7,373 Words - The NAR Code of Ethics
By: Jay Thompson,
PhoenixRealEstateGuy.com,
Post Archive,
RSS FeedPosted: Monday, November 26th, 2007, 9:49 am MST
Category: Marketing, Real Estate
In his post here earlier today, Jim Duncan said something I’ve thought since the day I stood up, raised my right hand and pledged to uphold the Realtor Code of Ethics:
I have argued before that if you need
89 pages to explain ethics, rather than a simple code of honor, you just might need too much guidance.
Adopted in 1913, and amended 31 times, the NAR’s Code of Ethics is 9 pages of double column single-spaced text. Seventeen Articles. Eighty two “Standards of Practice”. 7,373 words in 266 paragraphs.
It is loaded with gems like this (Standard of Practice 17-4, Subsection 5):
Where a buyer or tenant representative is compensated by the seller or landlord, and not by the listing broker, and the listing broker, as a result, reduces the commission owed by the seller or landlord and, subsequent to such actions, claims to be the procuring cause of sale or lease. In such cases arbitration shall be between the listing broker and the buyer or tenant representative and the amount in dispute is limited to the amount of the reduction of commission to which the listing broker agreed
Huh? Maybe it’s just me, but I had to read that 3 or 4 times just to make sense of it. And I’m not so sure I actually figured it out.
Do we really need 7,373 words to tell us how to act?
The United States Military Academy has an Honor Code. It’s no real stretch of the imagination to equate an “Honor Code” with a “Code of Ethics”.
West Point’s Honor Code consists of one sentence. 12 words.
A cadet will not lie, cheat, steal, or tolerate those who do.
It was derived from the Military Academy’s motto - the lengthy and convoluted, “Duty, Honor, Country”.
One of my old schools, THE University of Texas, adopted an honor code long after I left those hallowed halls. It is substantially longer than the Military Academy’s code, coming in at a War and Peace like 41 words:
The core values of The University of Texas at Austin are learning, discovery, freedom, leadership, individual opportunity, and responsibility. Each member of the university is expected to uphold these values through integrity, honesty, trust, fairness, and respect toward peers and community. (My emphasis)
7,373 words versus 12 - 41 words.
Could not the Realtor Code of Ethics be trimmed down just a bit to make it more meaningful, and much more likely to be read, understood and followed?
Bookmark this to: del.icio.us • Digg it • StumbleUpon • Subscribe to RSS feed
Related posts:23 Comments so far
The VMI Honor Code (my alma mater) is the same 12 words - “A cadet shall not lie, cheat, steal nor tolerate those who do.”
Its brilliance is its simplicity.
As I’ve noted before, if Realtors need to be told not to be dishonest or sneaky with meta tags (and apparently they do - see Standard of Practice 12-10, #3) there’s something wrong.
Texas A&M has the same Honor Code as well. (I’m a Longhorn, can’t be referencing the Aggies directly in a post…)
It seems to cover . . . everything.
The current Realtor COE is an unwieldy monster. WAY too much legaleze and double-speak.
If the NAR were to adopt something so brillant in its simplicity it would probably put a lot lawyers out of work.
I think the bigget hurdle to the Honor Code mentioned above (the same one they use at USAFA) is the “tolerate those who do”. It seems many agents today look the other way. At our little company we got rid of everyone who had no ethics/honor. We are down to two of us–the owners. Oh well at least we know things are being done the way should be here.
[...] My question is this: Do we really need 7,373 words to tell us how to act? [...]
To put this in another perspective. The Constitution of The United States of America is 4400 words. Just over half that of the NAR code.
@carey– I think that the reason that the code is so explicit is specifically to keep lawyers from getting involved. The Constitution may be 4400 words, but there are almost infinite more words regrading is interpretation.
The NAR has tried to avoid leaving room for interpretation. That never works, but of course they tried.
Yes, and perhaps we should also junk the Code of the United States — the laws that govern us all. After all, it IS rather lengthy and hard to understand. Maybe we could just replace it with a one-liner: “Everybody, be sweet and do right.” This is, after all, in the words of Voltaire, the best of all possible worlds, right?
Sure, the REALTOR Code is a rather stuffy legal document (which, amazingly, WASN’T written by lawyers; it was written by — gasp! — REALTORS), but it has value in the marketplace as a guide, as a business tool and as a threat…because unfortunately, not all practitioners are as honorable and upright as some in the real estate blogosphere profess to be.
For a look at how REALTORS in my state are addressing the usefulness and viability of the Code, check out TCIGB.com, where among other things, you’ll find sections of the Code wrought in “straight talk.”
The NAR Code of Ethics is what it is because of vestigial sub-agency. It would be fun (for someone other than me) to strike every paragraph that would be obviated by divorcing the commissions. Then strike the paragraphs that consist of worthy sentiments. Then get rid of any remaining paragraphs that are reiterations of civil or criminal laws — torts or fraud. What’s left? The Code of Ethics exists to attempt to rationalize our irrational commissions structure. It’s procuring cause in a blizzard of wordy camouflage.
Gee, I have an idea.
We could replace it with the Golden Rule?
Scott - the fact that the Virginia Association of Realtors felt the need to translate portions of the COE into “straight talk” speaks volumes, IMHO. (well done translation, and web site, by the way).
I didn’t mean to imply that the COE should be 12 words. But 7,373 is ridiculous. And it’s getting bigger every year. It is excruciating to read. Let’s face it, there are a lot of agents out there who’ve pledged to uphold the COE — and they’ve likely never read the thing cover to cover.
Why not have the COE in “straight talk” to begin with?
Ethics. One of my favorite subjects. Look around you. Do you see our government acting ethically? How about big business? There are too many realtors (small r on purpose) who took an exam that was/is too easy, at least in California where I work, and don’t have a clue about ethics, business, or honesty. Some how they say around, sometimes for short periods of time, and what’s beyond me, many years opening up their own brokerages,too! Living in a litigist state like California, we see changes every year due to litigation. The wording especially in that clause, about commissions is over-kill because lawyers didn’t write it and the agents who did were/are afraid of the lawyers so they sewed it up tighly and tried to throw in everything, including the kitchen sink while doing so. Yes, do keep it simple. The West Point, and I assume it’s the same for the other branches, is right on point.
A distinction should be made between “rules” and “ethics.” The problem that the COE has currently is that it is a rulebook, having little to do with ethics. As Greg pointed out, much of it really exists to settle procuring cause disputes amongst brokers. The reality is that those things have little to do with ethics, but a lot to do with rules. Courts have already established the rules. NAR just added superfluous blather under the guise of “ethics.”
To give a more personal example: The National Federation of High Schools basketball rule book is quite lengthy. The player/coach/referee codes of ethics, in contrast, are only a few items each.
NAR loves to tout the Code of Ethics. In reality, they are mainly touting a rule book. Seems kinda silly to me.
Personally, I think the most important part of the entire document is the preamble. If you could bring ethics charges based on the preamble, much of the REALTOR chaff might be blown away. . .
Here is the link Scott was talking about from the VAR: http://www.thecodeisgoodbusiness.com/code/default.aspx
It is excruciating to read but fun to teach. I teach it twice a month and I swear I never get bored, there are so many examples of crappy behavior out there that I never run out of stories to use. Probably not a good thing but it keeps my classes interesting and the agents very involved.
There are a couple of funny things I picked up here…
The CoE is tantamount to a legal code (spelled L-A-W) and it was written not by lawyers, but by REALTORS(R). But, we are prohibited from practicing law…
The CoE is not about ethics, but rather it is rules. The Constitution is about rules. The Cadet Codes presented are about ethics. I think the NAR needs to divorce the Code of Ethics from the rules. The actual Code of Ethics should present the “spirit of the law” rather than the “letter of the law.”
It was good meeting you at the NAR Convention.
I think I can live the code.. I can’t understand it, and believe me, I’ve been thinking of taking the code and a dictionary and seeing if THAT will help, but, nawh…
The code of ethics needs to be rewritten in modern language… We need a New Living Translation (NLT) of the code of ethics. At present it is it’s own worst impediment.
Thanks
Jim
16 years ago my Pru broker at the time had an office meeting I will never forget.
He told us someone asked for an office manual that covered standards of behavior, etc. He then walked to a chalk board and wrote “Do what’s right”.
Then he turned to the 100+ agents in the room and said, “Anyone who needs further clarification, please find another broker”.
He concluded the meeting by quoting the Academy’s Honor Code, where his son was a cadet. I’m not sure what response he expected, but he received a standing ovation.
>”it has value in the marketplace as a guide, as a business tool and as a threat”
What threat? Most unethical agents rarely even get a slap on the wrist.
The NAR COE is
Ah the NAR code of ethics. I’m with Greg on this one. Unshackle the commission structure and so many issues will go away. NAR does and will make up any excuse to justify the current financial model and procuring cause or what not. The concept of procuring cause to me is terribly flawed as well. Again, … divorce the commission and procuring cause and all the problems that follow it go bye bye.
I’m not sure if it’s required nation wide, but I had to take a 3 clock hour “refresher” of the code of ethics. Seriously, if it requires 3 hrs to tell me to do what’s right, something is not right. I never though of the CoE as a rulebook but it is such a fitting description.
Will the NAR change it’s ways? Some reason I doubt it. They need to feel important and being loquacious is probably partially how they accomplish that.
Jay - what about NAR’s recent decision to “Ban REALTOR® websites from using “MLS”"? This has obviously upset more than just a few people.
- see REW thread at: http://www.realestatewebmasters.com/thread19714.html
- also Blog post at: http://www.realestatewebmasters.com/blogs/morgan-carey/3485/show/
“what about NAR’s recent decision to “Ban REALTOR® websites from using “MLS””? This has obviously upset more than just a few people.”
I hope they do. That issue will be resolved with a restriction of trade lawsuit.
[...] Here is this week’s short-list of Odysseus Medal nominees: Robert Ashby — Credit crunch, What Should be Done About the Continued Credit Crunch? How About Nothing?Chris Johnson — 2011, Why 2011 might not even be the endJim Watkins — Foreclosure, Sad Story of a Family in Foreclosure: Some things You Hate to SeeMarlow Harris — Iggy’s House, Iggy’s House and B.S. RealtyBrian Brady — Market outlook, 2008 Housing Market Outlook For U.S. InvestorsMariana Wagner — RE agent, You know you’re a real estate agent if…Jay Thompson — NAR COE, 7,373 Words - The NAR Code of EthicsKris Berg — Real estate blogging, The Real Reason Your Agent Should be BloggingJeff Brown — Lenders lend, Lenders Clearing Deck To Blink, Uh, Lend — What Will They Think of Next?Cathleen Colins — Memories, Memories of my Dad in the house he never got to seeJim Duncan — NAR speak, Why use a realtor - decoding nar-speakGeno Petro — Serendipity, Serendipity, straight upMichael Wurzer — Advertising, Everything Is Advertising [...]
“I hope they do.”
Going to require a lot of changes to your own site Bob…
Personally, I think it’s ludicrous. First of all, “MLS” isn’t trademarked by anyone (other the Major League Soccer).
So the NAR “fobids” members to use the term MLS. What is next? What’s to stop them from banning something else?
Meanwhile, the NAR can only forbid its member from using MLS. So ANYONE ELSE is free to use it. Now some slimeball FSBO or listing site can just vault right over me for search terms related to “MLS”. Yeah, that makes perfect sense and is a prime example of the NAR and local associations really stepping up for the benefit of their membership.
Why doesn’t NAR forbid the use of “Real Estate”, “Realty”, and “Real Property” from it’s members websites? That way we could buy leads from non-member’s so that we could possibly conduct our business in “R**l E****E”, R****Y, and “R**L P******Y”.
If a visitor to a Realtor web site is not visiting to “search the MLS” then what the heck are they doing there, looking for a 10 year old glamour photo of someone they don’t know or looking for cheesy phrases telling how great the agent is? I doubt it?
As far as ethics go, aren’t we supposed to disclose facts? Isn’t it a fact that an IDX application on an agent web site is there for one purpose and one purpose only - to “search the MLS”?
Wouldn’t it be a shame if an ethical Realtor did not disclose the material facts that the page exists for the purpose of site visitors to be able to “search the MLS”?
If the agent does not disclose that the page purpose is to “search the MLS” then what should the visitor be led to believe that he might be searching? The site owners own listings (all 30 gazillion of them)?
So, if we deduce that it would be impertive for an ethical Realtor to properly disclose what is in fact being searched, then would it not be an ethical lapse if this were not prominently displayed in the Page Titles, Keywords, and Descriptions so that all visitors human and electronic know exactly what is being presented by the ethical Realtor?
Isn’t it a bit worrisome that Realtors in this forum that will “not lie, cheat, steal, or tolerate those who do” are being challenged by their own associations Code of Ethics to not truthfully disclose “what” is being searched?
I think these posts attest to the “or tolerate those who do” portion of the “Ethics for Dummies” version of the code of ethics.
Thanks for this post Jay and Bob’s comment!
[...] The Realtor Code of Ethics is here, and it’s nine pages long. [...]