Certain client information is subject to confidentiality,
even after the relationship ends between the client and
agent. Most notably, a client’s price position, negotiating position, and motivation to buy or sell cannot be
shared with anyone else. Here’s an example: Sellers tell
the agent that they would lower their asking price from
$245,000 to $210,000 if they had to. The agent is not
free to disclose this, even if a deal falls through.
Linda Hobkirk has seen a number of agents break
this rule. Her home state of Arkansas allows for dual
agency, where an agent or brokerage can represent
both the buyer and seller in a transaction. The agent or
brokerage must keep the buyer’s and seller’s information confidential at all times.
But in cases where a deal goes bad and the house
falls out of contract, many agents have “loose lips” and
start carelessly revealing information about buyers
and sellers to third parties, assuming their duty to keep
quiet ends when the client relationship does, says Hobkirk, an associate with Coldwell Banker Harris McHaney
& Faucette Real Estate in Rogers, Ark.
“We are very similar to doctors and lawyers in that
we must protect confidential information unless ordered by a sitting judge to release it,” she says.
Some information, however, is not subject to confidentiality. For example, since a seller cannot expect
an agent to conceal significant property defects from
a buyer, the seller likewise cannot demand that the
agent keep that information confidential after their business relationship has ended. Therefore, an agent can
disclose the existence of property defects to anyone,
including another agent the seller decides to work with.
What the Code Says (Article 1, SOP 1-9): A client cannot require an agent to keep confidential any information that would be required to be disclosed to a buyer.
Any other information defined as confidential may not
be disclosed. But the question remains concerning
how long the duty of confidentiality lasts. SOP 1-9 says
the duty of confidentiality exists during and after the
termination of the agency relationship. However, if there
is a conflicting standard under state law as to how long
confidentiality lasts, state law will rule.
Many states follow the SOP 1-9 standard of confidentiality, but one state that differs is North Carolina,
where state law says the duty of confidentiality ends at
the termination of the agency relationship.
Soliciting Another Agent’s
Listing or Buyer Agreement
The only time an agent may not solicit another agent’s
client is when that client is subject to an exclusive agreement with his or her agent. However, when a client has a
nonexclusive agreement with an agent, the client is fair
game to any other agent.
Exclusive agreements are in the best interest of the
client, which is why the Code offers them protection.
With nonexclusive agreements, sellers, for example,
may work with several listing agents to list a property,
but the agent who procures the buyer is the only one
who gets paid. That offers little incentive for the listing
agents to work hard for the seller when they know they
may not receive compensation. In exclusive agreements, the client works with one agent, and that incen-tivizes the agent to do his or her best for the client.
Tammy O’Neill, an agent with RE/MAX Fine Homes
in Newport Beach, Calif., had another agent go after her
client despite their exclusive buyer agreement.
“I had an agent go to my client’s house right after I
showed that agent’s listing and solicit my client to work
with her in finding a home,” O’Neill says. “Yes, she went
right to the door and tried to steal my client. Needless
to say, it didn’t work, and my client and I closed on a
The offending agent’s actions constituted a Code
violation because she initiated contact with a client who
was already subject to an exclusive buyer agreement.
However, there are conditions where certain interac-
tions between a client bound by exclusivity and another
agent are fair.
What the Code Says (Article 16): On the seller side,
sending mass mailings to groups that may incidentally
include an owner who is exclusively listed with another
agent doesn’t violate Article 16. However, REALTORS®
are prohibited from discussing listing a property with
such an owner—unless the owner initiates the contact.
On the buyer side, SOP 16-9 requires that before a
REALTOR® enters into an exclusive buyer agreement,
he or she must use reasonable efforts to determine
whether the buyer is already subject to one. Should the
REALTOR® find that the buyer is already subject to an
exclusive buyer agreement, the REALTOR® must direct
the buyer back to his or her exclusive broker unless the
buyer directs them otherwise.
Bruce Aydt, ABR, CRB, writes REALTOR® Magazine’s Ethics column.