Today, we’re discussing licensed real estate professionals in the great state of North Carolina and the top three things that I see the Real Estate Commission disapproves of.
We previously talked about property management issues. Yes, a real estate agent does have some bugaboos about what goes on there that is not ethical. I’ll refer you to the previous blog for more discussion on that. But these are more of, what I can only describe as shady personal interest type of dealings.
One of those would be failure to disclose an interest with a third-party. Essentially, what it would be is a real estate agent would have a deal worked out with a client, say it’s for a distressed property, and they already, prior to completing the deal with the client, it would be like a purchase from a client. This deal is acceptable, provided it is executed ethically. You got to make sure that everything is properly disclosed, you have client permission, and you adhere to established procedures. Assuming that all that is done correctly, you also must make sure that you don’t have a side deal worked out with a third-party ahead of time before the sale happens. To where I’m going to get this property from this client for, let’s just say $50,000, and then before the money even hits their hand and the deed hits yours, you’ve already got a third-party deal worked out with Joe Smith up the road for $150,000 for the same exact property. That’s what the Commission does not like. That’s an ethical violation. That’s going to be something that they’re going to severely frown upon. Don’t do that.
Failure to disclose a personal interest is another matter that the Real Estate Commission heavily frowns upon. It’s slightly different from the previous example, but in this case, let’s say you own company A, and company A owns company B, which in turn owns company C. Now, imagine your client is Jane Williams, and she’s dealing with company C, completely unaware that company C is owned by company B, which, in a convoluted chain, is ultimately owned by you, the real estate agent. This is precisely what the Real Estate Commission is referring to when they talk about the failure to disclose the real estate agent’s interest in a transaction with the client That’s another thing that’s very much frowned upon by the Real Estate Commission.
The last thing, and this would be a major issue with the Real Estate Commission if this were to happen, would be failure to put a real estate listing on MLS (Multiple Listing Service) in a timely manner.
Sometimes this has been done in the past, and the Real Estate Commission has found out about it where an agent has failed to put the listing on MLS timely in an interest to profit more off the listing. Now, this is a little bit different than putting a “coming soon” sign for marketing purposes. That’s fine, if you talk with the client, they know what’s going on, they’re on board with it, they approve that. That’s different and that’s acceptable because that’s a marketing thing. It could potentially benefit the client and drive up more interest in the property. So, say you do a “coming soon” on May 1st, and you talk with a client, you have a game plan together, you get their approval and it’s set to go on the MLS on May 25th. And during those three weeks or so, you got people calling and you’ve drummed up a lot of interest in it, and everybody’s just waiting to see it. And then May 25th rolls around and you got 20, 30, 40 people at the first showing. That’s what that’s for and that’s fine if you have client approval and a client is fully aware of what’s going on and the reason for it, etc. Not putting it on MLS for your own benefit and at the detriment of the client, that’s what the Real Estate Commission is worried about.