Stop Taking Legal Advice From NAR And Your Local Association

Key Takeaways:

– Associations should not be relied upon for legal advice in real estate
– Legal advice should come from an attorney
– Associations can provide valuable resources, market information, education and training, networking opportunities, and uphold professional and ethical standards
– Associations may sometimes give incorrect or misguided advice
– Agents should research and verify laws and rules themselves
– Agents should use their own lawyer-approved contracts
– Agents should seek legal advice from legal professionals
– Associations should advise agents to contact an attorney or the Department of Licensing for legal questions
– Associations should not give legal advice or opinions
– Agents should advocate for themselves and encourage others to do the same
– The neighborhood open house strategy is a game-changer

inman:

Associations are a valuable resource, but they’re not the be-all and end-all of real estate, especially when it comes to questions about legality and licensing. It’s important to rely on valid legal advice from an attorney rather than the opinion of associational employees, coach and author Darryl Davis writes.

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Before we dive into this topic, I want to be very clear that I am not against the National Association of Realtors or any other industry associations. I do, however, believe our associations have, in many instances over the years, crossed the line in what their purpose is and the best way to guide their members.

I bring this up because recently, one of our clients hit a roadblock with their board. After a coaching session, she decided to host a neighborhood open house. This is a powerful strategy that I’ve been credited with creating over 25 years ago.

What is a “neighborhood” open house? The concept is to invite just the neighbors to an open house before your public open house with a special, wedding-like invitation that lets them know that the homeowner will not be home, that the invite is for neighbors only, and just for a limited time.

It’s perfect for generating listing leads, bonding with neighbors in a potential farm area, and helping agents separate lookers from buyers. 

However, she was told by her board that she couldn’t do this; she could only host a public open house. This is incorrect. Now, this could be a misunderstanding of licensing laws (which, by the way, don’t prohibit this strategy in any state that I know of) or a misinterpretation of MLS/association rules (which is also not true).

I think this is a classic error: Relying on associations for legal guidance without really researching the true “laws and rules” when, unfortunately, the person answering the phone sometimes gets it wrong, or worse, crosses legal lines and gives bad advice.

Here’s my suggestion: Given the current industry climate with the recent lawsuits, it might be better if associations and their staff steer clear of responding to legal questions, including those about fair housing, contract law, or even calling FSBOs or expireds on the Do Not Call List. They should simply advise agents to contact an attorney or call the Department of Licensing and remind their members that they are an association, and as such, don’t give legal advice or opinions. 

Here’s my playbook for agents to help navigate these crazy times with transparency and accuracy: 

  1. Skip the association for legal advice. They might mean well, but they can lead you astray. Get your legal insights straight from an attorney.
  2. Dial up your state’s licensing department. Unsure about license laws? The Department of Licensing is the place to go for real answers. 
  3. Policies and rules versus laws. Association advice is best for board or MLS policies/rules; they don’t govern your license. 
  4. Ditch those generic association forms. Get your own, lawyer-approved ones for commission agreements, listing contracts, etc. Sure, use MLS forms for listing entries, but have your own contracts to safeguard your business and your interests.
  5. If someone tells you “That’s against the rules” or “It’s illegal,” ask them to show you the written rule or law from the original source. No proof? They’re likely mistaken.

Now, if associations aren’t for legal or marketing advice, what good are they? Plenty. Associations across industries serve key roles:

  • Advocacy and representation: They’re your voice in important discussions with governments, industry players, and the public.
  • Information and resources: They provide valuable resources and market information that you need to do your job as comprehensively as possible. 
  • Education and training: They help you to keep your skills and knowledge base sharp by providing workshops, seminars and certifications.
  • Networking opportunities: They’re the hub for meeting, collaborating and sharing ideas with peers.
  • Standards and ethics: They uphold the professional and ethical standards of your industry.

So, remember this: Our associations are a valuable resource, but it’s not the be-all and end-all of real estate, especially when it comes to questions about legality and licensing. You’re in the driver’s seat for your business, and you need to stay that way. Use associations for what they’re best at, and seek legal advice from legal professionals, who know the laws backwards and forwards. 

This is your business, and your license on the line. Advocate for yourself and encourage other agents and leaders to do the same.

Stay informed, stay sharp, and let’s make 2024 your breakthrough year. Oh, and keep rocking the neighborhood open house strategy — it’s a game-changer.


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Property Chomp's Take:

Associations play an important role in the real estate industry. They provide valuable resources, market information, education, and networking opportunities for professionals in the field. However, when it comes to legal advice and questions about licensing, it's crucial to rely on valid legal advice from an attorney rather than the opinion of associational employees.

In a recent incident, one of our clients faced a roadblock from their board. After a coaching session, the client decided to host a neighborhood open house, a strategy that has been credited to me over 25 years ago. The idea is to invite only the neighbors to an open house before the public event, creating an opportunity to generate listing leads, bond with potential farm area neighbors, and separate lookers from serious buyers.

However, the client was told by their board that they couldn't proceed with this strategy and could only host a public open house. This information was incorrect. It could be a misunderstanding of licensing laws or a misinterpretation of MLS/association rules. This highlights a common error of relying solely on associations for legal guidance without conducting proper research on the laws and rules.

Given the current industry climate with recent lawsuits, it would be better if associations and their staff refrain from responding to legal questions. They should advise agents to seek legal advice from attorneys or contact the Department of Licensing. Associations should remind their members that they are not authorized to give legal advice or opinions.

To navigate these times with transparency and accuracy, here's a playbook for agents:

1. Skip the association for legal advice and consult an attorney for legal insights.
2. Contact your state's licensing department for clarification on license laws.
3. Understand the distinction between association policies and rules versus actual laws that govern your license.
4. Use lawyer-approved contracts and forms to safeguard your business and interests.
5. Request written proof from anyone who claims that a certain action is against the rules or illegal. If they can't provide proof, they are likely mistaken.

Although associations are not the go-to source for legal or marketing advice, they serve several important purposes in the industry. They advocate for professionals, provide information and resources, offer education and training, facilitate networking opportunities, and uphold ethical standards. It's essential to use associations for what they excel at and seek legal advice from professionals who specialize in the field.

In conclusion, while associations are a valuable resource in the real estate industry, they should not be relied upon as the sole authority on legality and licensing. Agents should advocate for themselves, seek legal advice from attorneys, and encourage other industry professionals to do the same. By staying informed and sharp, agents can navigate these challenging times and make breakthroughs in their careers.

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