NAR Professional Ethics & Compliance 2 ā Questions and Answers
Question 1: Under the Code of Ethics, which Article obligates REALTORSĀ® to preserve confidential information obtained from clients, even after the relationship ends?
- Article 1
- Article 4
- Article 12
- Article 1 via Standard of Practice 1-9 (Correct answer)
Correct answer: Article 1 via Standard of Practice 1-9
Standard of Practice 1-9 under Article 1 requires REALTORSĀ® to preserve confidential information obtained during the agency relationship even after it has ended.
Question 2: A REALTORĀ® discovers a client is engaging in a transaction that is legal but appears to involve mortgage fraud. What is the correct course of action?
- Continue representing the client since it is the client's decision
- Withdraw from the transaction and report to appropriate authorities if required by law (Correct answer)
- Notify the other party's agent immediately
- Do nothing unless directly asked about it
Correct answer: Withdraw from the transaction and report to appropriate authorities if required by law
REALTORSĀ® must not facilitate illegal activities and should withdraw from transactions involving fraud, reporting to authorities when legally required.
Question 3: Which of the following best describes the 'arbitration' process available through NAR's dispute resolution system?
- A non-binding mediation between two parties
- A binding process to resolve commission disputes between REALTORSĀ® (Correct answer)
- A court-ordered settlement procedure
- A voluntary peer review of advertising practices
Correct answer: A binding process to resolve commission disputes between REALTORSĀ®
NAR arbitration is a binding process used to resolve monetary disputes, typically involving commission disagreements, between REALTORSĀ®.
Question 4: Article 4 of the Code of Ethics requires that when a REALTORĀ® purchases property for personal use, they must:
- Obtain written consent from all parties in the transaction
- Disclose their REALTORĀ® status and any personal interest in writing (Correct answer)
- Recuse themselves from negotiating any commission
- Notify the local board of REALTORSĀ® before closing
Correct answer: Disclose their REALTORĀ® status and any personal interest in writing
Article 4 mandates that REALTORSĀ® disclose in writing their status as a real estate professional and any personal interest when buying, selling, or renting their own property.
Question 5: A buyer's agent receives an offer of compensation from the listing broker that differs from what was offered in the MLS. Under the Code of Ethics, what must the buyer's agent do?
- Refuse the listing if compensation is different from MLS
- Accept the higher of the two compensation amounts automatically
- Promptly disclose the discrepancy to their client and broker (Correct answer)
- File an ethics complaint with the local board immediately
Correct answer: Promptly disclose the discrepancy to their client and broker
REALTORSĀ® must disclose compensation differences to their client and broker to ensure transparency and avoid conflicts of interest.
Question 6: Under Article 16, which practice is explicitly prohibited for REALTORSĀ®?
- Advertising services at a lower commission than competitors
- Using deceptive tactics to induce a client to switch agents mid-transaction (Correct answer)
- Calling expired listing owners to offer services
- Conducting open houses in competing agents' listing areas
Correct answer: Using deceptive tactics to induce a client to switch agents mid-transaction
Article 16 prohibits REALTORSĀ® from using deceptive methods or misrepresentation to induce clients to break existing agency agreements and switch to them.
Question 7: When must a REALTORĀ® present all offers and counter-offers to a seller, according to the Code of Ethics?
- Only offers above the listing price
- All offers and counter-offers until closing unless the seller gives contrary instructions (Correct answer)
- Only written offers submitted before an offer is accepted
- Offers that arrive within 48 hours of listing
Correct answer: All offers and counter-offers until closing unless the seller gives contrary instructions
Under Article 1 and its Standards of Practice, REALTORSĀ® must present all offers and counter-offers objectively and as quickly as possible unless the seller has given contrary written instructions.
NAR Professional Ethics & Compliance 2
Under the Code of Ethics, which Article obligates REALTORSĀ® to preserve confidential information obtained from clients, even after the relationship ends?