Importance of Real Estate Ethics

Wednesday, June 24, 2009:

Are ethics really important in the real estate business? They certainly can be as illustrated by the following example.

Imagine for a moment that you are having chest pain and shortness of breath. It is obvious that you need a doctor, so you place a call to Dr. Dennis Pullit, DDS. Would it make sense for Dr. Pullit to recommend that you call a heart specialist rather than a dentist? Do you think there might be an ethical issue here if Dr. Pullit tried to assist with your chest pain?

Next try applying the same principal to real estate. There are numerous specialties in real estate, just as there are in the medical field. Many agents are “residential” specialists who work with home buyers and sellers. Others specialize in commercial, industrial, property management – or raw land.

Each specialty requires a different subset of knowledge, education, and experience. For example, an industrial broker must know and understand concepts such as internal rate of return, future value, and physical & functional depreciation – to name just a few. Thus, it would make sense, if you’re planning to buy a home, to work with a residential specialist – and not an industrial specialist.

A broker who specializes in homes will have daily contact with such critical items as home inspections, residential financing, termite inspections, Homeowner’s Associations, and subdivision regulations. The more homes an agent has listed and sold, the greater the value of the experience gained. The industrial specialist cannot begin to offer the same degree of excellence in the services offered.

So – back to ethics. Recognizing the importance of different specialties within the real estate business, the National Association of REALTORS® addresses this topic. Take a look at Article 11 of the REALTOR® Code of Ethics:

“REALTORS® shall not undertake to provide specialized professional services concerning a type of property or service that is outside their field of competence unless they engage the assistance of one who is competent on such
types of property or service, or unless the facts are fully disclosed to the client.”

Now take a look at some of the areas of expertise required of a broker who lists and sells large parcels of raw land:

1. Metes and bounds legal descriptions
2. Rights-of-way by prescription
3. Timber & hunting rights
4. Riparian rights
5. Recognition of survey blazes, rock property corners, and painted lines
6. Identification of tree and plant species
7. Knowledge of wildlife presence on property – both friend and foe
8. Precautions when dealing with bears and other predators
9. Inclement weather & natural event survival skills
10. Ability to read topographic maps
11. Knowledge of compass & GPS methods for orienteering
12. Authentic & accurate records of properties listed & sold
13. Use of all-terrain vehicles to navigate properties
14. Ability to bush-whack through unimproved forested land

Get the picture? The services provided by a land specialist reach far beyond the boundaries of town limits, paved streets, and cookie-cutter homes. The land specialist must be able to both expose buyers and sellers to all physical aspects of a large property, while at the same time protecting them from the potential for falls, hypothermia, negative wildlife encounters, and the effects of sudden changes in the weather.

So . . . planning to buy or sell land? See the difference in specialties within the real estate business? Enough said.

Have you had any unpleasant experiences while looking at land? Tell us your story!