NAR requires that local associations facilitate arbitration requests and Code of Ethics enforcement through a Professional Standards program. Each local can run its own Professional Standards program or the NAR rules allow locals to work with another local or with the state Realtor® association to provide these services. 

At least a dozen states operate Professional Standards programs on behalf of their local associations.  A PAR task force reviewed many of these statewide programs during 2010 and 2011 and in 2011 the PAR Board of Directors voted to create a Statewide Professional Standards Cooperative to offer these services to local associations in Pennsylvania.

The statewide cooperative officially launched on January 1, 2012, with 18 participating locals.  Basically, this means that as of the beginning of the year, all administrative responsibilities related to ethics and arbitration cases in those associations will be handled by PAR staff rather than local staff.  Locals that have not joined the cooperative will still operate their local programs as they have in the past.

The primary difference ‘on the street’ will be that Realtors® or members of the public will contact PAR instead of local staff to pursue a possible ethics complaint or a request for arbitration against a Realtor® who belongs to one of the participating locals.  The grievance, hearing and appeal process will then be handled by the appropriate state committee(s), which will be have members from every participating local, as well as from those locals who continue to run their own programs. 

The statewide program will have other benefits as well.  For example, the PAR program will emphasize mediation and ombudsman services to try to solve issues before they progress to a full-blown hearing.  Also, the statewide cooperative is introducing a new Ethics Citation System, based on procedures adopted in only a few other associations across the country, which for the first time will authorize the issuance of “tickets” for certain breaches of the Code, rather than requiring every complaint to proceed through the full hearing process.

The statewide cooperative is a voluntary program offered to all local associations.  Locals may join or leave the program on a yearly basis, though for the first year we will facilitate the process for locals who wish to join the cooperative throughout the year.  If you have any questions about the statewide cooperative, or if you have a potential ethics or arbitration case, please contact me at 1-800-555-3390 or laaron@parealtor.org.

Secretary Carol Aichele

As the New Year begins, the PA Department of State is looking to the real estate industry as an important part of helping the commonwealth’s economy recover.

Secretary of the Commonwealth Carol Aichele said, “These tough economic times have hit no industry harder than real estate. Selling homes is an economic generator, providing income for Realtors® and their firms, while creating and preserving other jobs.”

Aichele notes, a home purchased often sparks increased business for home furnishing stores, home improvements businesses and landscapers, as families tailor properties to fit their personalities.

The secretary also sees Realtors® as job generators. “When you open a realty office, you not only employ Realtors® but also support personnel.  And you support other local businesses, by purchasing goods, such as paper, computers, office furniture, and vehicles and by hiring other firms, from cleaning services to legal representation.”

Aichele, who oversees the State Real Estate Commission, has implemented policies to more efficiently and effectively investigate complaints and when needed, the department will take action against licensed professionals who violate their standards of practice and harm the public.

“I believe this is important for you as license holders, because when anyone holding a license harms the public, it damages the reputations of everyone holding that license,” she said. “For the Department of State, it damages the public trust in us if we don’t act firmly, fairly and in a timely manner; that won’t happen on my watch.

“At the Department of State, we believe setting and enforcing the highest standards enhances your ability to do your job, by really making that license mean something,” Aichele added. “We want the best Realtors® to locate and stay in Pennsylvania because the standards are high. We want the Pennsylvania real estate industry to have the best reputation.”

Aichele believes Gov. Tom Corbett is making Pennsylvania a place where the real estate industry can flourish by changing the culture in Harrisburg.  While the state had a $4.2 billion deficit, the governor demanded state government to live within its means, while still providing high quality core services people need and deserve.  That is why he worked with the legislature to produce an on-time, no tax increase budget.

As part of the budget, the governor signed a law to help stabilize school property taxes. The new law removes most exceptions for school districts to raise property taxes above an index pegged to inflation, without voter approval.

“As Realtors®, you recognize how important good schools are to families buying homes but property taxes play a role in whether families can afford homes,” she said. “This new law will help insure families won’t face large annual property tax increases.

“The governor and I also believe homeowners should have the most freedom of choice possible in deciding what features are in their new homes,” Aichele said. “That’s why he signed the law removing the requirement for sprinklers in all new construction, leaving that decision up to the homeowner and giving you more options to offer your clients.”

Aichele added, “As the person who signs real estate agents’ licenses, I stand behind what those licenses mean; that you are a top professional. I’ll do all I can by setting and enforcing the highest standards to support the real estate profession in Pennsylvania, to enhance the public’s confidence in you and spur our economy.”

During the National Association of Realtors^® (NAR) Annual Convention several changes to the code were adopted that will be reflected in the NAR Code of Ethics effective January 1, 2012.

A sneak preview of the 2012 Code of Ethics changes are:

• Language was adopted to implement discretionary authority for boards and associations to require their members mediate disputes that would be otherwise arbitrated.
  • Rationale: The amendment allows local associations to create a policy that mandates mediation before arbitration.
• A new Standard of Practice under Article 1 has been adopted similar to existing Standard of Practice 3-9 to prohibit Realtors® from accessing or using, or permitting or enabling others to access or use, listed or managed property on terms or conditions other than those authorized by the owner or seller.
  • Rationale: Adding this under Article 1 now makes it clear that the rule applies to in-house deals as well as cooperative deals and clarifies that it applies to both listed and managed properties.
• In Article 15 of the Code the word “competitors” was changed to “other real estate professionals” that prohibits the making of false of misleading statements about others.  
  • Rationale: For instance a Realtor^® engaging in appraisal might not be the competitor of a Realtor^® engaging in property management but one would still be barred from knowingly or recklessly making false or misleading statements about the other.

Be sure to keep your eye out for the release of the 2012 Code of Ethics and Standards of Practice of the National Association of Realtors^®.  The Realtor^® Code of Ethics is always changing to reflect evolving real estate industry practices.

To make sure you are aware of the changes that affect your business and ensure that you are in compliance with the code, contact your local Professional Standards Administrator regarding educational and training opportunities in your area.

As a reminder, all Realtors^® are required to complete the NAR Realtor^® Code of Ethics Training by December 31, 2012.

Currently, local associations are required to offer the parties involved in an arbitration case an opportunity to mediate their dispute. Associations may choose whether to offer that option before or after the arbitration request is reviewed by their Grievance Committee. If either party doesn’t want to mediate, the case goes forward into the hearing process.

The proposed change, brought forth by the NAR Professional Standards Committee to the Board of Directors, allows local associations to mandate mediation, except where both parties elect to bypass mediation and go to the hearing.

Not every association is going to want to require mediation as a condition of membership, but those with the most successful mediation programs might consider adopting this change if it is approved in November.

Postcards were sent to brokers and agents notifying them that real estate licenses must be renewed with the commission by May 31. In order to apply for license renewal, real estate professionals must complete 14 hours of approved continuing education (CE).

Agents who received their licenses between Dec. 1, 2007 and Nov. 30, 2009 are required to take 14 hours of continuing education in specific, mandatory commission-developed courses.  Those who received their licenses after Nov. 30, 2009 will be waived from continuing education for the 2010 renewal but will be required to take the specific, mandatory commission-developed courses for the 2012 renewal.

Licensees do not need to send CE information with their renewals as the commission will again use a post-renewal random continuing education audit. Proof of CE completion should only be sent if the broker or agent receives specific instructions from the commission to do so.

If an agent has not received a license renewal notice from the state, he can use the registration code that is printed on his wallet real estate license card to renew his real estate license.

Real estate licensees are encouraged to renew their licenses online, which is quicker and more efficient. Paper applications are being accepted but will take longer to process.      

The PA Association of REALTORS^® (PAR) does not participate in the license renewal process and does not keep records of members’ continuing education credits.

Seventy-five hours of education will be required later this year prior to becoming an appraisal trainee under new regulations proposed by the State Board of Certified Real Estate Appraisers, according to Daniel Bradley, board chair.

Bradley said the changes will require applicants to complete 75 hours of coursework in specific topics, including the 15-hour Uniform Standards of Professional Appraisal Practice (USPAP) course, 30-hour Basic Appraisal Principles course and 30-hour Basic Appraisal Procedures course before applying to the board to become a licensed trainee.

Those currently working as appraisal assistants will have a window of time to submit their application to receive a trainee license. After the board sets the final date, anyone working to assist in the preparation of an appraisal must be a licensed trainee.

“At this time, anyone can be an appraisal assistant; there are no qualifications,” Bradley explained. “The new regulations will define an ‘appraisal trainee’ and the requirements to qualify for the new trainee license. The trainee will then be required to obtain a minimum of two years experience working with a certified appraiser before he can qualify to become a certified appraiser.”

The educational requirements follow the Appraiser Qualifications Board (AQB) recommendations to create consistency within the industry in Pennsylvania.

By requiring the application process up front, the board sees this as beneficial to applicants who may not meet the requirements to become certified appraisers. “An applicant may have a criminal record or some other barrier which would preclude him from being certified,” Bradley said. “We would prefer that he knows this before going through two years of training and then discovers that he doesn’t qualify.”

The appraisal board is considering limiting the number of times a person can renew a trainee license but it is making some allowance for a person who may be experiencing circumstances beyond his control, such as overseas military service or health issues.

The proposed regulation changes have had a first round of public comment during which PA Association of REALTORS® submitted comments in favor of the changes. The Independent Regulatory Review Commission (IRRC) has reviewed the regulation package and is going through final rulemaking. The proposed regulations will be sent back for public comment, as well as comments from the  House and Senate Professional Licensure committees, the Governor’s Policy Office and the IRRC.

Bradley said the appraisal board tentatively expects to finalize the regulations by April 1 and hopes to implement them by July 1.

Real estate professionals have just five months to complete 14 hours of approved continuing education before renewing their licenses. Real estate licenses need to be renewed with the PA Department of State by May 31, 2010.

Agents who received their licenses between Dec. 1, 2007 and Nov. 30, 2009 are required to take 14 hours of continuing education in specific, mandatory commission-developed courses.  Those who received their licenses after Nov. 30, 2009 will be waived from continuing education for the 2010 renewal but will be required to take the specific, mandatory commission-developed courses for the 2012 renewal.

Online license renewal is available beginning in early March but in order to complete the renewal process, a REALTOR’S^® broker must first have renewed his license.  The State Real Estate Commission will send renewal notices to brokers prior to agent renewal notices.

The commission will again utilize a post-renewal random continuing education audit, so licensees should not send CE information with their renewals unless they receive specific instructions from the commission to do so.

The State Bureau of Professional and Occupational Affairs (BPOA) and the PA Real Estate Commission altered the renewal system in 2008 to ensure an easier process. REALTORS^® have a registration code printed on their wallet cards that should be used to renew a license as early as 90 days prior to its expiration date even if a REALTOR^® hasn’t received his license renewal notice from the state.

REALTORS^® are encouraged to renew their license online, which is quicker and more efficient. Paper applications are being accepted but are not the preferred method.

The PA Association of REALTORS^® (PAR) does not participate in the license renewal process and does not keep records of members’ continuing education credits. REALTORS^® who have taken courses through the PA REALTORS^® Institute (PRI), PAR’s school, can call 800-745-5527 to obtain more information regarding their 2008-2010 continuing education credits.

For a brief FAQ of the requirements, read the Department of State’s January 2010 newsletter (PDF).

New Standard of Practice 15-3 focuses on electronic communications. It obligates REALTORS® to “publish a clarification about or to remove statements made by others on electronic media the REALTOR® controls” when those statements include false or misleading information about competitors, competitors’ businesses and competitors’ business practices. This means when a REALTOR® learns false or misleading information is posted to his blog, Facebook wall or other social media site, he has the obligation to remove it or post a retraction/clarification of the statement.

The other new Standard of Practice (3-9) is designed to address the misuse of lock boxes, unauthorized access to a listed property and violation of other rules determined by the seller and listing broker. REALTORS® must remember that rules for property access must be followed and can often be found in the remarks section of the MLS.

New Case Interpretation 12-21 suggests that REALTORS® who change brokers need to be careful in how they advertise sold properties while affiliated with their prior broker. The case interpretation uses REALTOR® Q as an example. She advertises sold properties on her web site but when she switches brokers and continues to advertise the same sold properties on her site, she is found in violation of Article 12.

An updated copy of the new Code – with additions underlined – is available on the PAR web site, along with a summary of all changes and more detailed explanations.

All REALTORS® pledge to abide by the Code of Ethics. The code establishes a standard of conduct to protect consumers, the public and fellow REALTORS®.

Article co-authored by Hank Lerner, Esq., Director of Member & Legal Services at the Pennsylvania Association of REALTORS®.

Virtual staging is where you take an empty room and then digitally enhance it with furniture to make the space more inviting. For example, a stager may digitally add some artwork, chairs, tables and other items to liven up a vacant space, allowing buyers to see the potential of the home. The enhanced photos may then be used on the sales practitioner’s flyers, Web site, MLS and in advertisements for the listing.

In short, rather than bringing a home stager into the home to dress it up with furniture and other items that don’t belong in the home, the listing broker does the same thing electronically for much less expense.

NAR suggests (in that post and in other articles) that practitioners need to be sensitive to claims that virtual staging may be a violation of Article 12 of the Code of Ethics which requires that REALTORS® present a “true picture” in their advertising.  If listing brokers put up virtually staged pictures of a property that never actually existed in that state – using furniture or fixtures that aren’t present in the home and have never been there – is it really a “true picture” of the property?

Personally, adding non-existent digital furniture to a photo of a living room doesn’t cause me a lot of angst, although I can see how it might be misused.  After all, is that really so different from pictures of “live” staging where you move in real furniture that won’t be staying with the house?

But as you think about virtual staging keep in mind that there are a lot of ways to manipulate pictures and some may be far worse than others.

For example, I would get heartburn if a listing broker eliminated negative features from a photograph or materially changed the photograph in a way that misrepresented the existing features of a home.  What would you think of a photograph that digitally turned a gravel driveway into an asphalt driveway or one that magically erased the electrical pole in the backyard and the wires that run over the house?

Obeo has a product called StyleDesigner that is targeted to let buyers change various aspects of property photographs to envision what a home might look like with different paint colors, flooring or counters.  No problem with that use for buyers who want to envision what they might change about a house but I certainly don’t think sellers could get away with Photoshop upgrades in their own listing pictures by dropping in granite counters instead of the existing laminate or hardwood instead of linoleum.

What do you think?  Have you used virtual staging and seen results?  Would you have a problem if you showed up with your buyer to a vacant home that had virtually staged pictures in the MLS?