NAR proposed changes to the Code of Ethics, and the real estate community is reacting — or more precisely, descending into an uproar. Here’s why industry professionals should take some time to closely read and examine these changes.

Jay Thompson is a former brokerage owner who spent six years working for Zillow Group. He retired in August 2018 but can’t seem to leave the real estate industry behind. His weekly Inman column publishes every Wednesday.

Shortly (like, five seconds) after it was announced that the National Association of Realtors (NAR) was considering changes to the Code of Ethics, the uproar began.

It shouldn’t really come as a surprise. Anyone who has been in the industry for more than a couple of days is fully aware that pretty much anything said or proposed by the NAR is met with questioning that typically devolves into uproar — and often downright rage. 

Let’s briefly recap the proposed changes. This is straight from the NAR’s announcement and FAQ page (which I encourage everyone to read in its entirety):

“The NAR Professional Standards Committee met on October 5, 2020, to consider recommendations from its Interpretations and Procedures Advisory Board on the Code of Ethics’ applicability to discriminatory speech and conduct. The Committee approved the Advisory Board’s recommendations, therefore six of them will be presented to the NAR Board of Directors for a vote at their November 13, 2020 meeting.”

The specific changes proposed are detailed in Appendix 2 of this document, which again should be read by all. Briefly, those changes are:

1. To amend Policy Statement 29 of the NAR Code of Ethics and Arbitration Manual to expand applicability of the Code of Ethics to all of a Realtor’s activities.

Policy Statement 29 can be found in the 2020 Code of Ethics Arbitration Manual, a document I suspect has been fully read by a very small fraction of Realtors. You should read it. Yes, all 271 pages. Here is Policy Statement 29 as it currently stands:

29. Applicability of the Code of Ethics to non-real estate-related activities

While Realtors are encouraged to follow the principles of the Code of Ethics in all of their activities, a Realtor shall be subject to disciplinary action under the Code of Ethics only with respect to real estate-related activities and transactions involving the Realtor. (Adopted 2/88)

The proposal changes this statement to:

29. Applicability of the Code of Ethics

A Realtor shall be subject to disciplinary action under the Code of Ethics with respect to all of their activities.

This proposed change is a big deal, and it has led to much consternation from the masses. “Who are they to tell me how to act all the time?” Seems like a reasonable question. The impetus, the reasoning for this change, is simple on the surface. Again, from the NAR FAQ:

Put simply, when one Realtor engages in discriminatory speech and conduct, those actions demonstrate to consumers that they represent the actions of Realtors collectively.”

Yes, when you go off spouting racial slurs, demeaning people, encouraging aggressive acts, and using racist and hate speech, it reflects poorly on every Realtor. The vast majority of Realtors are good people trying to do a difficult job. One bad apple spoils the bunch, ya know.

2) To add the following new standard of practice under Article 10:

The question that arises immediately from this is: How are these defined, and who determines what is harassing speech, hate speech, epithets or slurs? This is followed swiftly by: How will this be enforced?

Again, all reasonable questions. Again the answers, as seen by the NAR, are provided in the FAQ:

The Committee recommends adoption of a new Appendix XII to Part Four of the Code of Ethics and Arbitration Manual which lays out, with great specificity, the proper application of proposed Standard of Practice 10-5, including an explanation of the terms used within the Standard of Practice, such that consistent application of these policies can be achieved.

Yep, another reading assignment. Read Appendix XII in its entirety. You are free, of course, to question whether or not it answers with “great specificity.” In my opinion, it’s a good start, but still leaves a lot open to interpretation.

3) That the definition of “public trust” be expanded to include all discrimination — not just willful discrimination — against the protected classes under Article 10 of the Code of Ethics, and all fraud, not just fraud resulting in substantial economic harm.

Another big deal. Another recommendation that should be closely read and the ramifications understood. Another place where things can be interpreted in different ways.

There are more recommendations proposed, and the initial Inman piece summarizes them well. There is much to ponder, much to grasp, and yes, much to read.

But read we must. It’s glaringly obvious that many commenting on these proposals have only skimmed the surface, and some are sounding off without critically thinking about the changes. Some are also woefully ignorant about certain subjects.

Please note, I’m not calling anyone stupid. There is a significant difference between the words “stupid” and “ignorant.” Stupid means having or showing a great lack of intelligence or common sense. Ignorant means lacking knowledge, information or awareness about a particular thing.

I, and everyone reading this, am incredibly ignorant about many things — astrophysics, quantum mechanics, brain chemistry, infectious disease transmission, calculus and more. Heck, I took nine hours of calculus classes in college, but put a derivative or integral problem in front of me to solve today, and I would just laugh and laugh. It would be a hopeless exercise.

The ignorance seems to surface most strongly in the area of freedom of speech. Peruse the discussions in the social space regarding these proposals, and you will see countless statements along the lines of, “so much for my freedom of speech!” or, “has no one at NAR read the First Amendment?”

Have you read the First Amendment?

“Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances.”

This has nothing to do with your freedom of speech. “Congress shall make no law […] abridging the freedom of speech.” The First Amendment restricts the federal government from making laws that impinge on freedom of speech of U.S. citizens. (The 14th Amendment extends that restriction to state governments.)

It enables you to stand on high, or on Facebook, and proclaim that the President of the United States is an idiot — and you can’t be tossed in prison for making that statement. It does not give you the “freedom” to say anything you want, nor does it mean there are no consequences for your actions and statements. “Freedom of speech” is not a license to say anything, everywhere.

Even federal and state governments can place some restrictions on your freedom of speech. You can’t, for example, stand up in a movie theater and yell, “Fire!” You want to call the president an idiot, knock yourself out. Try posting a plan to assassinate said president and see how fast the Secret Service knocks on your door and hauls you off to prison — as they should.

Importantly, freedom of speech doesn’t even apply to private organizations — like the NAR. These proposals are not federal or state laws. They are directives of a private organization, restrictions on its members.

And the NAR, like any other private organization, is free to impose requirements and restrictions on its members. Heck, they could come out and say, “to maintain membership in the NAR you must publicly proclaim allegiance to the NAR staff, and never utter a negative word about any action we take.”

So, stop the proclamations that these proposed changes impinge on your freedom of speech. They don’t, and saying they do is ignorant. Likewise, the NAR is fully within its right to say its rules apply to members even outside their duties as an agent.

You might not like that, and that’s well within your rights, but saying they can’t create such a rule is ignorant. Of course they can — their group, their rules. If you don’t like it, you have some choices. Change the rule, leave the group, or violate the rule and face the consequences.

Want to change the rule? Contact your NAR directors. They will be voting on the changes at the NAR annual meeting on Nov. 13. You can find your state’s directors here (login required). Want your voice and opinion to be heard? You can attend the (virtual) Professional Standards Forum meeting on Nov. 2 where the topic will be discussed. Registration info is here.

You can also email feedback to Talk to your Association Executive. Educate yourself and read up on all the changes and reasoning behind them. Think of alternatives (Rob Hahn just wrote an interesting alternative here.) Start an informed group, and help educate your fellow professionals.

I believe very few would argue the NAR’s desire to send “a clear message that the National Association of Realtors condemns discriminatory speech and conduct” is inherently bad. Maybe you think they’re going about this the wrong way, and that’s OK. Good, in fact.

But let’s minimize the ignorance, and if you feel strongly about this, go through the proper channels to voice your opinion and affect change. That’s far more effective than venting on Facebook.

Reading list:

Jay Thompson is a real estate veteran and retiree living in the Texas Coastal Bend, as well as the one spinning the wheels at Now Pondering. Follow him on Facebook, Instagram and Twitter. He holds an active Arizona broker’s license with eXp Realty. “Retired but not dead,” Jay speaks around the world on many things real estate.

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