NFCAR's Ethics Moment

Volume 5, Issues 4                                                                                      August 21, 2013
Freebies OK if Terms Are Clearly Disclosed
It's OK to advertise freebies or money-back deals, but the terms must be clearly disclosed up front.
Question
To attract more clients, I would like to advertise a free home warranty or $500 back at closing. Is it OK to do this, and what are the restrictions, if any?
Answer
Advertising free premiums, giveaways, and rebates is covered by the Code under Article 12's requirement to present a "true picture" in our advertising, marketing, and representations to the public. The key is to be sure your advertising clearly states any conditions or requirements to receive the benefit.

 

Standard of Practice 12-1 says, "REALTORS� may use the term 'free' and similar terms in their advertising provided that all terms governing availability of the offered product or service are clearly disclosed at the same time." Standard of Practice 12-3 addresses this issue as it relates to you requiring that consumers who take advantage of the offer use you as their real estate agent. It states that "Premiums, prizes, merchandise discounts, or other inducements" are not, in themselves, unethical even if the benefit "is contingent on listing, selling, purchasing, or leasing through the REALTOR� making the offer."

 

However, the offering of any inducements to do business is subject to the limitations and restrictions of state law. Most state license laws don't prohibit such offerings, but there are some states that regulate the advertising of the inducement and several states that prohibit their use. If the Code allows a practice that state law prohibits, the state law will always take precedence. So carefully check on your state laws before offering these "freebies."

Reprinted from REALTORS Magazine Online March 2013 with permission of the National Association of REALTORS. All rights reserved. Article written by Bruce Aydt. 
To obtain a copy of the Code of Ethics click here

 

 To ask a question, or to suggest a topic for the ethics moment click here
Code Of Ethics
The Northern Fairfield County Association of REALTORS�
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