Do It Right—Do It Ethically

By Christopher M. Leporini, REALTOR® Magazine

Doing the Right Thing: A Real Estate Practitioner’s Guide to Ethical Decision Making, Third Ed. By Deborah H. Long
(Gorsuch/Prentice Hall) 137 pp., $17.95
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This workbook-style book helps real estate practitioners develop their ethical decision-making skills by using case studies from real estate trade publications, daily newspapers, and hypothetical questions. It explains many of the laws and regulations that real estate professionals might encounter in their daily practice—from fair housing rules to lead-based paint disclosure requirements.

The first half of the book provides background on the ethical dilemmas that real estate professionals face as well as general information on developing personal values, principles, and ethics. The second half examines specific ethical issues, such as agency, stigmatized properties, and environmental hazards. The book provides easy-to-understand explanations of these legal and ethical considerations. It largely deals with ethical considerations for seller’s representatives but also includes some information for buyer’s reps as well.

Each chapter includes a “How Would You Respond?” write-in exercise that poses hypothetical questions that require readers to apply what they’ve learned. Possible answers to the situations also are offered.

Author Deborah H. LongCRS, GRI is a real estate broker, writer, and instructor who frequently speaks about ethics. She is the author of other real estate books, including Now That I Have My Real Estate License, What Am I Going to Do With It? and Owning and Managing a Florida Real Estate Office.

Tips for Real Estate Professionals

  • Never reveal to buyers whether a house has any outstanding offers or what the sellers paid for the property without the sellers’ express consent. You can tell buyers, “Since I represent the sellers and I am trying to get them the best price and terms, I can’t disclose that information. However, I would be happy to submit any offer you would like to extend to the sellers,” the author suggests.
  • Advise buyers to be upfront about past credit blemishes. If you represent a buyer with a spotty credit history, you can’t be dishonest with sellers about this fact—even if these problems were resolved several years ago. Advise the buyers that concealing the truth today could end up in a lawsuit tomorrow. At the same time, you can help the buyer to assemble information, such as credit reports and audited tax returns, to show how they have improved their situation.
  • Reject demands from buyers or sellers to discriminate or make any other judgments that violate fair housing rules. “Practitioners can legally use no form of discrimination other than discriminating against the inability to afford a home,” the author writes. Any time that your actions or words indicate assumptions based upon ethnicity, race, gender, religion, national origin, or family status, you are putting your career in jeopardy. If a seller refuses to sell to certain minority groups, immediately inform them that the Civil Rights Act of 1968 prevents any real estate professional from doing so. If the seller persists, tell the seller that you can’t take the listing—it’s not worth the consequences. Buyers could file suit with the U.S. Department of Housing and Urban Development against you and the seller, which could result in you losing your license. If buyers ask what kind of people live in a neighborhood, you can only respond in terms of economics. Never describe a neighborhood in terms of a predominant ethnic, religious, or racial group. You can advise them that the best way to figure out whether they’d be comfortable in the neighborhood is to speak with the neighbors themselves.
  • Disclose latent home defects to buyers, even if they don’t inquire about them. It’s your moral responsibility and, in some cases, a legal responsibility to do so. Likewise, if you question the truthfulness of information provided by your seller, you are obligated to investigate. Always tell buyers to consult their own experts, such as home inspectors, to alleviate the liability that the seller may have toward repairs. “If the buyer’s inspector discovers problems that the seller did not disclose, it’s better to negotiate this issue before closing than to face a lawsuit after closing,” the author writes.
  • Learn the laws in your state governing disclosure for crimes that have taken place on a property. Approximately half of the states have laws ruling that sellers don’t have to tell buyers about psychological stigmas attached to properties, such as suicides and accidental deaths. Check with your broker’s attorney regarding the legality of disclosing such information. Even if state law doesn’t explicitly require you to do so, discuss the matter with the seller. Explain that although your fiduciary relationship means that you must keep the matter confidential, sooner or later the buyers will find out and could potentially sue them. Have the seller instruct you in writing to disclose this information to the buyer.

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This post was contributed exclusively for REALTOR® Magazine.

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