This sort of thing happens all the time. A prospective homebuyer comes into an open house. The real estate agent strikes up a conversation and they hit it off. Next thing you know they are talking about writing an offer on the house that is open, or perhaps on some other house that the agent has by then shown to the buyer. Then comes the uncomfortable breaking of the news. "You know, I really appreciate all the help and information you have given me, but I've been working with another agent. I'm really going to have to go to him to write this offer."
There are endless variations on this scenario, and a great variety of ways in which they might ultimately play out. But our interest today is to go back to the beginning and consider what should have happened.
It is just a good business practice in situations such as we have described for an agent to ask, "Are you working with another agent?" These don't need to be the first words out of the agent's mouth, but the question should be articulated pretty early on. Doing that may save everyone a lot of trouble, possibly some embarrassment, and maybe even hard feelings.
Furthermore, if the agent is a Realtor® -- a member of the national, state, and local associations of Realtors® -- then not only would it have been smart to ask such a question, it would have been the agent's professional ethical duty.
Article 16 of the Realtor® Code of Ethics says, "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 their clients."
Like many other articles of the Realtor® Code of Ethics, this needs interpretation and/or elaboration. All of its implications are not immediately evident. (This is hardly something unique to the Realtor code. It is common for ethics codes to need interpretive commentary. Consider, for example, the Ten Commandments.) The official interpretations and elaborations of the Realtor® Code of Ethics are contained in the Standards of Practice. Some articles, of course, require more Standards of Practice than do others.
In the case of Article 16, there are currently twenty accompanying Standards of Practice. (Standards may be added to articles from time to time.) Relevant to the situation we are considering is the second paragraph of Standard of Practice 16-13.
Before providing substantive services (such as writing a purchase offer or presenting a CMA) to prospects, Realtors® shall ask prospects whether they are a party to any exclusive representation agreement. Realtors shall not knowingly provide substantive services concerning a prospective transaction to prospects who are parties to exclusive representation agreements, except with the consent of the prospects' exclusive representatives or at the direction of prospects.
To be sure, the wording of the Standard is a bit more particular than, "Are you working with another agent?" That is, it requires that the Realtor® ask if the prospect is a party to an "exclusive representation agreement" (which, among other things, would have to be in writing). Certainly, someone might have been "working with" another agent without actually being party to such an agreement.
Additionally, the Standard is regrettably imprecise by not specifying that the inquiry should be with respect to an exclusive representation agreement regarding the same type of real estate service. Standard of Practice 16-3 makes it perfectly clear that the Code of Ethics does not preclude a Realtor from "offering to provide, or entering into a contract to provide, a different type of real estate service unrelated to the type of service currently being provided [by another Realtor®]" There would, for example, be no professional ethical problem with a Realtor® entering into an exclusive buyer agency agreement with a prospect who happened to have his home exclusively listed with another Realtor®.
