Say you’re a Realtor® and a buyer enlists your help to make an offer on a home and complete the transaction. During the process, they may ask you questions about the property, such as whether there have been previous fires or flooding in the home or any other notable events. As a member of the National Association of Realtors (NAR), you know you’re obligated to disclose these details and more to clients, as detailed in the NAR's Code of Ethics. Though this document is very long, it’s one that Realtors of all experience levels are expected to try to commit to memory. Why? Because, ultimately, your level of familiarity with its tenets and expectations could be the deciding factor between whether you have a successful career in real estate or a disastrous one. To help you out, we’ve created a quick review of the NAR Code of Ethics that will outline all the important pieces of information you need to know and remember. Specifically, we’ll cover the following topics:
And if you’re hoping to dive deeper into a specific article or duty, don’t forget that you can always review the full document on the NAR website, as well. What Is the NAR’s Code of Ethics?The NAR's Code of Ethics was created in 1913 to ensure that a client who’s buying or selling a property is treated fairly by the Realtor handling the transactions. In short, the Code of Ethics says you’re legally required to divulge details about a home, apartment, condominium, or any other type of property, even if that means losing out on your commission. Current Realtor chapters and members are required to complete the ethics training every four years to remain part of the NAR. Who Must Adhere to the NAR’s Code of Ethics?The Code of Ethics applies to state and local associations, as well as agents who have received the NAR certification. (Appraisers, brokers, and other types of licensed real estate professionals can also become members of the NAR, too.) The Code of Ethics does not apply to real estate professionals who haven’t achieved the NAR’s “Realtor®” label. Breaking Down the NAR's Code of EthicsFor NAR members, the Code of Ethics is the essential guidebook that dictates how they should behave during all client interactions. This information is broken up into four parts:
Now, we’ll walk you through a high-level overview of what each section covers. The NAR Code of Ethics PreambleAs a NAR member, Realtors must apply the principles of the Code of Ethics during all client interactions and business dealings. The preamble emphasizes that Realtors should “recognize that the interests of the nation and its citizens require the highest and best use of the land and the widest distribution of land ownership.” The Code of Ethics preamble encourages Realtors to uphold its core principles and highlights the ideas of honesty, integrity, fairness, and moral conduct in real estate dealings. The document also states that Realtors will stay up-to-date on the latest news and happenings that impact clients and real estate businesses, and also to avoid any practices that may damage or discredit the real estate industry and profession. The 3 Major Sections of the NAR Code of EthicsThe Code of Ethics includes three major sections, each of which contains a number of “articles” or declarations that dictate what a Realtor’s duties are to clients and customers, to the public, and to other Realtors. While you may not remember every word, it’s important to have a firm understanding of what each section covers.
A Summary of the 17 Articles of the NAR Code of EthicsNow, let’s break down each of the three major sections into their respective articles. To keep things short and sweet, we’ve paraphrased each of the articles and attempted to put them into plain English for you to skim. Duties to Clients & Customers
Duties to the Public
Duties to Realtors
For more detailed information or examples of any of the above articles, you should refer directly to the NAR's Code of Ethics itself. Interested in Becoming a REALTOR? Here's HowIf you aren’t already a Realtor but would like to become one, your first step will be to join your local Realtor association. You’ll also need to pay the $150 membership fee. Non-principal applicants are also welcome to apply to join an association. (According to the NAR, non-principal applicants refers to individuals who work in the real estate industry other than as sole proprietors, partners, corporate officers, or branch office managers, and are associated with a Realtor member.) Here’s what else you’ll need to do to officially become a Realtor:
Additionally, applicants should also be prepared to disclose information pertaining to:
You’re also required to attend an orientation course if you’re hoping to become a member. Image courtesy of iStock.com/cyano66 Last updated on Aug 25, 2021. Originally published on Apr 17, 2020. The views expressed in this article are those of the author and do not necessarily reflect those of Berxi™ or Berkshire Hathaway Specialty Insurance Company. This article (subject to change without notice) is for informational purposes only, and does not constitute professional advice. How we use your email address What does the article 10 of the Code of Ethics relate to?A new Standard of Practice under Article 10 was adopted: Article 10, Standard of Practice 10-5: “REALTORS® must not use harassing speech, hate speech, epithets or slurs based on race, color, religion, sex, handicap, familial status, national origin, sexual orientation or gender identity.”
What does Article 1 of the Code of Ethics state?Article 1 states: When representing a buyer, seller, landlord, tenant, or other client as an agent, REALTORS pledge themselves to protect and promote the interest of their client. This obligation to the client is primary, but it does not relieve REALTORS of their obligation to treat all parties honestly.
How many articles are in the Code of Ethics?The Code of Ethics consists of seventeen Articles and related Standards of Practice. The basic principles of the Code are summarized below.
What are the three major sections of the Code of Ethics?The Code of Ethics is divided into three major sections, "Duties to Clients and Customers," "Duties to the Public," and "Duties to REALTORS."
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