If ethics are so important, violations should be publicized
Realtors pledge to abide by a Code of Ethics, but complaints are handled behind closed doors, giving consumers little incentive to report bad actors.
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The views expressed in this column are solely those of the author.
Lately, the industry has been talking a lot about the importance of ethics. Specifically, how NAR's Code of Ethics makes Realtors stand out and holds them to a higher standard beyond being a licensed agent.
But if we are honest, most consumers have no idea what's in the Code of Ethics or if NAR really is holding agents to a higher standard, because if any enforcement is happening, it's behind closed doors.
Two paths to accountability, but only one has teeth
When a broker ignores or won't resolve a consumer complaint, consumers have two main options: take their complaint to the local Realtor association or to the state real estate commission. Only the second option has teeth, and it's a long, drawn-out process with no guarantee of action. But if the commission determines that there was a violation, the agent can lose their license or may have to pay monetary damages, and the outcome is a matter of public record.
Consumers typically equate Realtor associations with state boards and don't realize they are not the same. It's easy to understand why, considering most of the forms consumers are handed have the Realtor logo right at the top. So, when something goes wrong and the brokerage doesn't resolve the complaint, the Realtor association is sometimes the first place a consumer goes to report it.
Which got me thinking: Is there any point in going through the Realtor complaint process?
The association may put the case in front of the ethics board, possibly fine the agent (and that money goes to the association) and assign some educational courses. But what does the consumer actually get out of it? The association can't take that agent's license away. The only path to monetary compensation is a separate arbitration process, limited to contract disputes, and only if the consumer agrees to be bound by the decision.
And in the end, there is still no public record of the Realtor's bad behavior. Buyers and sellers have to rely on reviews or warnings in public forums or on social media, which in some cases can result in the person making the complaint getting hit with a cease and desist order, even when their story is truthful.
If Realtor ethics are so important, and NAR wants consumers to take the time to go through the complaint process, why not at least publicize who isn't following the rules?
What a public accountability system could look like
If Realtor associations made ethics violations public, here's what would actually be on the table:
Consumers could look up an agent's history before hiring them, the same way they can with the state licensing board.
Consumer experiences and trust could improve by avoiding the agents who don't follow the rules.
It puts real weight behind the "higher standard" language associations use to market the Realtor brand.
It creates an actual deterrent, since right now the worst outcome an agent faces is quietly losing a membership, paying some fines or doing a little extra reading.
It matches what other private credentials already do. The CFP Board, for example, which grants the CFP® mark to financial planners, publicly posts disciplinary actions, from censures to revocations.
It would show consumers that Realtor associations are serious about their rules and hold members accountable.
It better highlights the members who actually follow the rules.
NAR's strategic plan commits to strengthening ethical standards and rebuilding trust in the Realtor brand, so why not start here? If being a Realtor is what separates agents who are held to a higher standard from everyone else who just has a license, it's time to prove it.
Wendy Gilch is a consumer advocate and thought leader in residential real estate, dedicated to exposing industry practices that put homebuyers and sellers at a disadvantage. Since 2019, she has developed programs that educate consumers, increase transparency and push for stronger protections in the homebuying process.