Industry Standards & Ethical Practices Flashcards

A commercial broker who represents a landlord learns the landlord is willing to accept 15% below the asking rent. Sharing this information with the prospective tenant without authorization would violate the duty of:

Answer: Loyalty and confidentiality

The landlord's negotiating floor is confidential information; revealing it without authorization breaches the duties of loyalty and confidentiality owed to the client.

Under industry standards, a 'net listing' in commercial real estate is generally considered:

Answer: Ethically problematic because it creates a conflict between broker and client interests

Net listings create a conflict of interest because the broker profits more as the sale price rises above the minimum, potentially incentivizing inflated pricing advice.

CRECI ethical standards require that any material change in a property's condition discovered during the escrow period be:

Answer: Disclosed promptly to the buyer regardless of when discovered

Material changes discovered during escrow must be promptly disclosed to the buyer, giving them the opportunity to renegotiate or withdraw.

The professional standard of 'reasonable care' in commercial brokerage is best measured against:

Answer: What a competent professional in the same market would do under similar circumstances

Reasonable care is an objective standard based on what a competent, similarly situated professional would do, not the exceptional or the minimal.

When a commercial professional is asked to provide a Broker Opinion of Value (BOV), professional standards require the document to:

Answer: Clearly state the assumptions, limiting conditions, and that it is not a formal appraisal

A BOV must transparently disclose its assumptions, limitations, and non-appraisal status to prevent clients from relying on it as a formal valuation.

Under CRECI standards, 'blockbusting' in the context of commercial real estate refers to:

Answer: Using fear of demographic change to induce property sales at below-market prices

Blockbusting is an illegal and unethical practice of inducing owners to sell by exploiting fears about neighborhood demographic change.

A commercial broker who fails to present a written offer to the seller because they personally believe it is too low is violating the duty of:

Answer: Obedience and loyalty

Brokers must present all written offers to their clients regardless of personal opinion; filtering offers based on perceived merit violates the duties of obedience and loyalty.