A noteworthy legislative amendment was the exclusion of “squatters” from the definition of “tenant” under the current tenancy laws.
It is important to note that while the new Good Cause Eviction Law went into effect in New York City immediately, other municipalities throughout New York State will need to opt-in by enacting this legislation if they so choose.
A Realtor must act in the best interests of his/her client (Code of Ethics, Article 1). A good agent will do everything in their power to get their client the best deal or consummate a transaction. However, sometimes, an agent will overreach in order to manipulate parties or negotiations. While good-intentioned, it may get the agent into hot water with the Professional Standards Committee, or worse, New York State authorities. Here are some things to be aware of or avoid.
Showing Instructions
OneKey Rule 404.5 requires that “[a]ny instructions by an owner…restricting showings or access to a Property must be in writing and signed by the owner….” Such instructions must be on file with the listing broker and they must be made available immediately upon request.
The first thing to note is that the homeowner establishes the rules for showings, not the agent. What an agent might prefer for a showing is irrelevant. While an agent may like the idea of having only pre-qualified buyers see a property, they cannot require this, unless the request is coming from the homeowner and in writing…and that writing must be made available to any cooperating agent that requests it. If it’s not in the listing agreement, then it should be memorialized somewhere else. Same for requiring COVID-19 forms; without the homeowner’s consent, they cannot be required for a showing.
Recently, we have seen an uptick in rental listing agents requiring all sorts of documentation in order for a tenant to see a rental. Things such as pre-screenings, full application completion, credit checks and W-2 forms are being required. While this may seem like a quick, efficient shortcut to finding a tenant, it raises some ethical issues. Assuming that an agent is sitting down with the homeowner and discussing these requirements, it may be in the agent’s best interests to explain that such initial barriers to a showing may reduce the number of showings, increase a property’s days on market, and reduce competition which may, ultimately, result is a lower rental price. Failing to explain this to a client could be a violation of the Code of Ethics.
Further, creating onerous requirements for just a showing may raise thoughts of fair housing violations. Someone may say, “Is my client the only one being required to jump through all these hoops or is this just a ploy to discriminate against my clients?” Lawsuits are easy to file and hard to defend and will consume time and resources even if defended successfully.
Failing to have a full discussion with a client about the pros and cons of these potentially burdensome requirements, as well as having them reduced to a signed writing by the client can get an agent in hot water. Not only could an agent be in violation of the OneKey rule, but they may be in violation of Code of Ethics Article 1 (not acting in the best interests of their client and not treating all parties honestly), Article 2 (making a misrepresentation about the property or the transaction), and Article 3 (failing to cooperate with other brokers), but there could be Department of State investigations, and New York State Attorney General’s office investigations.
Presentation of Offers/Counter-Offers
The Code of Ethics, Article 1, Standard of Practice 1-6, states that “Realtors shall submit offers and counter-offers objectively and as quickly as possible.” Further, Standard of Practice 1-7 and 1-8 state that these offers must continue to be presented unless the client waived this obligation in writing. Nowhere does the rule state that the presentation of offers can be anything other than “as quickly as possible.” Further, OneKey Rule 405.3, a mandatory NAR rule, states that a listing broker, or someone in the listing broker’s office “must immediately advise” a seller/landlord that an offer has been made and they shall “make timely arrangements for the offer(s) to be presented.” Again, there is no provision that permits anything but “immediate” and “timely” presentation of all offers.
Problems arise when, whether for the sake of convenience or for strategy purposes, an agent decided the timing of when offers will be presented. Perhaps the offer is extremely low and the agent knows that the client will reject it. Maybe the agent may wish to hold off presenting offers until the property has been on the market for a week, or until after a weekend open house. Maybe the client is out of town and returning in a week. Perhaps an agent has a preferred offer that they presented and the agent puts all the other offers into a “holding pattern” until the client has had an opportunity to decide on that preferred offer. All these actions may be a violation of the rules (potentially Articles 1, 2, 3, and OneKey Rule 405). The fact remains that the rules require that all offers must be presented as quickly as possible/immediately/timely. Holding off on the presentation of offers, for any reason, can result in an agent violating these rules, not to mention that, as noted before, a party may assert that their offer was not presented as a way of discriminating against them.
Additionally, remember that simply because a party is making a counter-offer does not negate the timing of presentation. Initial offers and counter-offers are all treated the same and an agent cannot refuse to allow a buyer from presenting a counter-offer, even one that may seem unreasonable.
Be reminded that offers should be presented a.s.a.p. If the homeowner wishes to hold off on opening or analyzing them, that is their prerogative, not the agents. The agent does not decide. The agent needs to follow the rules and understand what’s their role in the process. They might suggest the timing of reviewing offers, but they cannot hold off on presenting offers or counter-offers up until the time of closing, unless this requirement is waived in writing by the client.
Speaking of offers and counter-offers, an agent should remember that all offers, including counter-offers, must be presented in the same fashion. To hand-deliver some, e-mail or verbally present others may influence a client’s opinion about an offer or create bias toward an offer. The rule is that they all must be presented objectively. Varying the way offers are presented, whether in the timing or the fashion in which they are presented, can run afoul of the rule.
Lying or “Baiting”
Sometimes agents take “artistic license” or otherwise get creative with what they say to other agents regarding offers. An agent might suggest that there is an offer or more than one offer that will imminently be coming in to create pressure on a buyer. Or an agent may disclose that a potential buyer’s offer should be at a certain price because there is another agent that is considering or made a similar offer. The problems arise when the facts are not true.
First, agents can’t just say that they have offers (assuming that there is an actual offer) without their client’s consent. Keep in mind that the Code of Ethics, Article 1, Standard of Practice 1-15, provides that the client decides if they wish to disclose the existence of any offers (that are not accepted offers). The agent needs permission from his/her client to disclose the existence of offers.
Second, an agent cannot lie or invent questionable offers in order to obtain other higher offers. That is a blatant violation of the Code of Ethics (Articles 1 and 2). Even if it benefits their client by creating pressure to induce a higher offer, it cannot be done because you are not treating the other parties honestly and you are making misrepresentations about the transaction. Something as innocuous as, “I have someone who’s looking to offer “X.” If you come in at that price plus a little more, I can guarantee you’ll get it” is very problematic. If no such offer exists, then the agent is improperly “baiting” the buyer’s agent. An agent cannot dangle a fictitious offer in order to induce another buyer to act, even if it benefits their client. Further, the agent cannot guarantee anything. The agent must go to the client to see if they’ll accept the offer; the agent can’t do it. Promising the offer will be accepted is overreaching.
Conclusion
Knowing what an agent can and cannot do is the difference between being a successful Realtor and being a Realtor that is standing before a tribunal. Don’t overreach and act like the client. Know your duties, know the rules, be timely and honest in all your dealings and, above all, stay in your lane!
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