Case #15-1: Knowing or Reckless False Statements About Competitors

REALTOR® A operated a residential brokerage firm in a highly competitive market area. He frequently used information from the MLS as the basis for comparative ads and to keep close track of his listing and sales activity as well as his competition.

One day, while reviewing MLS data and comparing it to a competitor’s ad, REALTOR® A noticed that REALTOR® Z had used a diagram to demonstrate his market share, contrasting it with those of several other firms. The ad showed that REALTOR® A had listed 10% of the properties in the MLS over the past three months.

REALTOR® A thought this was low. His analysis of MLS data showed his market share was 11%. REALTOR® A filed an ethics complaint against REALTOR® Z citing Article 15 of the Code of Ethics in that REALTOR® Z’s “obviously understated market share claim” was a “misleading statement about other real estate professionals.” REALTOR® A’s complaint was considered by the Grievance Committee which determined that an ethics hearing should be held.

At the hearing, REALTOR® Z testified he had always been truthful in his advertising and that all claims were based in fact. He produced an affidavit from the MLS administrator which indicated that a programming error had resulted in miscalculations and, after careful recomputation, REALTOR® A’s market share over the past three months had been 10.9%. The administrator’s statement noted that this was the first time that information related to REALTOR® A’s listings or sales had been misstated on the system. “I relied on information from the MLS. It’s always been accurate and I had no reason to even suspect it was wrong last month,” said REALTOR® Z in his defense.

How would you decide on REALTOR® Z?

Ethics Violation of Article 15 in the NAR Code of Ethics? or No Violation?

See below for how this hearing panel ruled…if you think a violation, how much discipline would you impose? Fine of $________ and ____ hours of education.

If you were the respondent (aka defendant) REALTOR® in this complaint would you have considered taking an offered citation (small fine and education) in lieu of a full formal ethics hearing or waiving your right to a full formal hearing and accepting the fine and education imposed by the ethics committee who takes into account your admission of unprofessional behavior (aka take a plea deal)? Would you have considered settling via an ethics mediator aka ombudsman aka ombudsperson?

SCR is receiving numerous reports of unprofessional behavior. Across the country, unprofessional behavior is the number #1 complaint by REALTORS® about their colleagues in the market.

There are several ways of addressing and trying to correct unprofessional behavior. Lead by example. If you see unprofessional behavior, say something. Discuss with the other REALTOR®. Discuss with the REALTOR®’s Broker-in-Charge (BIC). Consider filing ethics complaints at the appropriate association and filing license law complaints at LLR.

The Hearing Panel agreed with REALTOR® Z’s logic, noting that a REALTOR® should be able to rely on generally accurate information from reliable sources. They reasoned that if, on the other hand, the MLS had shown REALTOR® A having, for example, 1% of the market, then REALTOR® Z’s reliance on the information would have been “reckless” because REALTOR® A had generally had a 10 –15% market share and a reasonable conclusion would have been that the information from the MLS was seriously flawed.

The Hearing Panel concluded that REALTOR® Z’s comparison with other real estate professionals, while slightly inaccurate, was based on usually accurate and reliable information and had been made in good faith and while technically “misleading,” had not been “knowing” or “reckless”. REALTOR® Z was found not to have violated Article 15.

Posted by: Byron King on 10/14/20 (This information is only accurate as of 10/14/20. You must contact SCR for updates and changes to this information after 10/14/20 as laws and regulations may change over time. SCR 803-772-5206 or email Byron)