Real estate agents are central to the property buying and selling process and bear significant responsibilities. However, certain practices are outside their scope or legally prohibited. Both buyers and sellers should be aware of these limitations, which violate their real estate code of ethics and/or the law. Similarly, agents must also be mindful of these regulations to comply with legal standards and avoid errors that could lead to lawsuits. Regardless of where you are in the real estate transaction, this guide may be helpful.
1-Appraise properties
One activity that real estate agents cannot perform is property appraisal. While they may be familiar with market trends, property values, and potential market value, they are not qualified to conduct formal property appraisals. They are not licensed appraisers and, as such, cannot do so. This is a complex process that requires formal preparation, knowledge of valuation techniques, and real estate legislation. As a result, buyers and sellers should consult a licensed appraiser if they need an official appraisal value, such as during the mortgage application process.
2. Application of the law
Another important limitation is that real estate agents are not licensed attorneys and therefore cannot practice law. They should have a good understanding of the legal requirements related to real estate transactions, the general procedures, and how to refer clients to the right professionals. But ultimately, they lack training in the intricate details of real estate law and cannot advise on legal matters. Buyers and sellers should contact a licensed attorney to draft contracts and obtain assistance in fulfilling them. While real estate agents can provide guidance throughout transactions, they cannot act as licensed legal professionals.
3. Engaging in discriminatory practices
Real estate agents are prohibited by law from engaging in discriminatory practices. In the U.S., the Federal Fair Housing Act protects buyers from discrimination based on race, sex, religion, national origin, color, familial status, and disability. As a result, real estate agents cannot refuse to sell or rent a property to someone based on race, religion, or any other protected characteristic.
Furthermore, they cannot provide information that could be considered discriminatory when sharing demographic data about the neighborhood. Some common questions they are not allowed to answer include:
– What kind of people live in this area?
– What is the crime rate in the district?
– How old are the residents?
Real estate agents must avoid discriminatory practices and comply with fair housing laws.
4. Misrepresentation
We can define this as a real estate agency providing false, inaccurate, or misleading information about a property. For example, exaggerating the square footage or omitting a defect. Providing accurate information to all parties is part of their obligation. False information and deliberate deception of clients can have serious legal and financial repercussions. Ultimately, it is crucial that real estate agents maintain a high level of professionalism and ethical standards to ensure they provide the best possible service to their clients.
5. Lying about existing offers
Legally, real estate agents cannot lie about existing offers on a property. This practice violates the National Association of Realtors' Code of Ethics, as it is considered misrepresentation. This practice, often referred to as a "phantom offer," is illegal. Real estate agents are expected to maintain high standards of honesty, so ethically and legally, they should not be fabricating details about an offer that simply does not exist.
6. Retain offers
Similarly, real estate agents cannot lie by omission by withholding offers. They are obligated to present all offers to the seller without delay, regardless of the terms and conditions. The real estate agent must inform you of the offer, even if they know it is below the price you would accept. This means you have the option to reject it.
7. Quotation below the price
Underpricing is an illegal practice that involves advertising a property at a price lower than what the seller is willing to accept. Real estate agents cannot use deceptive tactics to attract buyers and must act in the best interests of their clients.
8. False or misleading advertising
Real estate agents cannot publish misleading or inaccurate advertising, as this violates their code of ethics. To attract buyers or sellers, they cannot use deceptive photos or descriptions of a property, such as outdated or digitally altered images. Agents must avoid discriminatory or offensive advertising.
9. Dual agency (in states where it is illegal)
This directive is specific to the U.S. market, but in general, avoiding conflicts of interest is a good ethical practice. Dual agency occurs when an agent represents both the buyer and the seller in a real estate transaction, which is illegal in several U.S. states. These include Alaska, Colorado, Florida, Kansas, Maryland, Texas, Vermont, and Wyoming. While dual agency is legal in some states, it remains a controversial practice.
10. Speaking ill of other real estate agents
Finally, real estate agents cannot speak ill of or make negative comments about other real estate agents and their business, as this is unprofessional and goes against their ethics. They must treat their colleagues with respect and courtesy, even if they have different approaches or opinions. Ideally, they should establish positive and constructive relationships with other agents.
Conclusion
In general, real estate agents can perform many tasks, but there are certain legal, ethical, and knowledge limitations that we should be aware of. These limitations exist to protect both parties and maintain standards. In short, real estate agents cannot act significantly beyond their role (for example, as lawyers and appraisers), engage in discriminatory practices, or deliberately lie about or misrepresent the facts. By adhering to these limitations and ethical standards, real estate agents can provide the best possible service to their clients and maintain a positive reputation in the industry.
Source: https://floorfy.com/blog
