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Editor’s Note: The Code of Ethics turns 100 in 2013. AAR will be celebrating the code with monthly articles published under the caption, Code Talk, in the Arizona REALTOR® Magazine, discussing the various ways the code governs professional conduct and interaction with the consumer in every day transactions.

When it comes to obtaining new clients, real estate agents are at the top of their game. But, there are several commonly used prospecting tactics that can land agents in hot water. This month, we’ll take a look at some danger zones to avoid when it comes to prospecting and advertising and give you tips on the right and wrong ways to do it.

Zone 1: Giving It Away 

While prospecting for new clients, some agents consider using a game of chance (like a drawing for an iPad).  However, agents should make certain that they are not doing so in violation of Arizona law.  A.R.S. § 13-3301(4) defines gambling, in part, as “the act of risking or giving something of value for the opportunity to obtain a benefit from a game or contest of chance or skill.”  Giving business to an agent in exchange for entry into a drawing is likely considered “giving something of value for the opportunity to obtain a benefit.” Agents should therefore refrain from offering new clients entry into a game of chance in exchange for business.

In light of the above, the better practice is to offer the same benefit to all members of the public that attend the agent’s open house or respond to the agent’s advertisement. Jerome King, designated broker of Long Realty in Tucson, Ariz., offers this advice for erring on the side of caution, “If you’d like to offer a free Starbuck’s card at an open house, you should give a Starbuck’s card to everyone.” The giveaways must be without condition and universal across the board. Furthermore, keep in mind that Article 12, Standard of Practice 12-1 of the code of ethics states: “REALTORS® may use the term ‘free’ and similar terms in their advertising and in other representations provided that all terms governing availability of the offered product or service are clearly disclosed at the same time.”

Zone 2: The Claim Game 

“I’ve seen a lot of marketing attempts lately that focus on ‘the last five homes sold in this neighborhood’. And then it gives the addresses of five homes sold, but not necessarily the last five homes the agent himself sold,” said King. “It’s a great marketing tactic, but it has one flaw: If you weren’t involved in the transaction you can’t give the impression in your advertising that you sold these homes.” Article 12, Standard of Practice 12-7 states: “Only REALTORS® who participated in the transaction as the listing broker or cooperating broker (selling broker) may claim to have “sold” the property.” Armando Contla, GRI with Arizona Turquoise Realty in Lake Havasu City, Ariz. adds, “I’ve also seen people advertise a property that has already closed escrow” in an effort to gain prospective clients. This is also found when people ‘poach’ listings and post them to Craigslist or other internet sites.

If you’re looking to paint a picture of a specific neighborhood in your marketing collateral, you should leverage other data such as that on your MLS or from your local newspaper.

 Zone 3: Slippery Signs 

“Many REALTORS® are posting ‘For Sale’ or ‘For Lease’ signs in their own yards to gain the attention of potential buyers. The only problem is, the agent’s home isn’t really on the market. This is just a way to get prospects,” said King. Clever? Sure. Unethical? Definitely. Article 12 of the code of ethics strictly prohibits false advertising of any kind. King offers this solution, “If you want to post a sign in your yard attracting new clients, have it say something like ‘For information regarding real estate in this neighborhood, call …’.”

Contla said that he’s also seen For Sale By Owner (FSBO) signs popping up in agents’ yards, when the property is not for sale. “Appealing to unrepresented buyers with a FSBO sign is just another bait and switch tactic.”
Along those same lines, Contla says that many agents are putting “For Sale” signs in front of homes where the owner may not want it advertised. “We’re seeing this in rental properties where the owner may live out of state,” said Contla. “Agents think that a home won’t sell unless it has a ‘For Sale’ sign in front. But, you must make sure that you have the express consent of your owner to do so.”