Personally, I believe full disclosure is generally the best policy in any business situation, but you may be surprised to know that my real estate license (licensed in Oregon and Washington) prohibits me from sharing certain (and not unimportant) facts with my clients. On specific subjects, I have no choice and simply cannot share pertinent information.
There are hard and fast restrictions on what licensed real estate agents can share with their clients, these restrictions are based on three different sources: the National Association of Realtors’ Code of Ethics, state specific laws (Oregon’s laws are used for this article), and the fair housing rules as governed by HUD. This link will take you the fair housing section on HUD’s official website.
Information Agents Can’t Share Due to Fair Housing Regulations
The location of specific buildings
A real estate agent can write in the description of a home for sale that the home is across the street from a park, strip-club, highway, cemetery, saloon, cigar bar, dive-bar, and more, but cannot write in the description that the home is across the street from a church, temple, cathedral, mosque, or any other type of religious meeting place.
All sorts of demographics are restricted
Don’t ask your Realtor about demographics in an area your looking to buy or sell in, whether those demographics revolve around ethnicity, gender, religion, disabilities, or otherwise. As a home buyer or seller you’re free to research demographics on your own, but real estate agents are not able to help. Real estate agents are also not allowed to advertise this sort of information when listing homes for sale. The real estate agent also cannot call out features of a home or neighborhood or area as family friendly (or any other type of demographic friendly or negative). An exception to this is approved 55+ communities. Most of the public is probably already aware of most of these restrictions.
Information Agents Can’t Share Due to Oregon Law
Death or crime that occurred in a home for sale, including murder
Let’s say I have listed a house in Oregon for sale where previously a house member was brutally murdered. The murder was cleaned up and the house subsequently listed for sale. I cannot share that with the buyers and the seller does not have to. The reason I say I cannot share that information with the buyers is because I have to put my client’s interests first (fidelity toward the client) and above my own interests and the interests of the buyer. Couple this with the fact that the seller does not have to share this information and that this information will mostly likely hurt the home sale, and de facto, I am unable to share the information with the buyer according to the licensing laws I’m bound to obey.
From the Oregon Property Seller Advisory as created by the Oregon Association of Realtors:
Facts that would be subject to disclosure but for the statute include the fact that the property was the site of a death, crime, political activity, religious activity, or any other act or occurrence that does not adversely affect the physical condition of, or title to, real property, including that a convicted sex offender resides in the area. Although the seller is not required to disclose such facts, they may elect to … Under Oregon law, neither the seller nor their agent is allowed to disclose that an owner or occupant of the real property has or had human immunodeficiency virus or acquired immune deficiency syndrome.
Client confidentiality
Whatever a client asks their real estate agent to keep confidential should be done so unless it breaks a law, and of course, the real estate agent cannot be asked to lie on behalf of their client. This may seem obvious on its face, but many people are not aware that a real estate agent must report any latent (hidden) defects about the home to the home buyer. For example, if the home seller shares a material problem (defect) with the home that is not obvious to anyone else, even if the home seller meant to share it in all confidentiality, the real estate agent must share that latent defect information with any potential home buyers according to real estate law (see fraudulent representation below).
As written in the Oregon real estate agent disclosure form:
Generally, agents must maintain confidential information about their clients. “Confidential information” is information communicated to the agent or the agent’s Principal Broker by the buyer or seller of one to four residential units regarding the real property transaction, included but not limited to price, terms, financial qualifications or motivation to buy or sell. “Confidential information” does not mean information that: a. The buyer instructs the agent or the agent’s Principal Broker to disclose about the buyer to the seller, or the seller instructs the agent or the agent’s Principal Broker to disclose about the seller to the buyer; and b. the agent or the agent’s Principal Broker knows or should know failure to disclose would constitute fraudulent representation.
Information Realtors Can’t Share Due to the NAR Code of Ethics
The quality of schools
Certainly school quality is a subjective topic and schools can be and are rated in a number of different ways. Great Schools is a rather successful website that rates schools across the country according to their own invented criteria. Oregon also provides public school report cards that are updated annually and available for everyone to browse. But don’t ask your Realtor about the quality of the schools in the area you’re looking to buy in or move away from. Here is an article from NAR explaining why Realtors are not allowed to share their opinion.
Comparative information about another Realtor or Realty company
The public can go online and find all sorts of websites that – poorly – rate and compare Realtors against one another. Often Realtors are forced to pay money to that website or third party in order to be compared favorably against other Realtors, to be preferred or to be featured, and typically to get any exposure on those third party websites. These websites exists as money makers because Realtors are not allowed to do that themselves. We cannot directly compare ourselves against other Realtors. If a client asks a direct question to us about another Realtor or Realty company we can answer that question if we are extremely careful about how we do so, but we certainly cannot create a website or a flyer or otherwise present ourselves as better or worse than other Realtors. We are allowed to compare ourselves against local performance averages, but not against any specific Realtor or Realty company. Since we are not allowed to do so and the National Association of Realtors will not do so, the public has no trustworthy way to compare Realtors or Realty companies when they are in the market for their licensed real estate services.
Taken from the preamble to the Code of Ethics:
Realizing that cooperation with other real estate professionals promotes the best interests of those who utilize their services, REALTORS® urge exclusive representation of clients; do not attempt to gain any unfair advantage over their competitors; and they refrain from making unsolicited comments about other practitioners. In instances where their opinion is sought, or where REALTORS® believe that comment is necessary, their opinion is offered in an objective, professional manner, uninfluenced by any personal motivation or potential advantage or gain.
A Necessary Disclosure
I am not a licensed attorney and do not practice law, any legal questions or concerns should be directed toward properly licensed attorney. This article is not a legal opinion, it is the opinion of a licensed real estate agent about related real estate industry practices I’m involved in.
Summary
Fair Housing rules are good and necessary to protect the public and guard against potential discrimatory practices. Oregon real estate law is good and necessary to protect home buyers and sellers. The NAR’s Code of Ethics is a good and necessary guide for real estate agents to provide their services in an ethical manner towards the public and each other.
However, while all of those things are good, every law or rule has a series of consequences that can be detrimental to the public if they are not aware of what those resulting consequences might be. For example, it is good for the public to know that they cannot rely on their real estate agent to find out about the quality of local schools. It is good for the public to know that whatever religion they are a part of (or not) they shouldn’t ask their real estate agent to find them a home nearby one of those meeting places. And if the public is shopping for a Realtor or Realty company’s services, they should understand that the websites they are visiting that compare Realtors (Homelight, Redfin, Zillow, Homes.com, and many more) do not do so in any official capacity and those Realtor comparisons are skewed heavily to favor whichever Realtors are willing to pay the most (thousands upon thousands of dollars) to look and compare better on their websites than the rest of the licensed providers in the area.
My goal is to provide the best possible customer service and experience for all of my clients, but it is good for them to know in which instances my hands are tied and I am bound by the rules and laws that govern my license.
I said there were seven facts your real estate agent can’t tell you in the title and only listed six categories. There are in fact, way more than seven, when diving into the fair housing rules there are a myriad of related facts a real estate agent cannot share with you about a home or area that I grouped generally into demographics, but is more specific and nuanced than that one word. Regardless, I will give a bonus seventh fact, no real estate agent can tell you what the best home or location is for you and don’t let them try. Real estate agents can be a wonderful source of advice, but only you can make the best choice on your next home.
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