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Code Of Ethics Case Scenario: Use of “Choose Your Neighbor” Marketing Letters

July 27, 2018 in KCRAR

The National Association of REALTORS® provides case
scenarios of Code of Ethics cases as a resource to members to help further
their understanding of the Code of Ethics. This year is a Code of Ethics
education year, meaning REALTORS® have until Dec. 31 to complete a
Code of Ethics training

The following in a case scenario provided from NAR:

Case #10-4: Use of “Choose Your Neighbor”
Marketing Letters

(Adopted November, 1987. Revised
November, 2013 November, 2017.)

REALTOR® A listed a property
in a new subdivision. At the instruction of his client, Seller X, REALTOR® A
did not enter the listing in the MLS, did not place a “For Sale” sign on the
property and did not advertise the property online. Seller X had told REALTOR®
A that he wanted the sale handled quietly, with the new purchasers being people who would “fit into the
neighborhood—people with the same socioeconomic background” as the other
residents of the subdivision.

Based on his conversation with
Seller X, REALTOR® A’s only marketing effort was mailing a letter to the other
residents of the subdivision, inviting them “. . . to play a part in the
decision of who your next neighbor will be. If you know of someone who you
would like to live in the neighborhood, please let them know of the
availability of this home, or call me and I will be happy to contact them and
arrange a private showing.”

REALTOR® A’s marketing strategy
came to the attention of REALTOR® B, whose mother lived in the subdivision.
REALTOR® B filed a complaint charging REALTOR® A with a violation of Article 10
of the Code of Ethics.

At the hearing, REALTOR® B told
the Hearing Panel of receiving a copy of the marketing letter from his mother,
who had recently moved to the subdivision. REALTOR® B advised the panel that he
had checked the Board’s MLS for information on the property, had driven past
the house
to look for a “For Sale” sign and had searched online for any
information on the property. Finding nothing, REALTOR® B concluded that REALTOR® A’s marketing strategy
was to limit access to the property to individuals preselected by the current
residents. “In my mind,” said REALTOR® B, “this could only mean one thing.
REALTOR® A was deliberately discriminating
against home buyers from
other areas, or those with different backgrounds, who
would never have the opportunity to learn about the house’s availability.
Obviously, REALTOR® A was directing all of his marketing energies into finding
purchasers who would not disrupt the ethnic and economic character of the

REALTOR® A defended his actions
by advising the panel that he was acting on Seller X’s instructions. Seller X
appeared as a witness for REALTOR® A and confirmed this fact, adding that he and
the other residents of his block had an informal agreement that they would try
to find “suitable” purchasers for their homes if they ever decided to sell.
Seller X felt that by broadening the marketing campaign to include all
residents of the subdivision he had increased the chances of finding such
potential purchasers.

The Hearing Panel
found REALTOR® A in violation of Article 10 of the Code of Ethics. In their
decision, the panel advised REALTOR® A that no instruction from a client could
absolve a REALTOR® from the obligation to market properties without regard to
race, color, religion, sex, handicap, familial status, country of national
origin, sexual orientation, or gender identity, as expressed in Article 10.
There was no doubt, in the panel’s opinion, that the exclusive use of “Choose
Your Neighbor” letters to market the property was designed to circumvent the
requirements of Article 10.

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