With everything that has transpired over the past year and a real estate market with a tight inventory, it appears that there are a few practitioners who are not putting their best foot forward with some of their real estate practices. We have been hearing about a variety of issues involving real estate brokers that don’t appear to support fair competition or may violate the law, or both. Some of the issues we have heard about are:
Real estate brokers are restricting open houses and showings to only those buyers who are not represented by a broker. If a buyer wants to see a property, and the buyer has a broker, the buyer is being refused access to the property. Depending on what has been explained to the seller, and what the seller has agreed upon, limiting the pool of potential buyers may be a violation of the listing agent’s duties to the seller. Additionally, if the showing limitations are not reduced to writing in the listing contract, this may lead to misunderstandings with the seller and additional violations of the license law. If buyers are being told that they need to terminate their relationship with their brokers to see properties, at a minimum, the Real Estate Commission (the “Commission”) may view this as unworthiness and incompetency.
Real estate brokers are being denied access to property information databases because they are from outside of the market area. The excuse given for barring access to the information is that the “out of area” broker lacks the competency to practice in a specific geographic region. Ultimately, it is the Commission’s jurisdiction to decide whether a broker is competent or not. Additionally, restricting fair trade within a particular market may also rest within the jurisdiction of the Federal Trade Commission.
Real estate brokers are advertising properties for sale that are actually “For Sale by Owner” or “FSBOs”. Marketing a property on behalf of someone else is a licensed duty and requires the broker to establish a relationship, either as a single agent or transaction broker, with the owner of the property. The brokerage relationship act requires that the broker provide all the services enumerated for the type of relationship provided. Commission rule 6.14(C) requires that all listing contracts for the sale, lease or exchange of real property must be in writing prior to performing any real estate brokerage services, which would include marketing.
In addition to the issues that we have heard about, we have seen numerous complaints filed with the Commission about trade association rules or MLS requirements. These requirements are generally outside of the Commission’s jurisdiction. The Commission does not enforce the Clear Cooperation Policy and they don’t have a regulation that dictates the timing for when a property must be entered into the MLS. The Commission also does not have a regulation that requires properties to be entered into the MLS. If the seller doesn’t want the property marketed in the MLS, or if the seller would like it to be marketed privately for a period of time (i.e. as a pocket listing or coming soon), that needs to be addressed in the listing contract. The Commission does not regulate the ethical standards established by the different trade associations. We receive quite a few complaints about real estate brokers making disparaging remarks about others or engaging in arguments over social media. Unless the behavior is representative of a fair housing violation, this is not a behavior that is addressed in the license law.
These are just a few of the issues that we have seen over the course of the past year. Some may be contrary to state or federal laws and others may violate trade association rules, but together they do not help to give the industry a positive image in the eyes of a consumer.
Director Marcia Waters
About the Director
Marcia Waters has been with the Colorado Division of Real Estate since August 2005. Marcia started with the Division as a Criminal Investigator for the Real Estate Commission and was promoted to Chief Investigator in 2006. In 2007, she was promoted to the position of Investigations and Compliance Director. In that capacity, she managed the investigatory and settlement programs for the Division. On October 15, 2010, she was promoted to the position of Division Director. The Division of Real Estate licenses and regulates approximately 50,000 real estate professionals. Ms. Waters serves as the administrator for the Real Estate Commission, the Board of Real Estate Appraisers, the Board of Mortgage Loan Originators, the Community Association Manager Program and the HOA Information and Resource Center. Ms. Waters manages the Division’s $6.5 million budget, oversees a staff of approximately 57 full-time employees, and establishes the direction of Division programs based on market and industry trends.