Real estate is a people business. The common misconception around real estate, especially on home and garden shows, is that it's all about the deals, negotiation, and clever marketing. No doubt, those are all parts of the process, but the core of real estate is relational. Where the development of the relationship with a client leads to the activities of the transaction. As I get off my soap box, I want to go back a half step before the relationship to the first interaction with the client and what boundaries exist there.
Consumer misunderstanding
Let’s face it, most consumers have no idea how the business end of real estate functions. It’s not a slight, but rather a statement of fact since many consumers assume a REALTORS® life is not so different from theirs. Go to the office, do some stuff, and take home a paycheck at the end of the month; plus, if they do something extra like sell a house, they may even get a bonus or something. This could not be further from the truth. Realtors® are most commonly on a straight commission basis, meaning they often work long, thankless hours for no pay in the hopes that when they help their clients successfully achieve their real estate goals, they might earn a fee, or they might not. If they do earn a fee, they share it with their brokerage, pay for the services they provided, and share a large portion with our elected friends in Ottawa. Don’t get me wrong, real estate is a great career, but it is a business and not a job, so just like any business, Realtors® are always interested in seeking new clients.
Strings attached
Because consumers are a bit fuzzy on the details sometimes, it is incumbent upon the Realtor® to determine if the potential client has any current commitments that could cause them problems. In Alberta’s Provincial rules, a Realtor® is prohibited from soliciting a consumer who already has a written service agreement with another Realtor®. When a potential buyer contacts a Realtor®, they must be asked if they have entered into any other agreement. If the answer is no, they can proceed, but if the answer is yes, the buyer must be warned that they could have legal obligations under that previous agreement. If they choose to proceed, they should seek legal advice on the matter.
MLS® System Abuse
In the hunt for new clients, every creative tactic is deployed. From clever advertising to sphere of influence networking, to joining clubs and associations to develop relationships. All of these are valid and productive ways of expanding a network; however, one way that is strictly forbidden in Alberta is the use of MLS® system “off-market” data to target consumers who were not successful in selling their property during the normal course of their listing agreement. The data housed in the MLS® system for these off-market listings is exclusively for statistical and evaluation purposes. It’s there to aid members in having the most reliable data possible, but use of the information for solicitation purposes is strictly forbidden and enforced with extreme prejudice. Despite the bright sales trainers of places far flung promoting how to successfully “work” off-market listings, in Alberta it is strictly prohibited to use MLS® data in this way.
Targeted advertising
As mentioned, advertising is a common way to seek out potential clients for listing or purchase. Even though the ability to advertise for clients comes in every possible modality, there are some restrictions even here. For example, if a Realtor® is sending postcards to a neighbourhood about their awesome listing marketing program, or special process for buyer success, it is likely that some of those recipients will be in existing agreements with other Realtors®. For this reason, the materials cannot be targeted to specific people or addresses that the Realtor® knows or should’ve known is in a relationship with a fellow Realtor®. As a precaution all materials in a campaign must have a disclaimer on the piece that informs recipients the piece is not intended to solicit anyone already in a relationship with a fellow Realtor®.
Direct communication
Direct communication between a potential client and a Realtor® is a great way to develop a relationship, and should be sought out at the kids’ ball game, in the grocery store line-up, or other social spaces. However, it is improper solicitation for a Realtor® to have direct communication with a consumer whom they know, or ought to know, has an existing written service agreement with a fellow Realtor®. This prevents the potential of interfering with an existing relationship and causing potential issues without all the information. It should be noted, however, that this prohibition is not intended to prevent consumers from initiating that contact at any time to allow the consumer to request information for future considerations of their path forward. In such cases, Realtors® are advised to be very careful about making statements or providing advice that would violate the mutual respect rule or be considered interfering with a contract. A Realtor® can never counsel anyone on how to break a contract, and if an unhappy consumer is looking for such advice, they need legal help regarding their contract and should be advised appropriately.
There is no question as to the value a Realtor® can bring to the consuming public in discussing real estate trends or statistics, providing expert services, or using their experience to negotiate transactions or steer around hazards in the process. Consumers should regularly seek out the aid of a local Realtor® in all aspects of their real estate needs as it’s their best strategy to success. It is important to understand, however, that restrictions exist in the solicitation of potential clients to ensure that the consumer remains in the driver’s seat and that the consuming public can expect trust, integrity and fairness in the way a Realtor® conducts their business.