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What Should You Know About Unethical Realtor Behavior?

Written by Ashley Sutphin Posted On Tuesday, 18 January 2022 00:00

When you buy or sell a home, it’s stressful. Purchasing a home is a huge financial decision that’s also life-changing. A real estate agent has to be someone who behaves with the utmost integrity and adheres to ethical standards, but as with anything, that may not always be what happens.

Most real estate agents and realtors take their business and the ethical requirements very seriously, but there are always a few bad apples in any industry. Unethical behavior certainly isn’t the norm, but some examples and red flags to watch out for are below.

It’s worth noting that understanding these unethical behaviors is essential, not just if you’re a possible buyer or seller. It’s crucial if you’re a real estate professional because you wouldn’t want to behave in an unethical way inadvertently.

Discrimination

Real estate agents have to be careful about doing anything that could be seen as discriminatory. For example, if you say a house is suitable for families in a listing, that could violate fair housing laws because there’s a mention of marital status.

Under the Federal Fair Housing Act, buyers have protection from discrimination based on race, sex, religion, familial status, disability, national origin, and color. A realtor can’t refuse to work with someone because they belong to a certain group of any kind.

Real estate agents aren’t allowed to answer questions about the racial makeup of a neighborhood, nor can they accommodate requests from a buyer to live somewhere with a certain racial or ethnic makeup.

Misrepresentation

Misrepresentation is one of the most frequently seen illegal practices in real estate and is the reason for more than half of all lawsuits against real estate agents.

When an agent misstates information about a property, such as structural features, it’s a misrepresentation. This is often an accident, but some agents might behave unethically if they do it on purpose to try and push the sale.

If you’re a buyer, even if you feel like you were accidentally misled, you might be able to pursue legal action.

Giving Legal Advice

If you’re a buyer or seller, you’ll probably have plenty of questions during a transaction. Many of those questions your agent is qualified to answer. However, some real estate agents aren’t qualified to provide you information about, nor should they because it’s unethical or potentially illegal.

For example, you shouldn’t answer legal questions if you’re an agent about things like taxes or contracts. You have to maintain a fine line when it comes to providing tax or legal advice.

A realtor shouldn’t interpret contracts or draft them. Instead, a realtor or real estate agent fills in contracts already written and approved by a legal professional.

Disclosing a Seller Will Take Less Than the Listing Price

If you’re a realtor, you shouldn’t let someone know your client will take less than the listing price. You may be tempted to let this information out to help sell the property, but unless you have written permission from your client saying you can reveal their bottom line or reason for selling, keep it to yourself.

Client Poaching

For realtors, you shouldn’t make phone calls or send written communication soliciting a seller with an active listing contract with another agent.

If you’re working with an agent and you think they’ve done something unethical, you can speak to them about it or file a complaint with the local Realtor Association in your area. If you continue to work with an unethical agent knowingly, it can put you in hot water as well, so do something about it quickly if you see something you think isn't right.

Keep in mind, unethical behaviors aren’t necessarily the same as red flags of a bad agent, so you have to watch out for these as well.

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