By Susanna Madden
The National Association of REALTORS® Code of Ethics was adopted in 1913 years ago to ensure consumers are properly served by requiring REALTORS® to cooperate with each other in furthering their clients’ best interests. Why? Let’s just say there were some unsavory types selling real estate to unsuspecting buyers.
The creation Code of Ethics and the invention of the word REALTOR® differentiates us from real estate agents who do not promise to abide by the code. Its purpose is to show our professionalism to the public and promote the benefits the word offers.
There are 17 Articles in our Code of Ethics and when we take the oath to become a REALTOR®, we swear to abide by them. 16 of the Articles have to do with our duties to our clients and customers, to the public and to each other. The 17th Article has to do with arbitration, which is how we handle the situation when there’s a dispute over who is entitled to the professional fee.
There are several important things to remember here:
- The property must close before it can be arbitrated or there is no commission to arbitrate.
- Arbitration is actually between brokers, not agents, as the brokers own the listings. Only brokers can offer and accept offers of compensation.
- The preponderance (greater weight) of clear, concise evidence showing no break in the chain of a series of events connecting to the buyer helps to determine the prevailing party.
- The panel’s decision is not based on:
- Who wrote the contract first?
- Who showed the property first?
But remember this: arbitration is binding and in the end one party will prevail. Except on very rare occasions, one party will walk out with all the marbles. When you joined this Association, you agreed to arbitrate commission disputes in accordance to the regulations of the Association and be bound by the decision.
Greater Tampa REALTORS® offers mediation to members who are in an arbitration dispute, whereby they can sit with a mediator to discuss the situation and see if they can come up with their own compromise. The purpose of the mediator is not to offer solutions, but rather to be certain each party respects the other’s right to speak. The parties may talk about what services they provided for the client, how they met them, what they discussed with them and then in many cases, information is gleaned that the other party had not been aware of. There is no predetermined entitlement of commission. The two parties can work it out however they wish. For example, splitting the professional fee however they agree and the broker will allow. Or they may choose to come back for more mediation discussion. Or, they may choose to go ahead and take their chances and arbitrate, letting the chips fall where they may.
This is why mediation is NAR’s preferred method of dispute resolution. Mediation can salvage reputations, friendships and feelings. So, to mediate or not to mediate? That is the question that perhaps you should consider, if the time comes when you are faced with an arbitration situation and you want to take control of the outcome of a commission dispute.
Susanna Madden, ABR, AHWD, CRB, CRS, ePRO, GRI Masters, MRP, PMN, SRES, SFR, TRC (RE/MAX ACR Elite) was the President of GTR in 2002.