethics, which sets standards of integrity. About 65 percent of licensed agents are members of NAR and thus REALTORS®.
In addition to the national Association, NAR has local associations to manage the members in their geographic region.
What is the Code of Ethics?
The REALTOR® Code of Ethics is a set of standards that REALTORS® pledge to uphold. The Code of Ethics has a preamble declaring the REALTOR® will treat clients and others the way they themselves would want to be treated. The Code then lists 17 articles covering three areas of responsibility.
The first is the responsibility to clients. REALTORS® are fiduciaries to their clients. Articles 1 through 9 of the Code of Ethics describe specific duties REALTORS® have to put their client’s interests above their own. These include not exaggerating or withholding pertinent facts about a property, being transparent about all aspects of compensation to the REALTOR®, disclosing whether the REALTOR® has any interest in a property being considered, and keeping all client funds in a separate trust account.
The second responsibility is to the public. Articles 10 through 14 assert that REALTORS® must not discriminate in the conduct of their business, must be honest in all advertising and marketing, must not engage in the unauthorized conduct of law, and will fully cooperate with any ethics investigations by local REALTOR® Association representatives.
Finally, REALTORS® have responsibilities to other REALTORS®. Articles 15 through 17 pledge that REALTORS® will not make false or misleading comments about other REALTORS®, will honor the exclusive relationship between other REALTORS® and their clients and will arbitrate financial disputes with other REALTORS® and clients.
REALTORS® are subject to disciplinary action and sanctions if they violate the Code of Ethics.
When a buyer or seller uses a REALTOR® to represent him, he’s working with a professional who has sworn to conduct business by a gold standard set of ethics.