New Standard of Practice: ‘Free’ for Buyers?

Dear Joey: A fellow Realtor told me about a new Standard of Practice, and it sounds like I can’t tell buyers that my service doesn’t cost them anything?

ORLANDO, Fla – Dear Joey: What is Standard of Practice 12-1? I heard something about a change, pulled out the 2022 Code of Ethics and noticed there’s a new Standard of Practice – specifically 12-1. What is this? – Code Monitor

Dear Code Monitor: Wow, impressive. NAR just recently posted the 2022 Code of Ethics – you are in the know! The new Standard of Practice 12-1 was just passed at the National Association of Realtors® (NAR) Conference in November. I’ll shed more light on it.

As you all are aware, Article 12 of the Code of Ethics states “Realtors® shall be honest and truthful in their real estate communications and shall present a true picture in advertising, marketing and other representations.” Overall, it deals with advertising.

The new Standard of Practice 12-1 supports this by stating “Realtors® must not represent that their brokerage services to a client or customer are free or available at no cost to their clients, unless the Realtor will receive no financial compensation from any source for those services. (Amended 1/22)”

How did this come to be and what does it mean for you?

Well, first, it came to be as an aid in consumer transparency. The Standard of Practice – along with new MLS Policy Language that is the same – helps make things clearer for consumers. By following the standard, consumers won’t be confused by services offered as “free” when, in reality, they’re not free.

What does this mean to you? You cannot advertise your services to a client or customer as “free,” meaning you cannot say “we work for free” or at “no cost to you.”

There’s really only one exception. It’s permissible to call your services free only if it’s literally true – that you will help this customer and receive NO financial compensation from any source for your services. If you really aren’t going to be compensated at all, you can market services as free.

This new rule generated a common question we’ve been getting: What if I say, “We provide a free CMA (comparative market analysis)?”

Per the language in Standard of Practice 12-1, if you will receive NO financial compensation from any source for that service, it should be okay. A “free CMA” – you truly receive absolutely NO compensation for providing it to a client – should be alright.

However, one caveat to that: If anyone calls this into question, we never know exactly what a panel may decide.

Great job for keeping your eye on the updated Code of Ethics and be sure to keep this new Standard of Practice in mind and its one exception. If you do, you should have nothing to worry about. 

Joey Sale is the former Director of Local Association Services for Florida Realtors

Note: Advice deemed accurate on date of publication

© 2022 Florida Realtors®

Source link