Title: Ethics in Real Estate Industry

Author: Samruddhi Ajay Raul.
MBA HRM
JDBIMS

Objectives:

• To analyze the Ethics in Real Estate Industry
• To gain the knowledge regarding of the Ethics in Real Estate Industry

Introduction:

• The real estate sector is one of the most globally recognized sectors. It comprises of four sub-sectors – housing, retail, hospitality, and commercial. The growth of this sector is well complemented by the growth in the corporate environment and the demand for office space as well as urban and semi-urban accommodation. The construction industry ranks third among the 14 major sectors in terms of direct, indirect and induced effects in all sectors of the economy.

• In India, the real estate sector is the second-highest employment generator, after the agriculture sector. It is also expected that this sector will incur more non-resident Indian (NRI) investment, both in the short term and the long term. Bengaluru is expected to be the most favoured property investment destination for NRIs, followed by Ahmedabad, Pune, Chennai, Goa, Delhi and Dehradun.

• The office market in the top eight cities recorded transactions of 22.2 MSF from July 2020 to December 2020, whereas new completions were recorded at 17.2 MSF in the same period. In terms of share of sectoral occupiers, Information Technology (IT/ITeS) sector dominated with a 41% share in the second half of 2020, followed by BSFI and Manufacturing sectors with 16% each, while Other Services and Co-working sectors recorded 17% and 10%, respectively.

• Around 40 million square feet were delivered in India in 2021. It is expected that the country will have a 40% market share in the next 2-3 years. India is expected to deliver 46 million square feet in 2022.

Methodology:

The Qualitative methodology is used is here. I have done with the personal interview of Construction businessman, one broker & one customer.
We took Nasik as our Sample Space. Because Nasik is one of the most growing cities of the Maharashtra.

Literature Review:

• Real estate ethics refers to practices in this field that are honest, protect customers, and follow the law. Study the importance and general concepts of ethical standards in real estate, code of ethics and violations, and discipline for violations.

• The real estate industry encourages the highest level of ethics in business practice to promote and preserve the right to own, use, exchange, and transfer real property. It’s imperative that practitioners within the industry know ethical standards, understand why they’re important, and abide by them. It’s essential that practitioners avoid discrimination in real estate transactions as well as any act of misrepresentation, exaggeration, or intentional act of deception, also known as fraud. Unethical practice is prohibited in all aspects of real estate practice, including advertising, property disclosure, listing agreements, inducements, the holding of earnest money, and contract facilitation.

• The legal duty of the realtor and licensed real estate practitioner is to promote and protect the rights and interests of the buying and selling public. Agency laws also mandate respect for agency relationships. A practitioner has duties that discourage unscrupulous and corrupt practices that dishonour the real estate profession or create unfair advantage over competitors.
• In a time when there were no license laws, buyers, sellers, and real estate professionals were unprotected from speculation, exploitation, and disorder. In 1913, the National Association of Realtors (NAR) Code of Ethics was adopted in the U.S. to establish a professional standard of conduct in the real estate industry. The Code of Ethics, which is updated on a regular basis, continues to form the model of ethical practice today. Each state in the union has its own real estate association with a unique canon of ethics which adopts many of the same professional standards of the NAR Code of Ethics. All real estate professionals should abide by the most current version of the code, the canon of ethics in the states in which they work, as well as any agency regulations and relevant state and federal laws.
• The Code of Ethics includes articles and standards of practice. Articles are broad statements of ethical principles, whereas standards of practice interpret and support the articles. A violation of the articles of the Code of Ethics is determined by the National Association of Realtors.

“Ethics” refers to customs, values and practices a society or community consider to be morally sound, by which our behavior is measured. Ethics are considered especially important when related to the activities of skilled or influential professionals. Although there is not an official code for all real estate agents, many are members of the National Association of Realtors, which has an ethics code. The Code of Ethics and Standards of Practice of the National Association of Realtors has 17 articles which can be summarized in the golden rule: do to others as you would like them to do to you. Failure to follow this code of ethics can cause a member to lose his membership. While not all real estate agents are members of the NAR, all must follow a code of ethics.

Tip:
Real estate agents must renew their licenses every several years, according to state law, which means taking an exam covering new rules and regulations and reviewing the basic tenets of real estate in their state. The exam also includes a review of the ethics involved in real estate, with special emphasis on the fiduciary relationship between agents and their clients.

Working With Clients:
• Real estate agents have responsibilities to their clients. They need to promote the interests of their clients first, while they remain obligated to treat all parties fairly and honestly. Agents should not mislead owners or buyers on the market value of a property or the savings they can make through their services. During a real estate transaction, agents are privy to the personal financial information of their clients. They are ethically obligated to keep that information private and not share it with anyone outside of the agent-client relationship.
• Agents should not to exaggerate or conceal pertinent facts pertaining to their clients or the property they represent. It must be divulged to the client if the agent or immediate family members or companies that they have an interest in are negotiating for their property. This must be in writing.
• What You Owe to the Public
• Real estate agents can’t deny services to people for reasons of race, colour, religion, sex, family status or nationality and they can’t “steer” clients to specific neighbourhoods based on discriminatory requests. Agents should also be careful not to provide “specialized services” in fields they are not competent. Because an agent is licensed doesn’t means they know both residential and commercial real estate law. They should focus.
• Agents must be careful they do not produce misleading advertisements. However, agents can offer prizes, bonuses and other incentives for clients who hire them, as long as the terms of the offer are clearly explained in writing. Real estate agents can’t provide legal or accounting advice. Instead, they must refer clients to a corresponding professional.

Duties to Other Members:

Real estate agents should not make false statements about competitors or solicit the business of exclusive clients of other agents. This restricts agents from targeting the clients of other agents by phone or mail. However, this practice is acceptable if the services offered are different than what the other agent is currently offering. It is fine to offer property management services to the existing client of an agent who is offering brokerage services, for example.

Understanding the Code of Ethics and the Law:
A code of ethics is not the same as federal or state law in real estate. Although the code of ethics may usually require higher standards of practice than the law, it is the law that takes precedence in any conflict. Real estate agents, regardless of the professional organization they are affiliated with, must be familiar with the real estate laws of their state.

Practice Your State’s Codes of Ethics:
Each state’s professional association provides its own guidelines for real estate agents. The California Association of Realtors, for example, produces its code of ethics and arbitration manual to apply the National Association of Realtors code to California state law. Whether you are a real estate agent or a consumer, you should become familiar with both the national and state codes of ethics as these will apply to all the real estate transactions you are involved in.

Review of literature:

I took the interview of the broker Mr. Anand Bhai from Nasik city. He is working with Real Estate Industry from the last 25-30 years. He recited that, after the digitalization the online websites like nobroker.com, 99acres.com etc. became very popular so people are not interested in middle man like broker. But according to Mr. Anand Bhai that websites are not following the ethics of Real Estate Industry.

I also talked to construction business person Miss Puja from Nasik city. According to Miss Puja the Market of Real Estate industry changed after post COVID-19 pandemic. People are still working from home so they are not interested for the relocation. But the tie-ups with various online platforms are giving us very good customer flow and business.

I Talked to Miss Srushti who recently shifted from Nasik to Mumbai Suburban. She said she rented a 1RK apartment in Goregaon west from the NOBROKER.COM and she got very nice place to stay also no extra brokerage is applied for that place so this deal is quite profitable for her. And also, she could see the pictures of the place before contacting the owner. So according to her the website is very ethical and professional.

Conclusion:

The Real Estate Business is ethical after digitalization and various online platforms are very transparent while giving service. The Real Estate Business is handled much ethically by monitoring of government.

References:

https://www.ibef.org/industry/real-estate-india

https://homeguides.sfgate.com/code-ethics-real-estate-1602.html