Case #15-2: Intentional Misrepresentation of a Competitorís Business Practices

Case #15-2: Intentional Misrepresentation of a Competitorís Business Practices

Published Monday, August 3, 2015

The following Case Study was produced by the Professional Standards Committee of the National Association of REALTORS®

Adopted Case #23-2 November, 1992. Transferred to Article 15 November,1994. Revised November, 2001. 

Following a round of golf early one morning, Homeowner A approached Realtor® X. “We’ve outgrown our home and I want to list it with you,” said Homeowner A. “I’m sorry,” said Realtor® X, “but I represent buyers exclusively.” “Then how about Realtor® Z?,” asked Homeowner A, “I’ve heard good things about him.” “I don’t know if I would do that,” said Realtor® X, “while he does represent sellers, he doesn’t cooperate with buyer brokers and, as a result, sellers don’t get adequate market exposure for their properties.”

Later that day, Homeowner A repeated Realtor® X’s remarks to his wife who happened to be a close friend of Realtor® Z’s wife. Within hours, Realtor® Z had been made aware of Realtor® X’s remarks to Homeowner A earlier in the day. Realtor® Z filed a complaint against Realtor® X charging him with making false and misleading statements. Realtor® Z’s complaint was considered by the Grievance Committee which determined that an ethics hearing should be held.

At the hearing Realtor® Z stated, “I have no idea what Realtor® X was thinking about when he made his comments to Homeowner A. I always cooperated with other Realtors®.” Realtor® X replied, “That’s not so. Last year you had a listing in the Multiple Listing Service and when I called to make an appointment to show the property to the buyer, you refused to agree to pay me.” Realtor® Z responded that he had made a formal offer of subagency through the MLS with respect to that property but had chosen not to offer compensation to buyer agents through the MLS. He noted, however, that the fact that he had not made a blanket offer of compensation to buyer agents should not be construed as a refusal to cooperate and that he had, in fact, cooperated with Realtor® X in the sale of that very property.
In response to Realtor® Z’s questions, Realtor® X acknowledged that he had shown his buyer-client Realtor® Z’s listing and that the buyer had purchased the property.

Moreover, Realtor® X said, upon questioning by the panel members, he had no personal knowledge of any instance in which Realtor Z had refused to cooperate with any other broker but had simply assumed that Realtor® Z’s refusal to pay the compensation Realtor® X had asked for was representative of a general practice on the part of Realtor® Z.

The Hearing Panel, in its deliberations, noted that cooperation and compensation are not synonymous and though formal, blanket offers of cooperation and compensation can be communicated through Multiple Listing Services, even where they are not, cooperation remains the norm expected of Realtors®. However, to characterize Realtor® Z’s refusal to pay requested compensation as a “refusal to cooperate” and to make the assumption and subsequent statement that Realtor® Z “did not cooperate with buyer agents” was false, misleading, and not based on factual information. Consequently, Realtor® X was found in violation of Article 15.