Real estate agents play a huge role in helping clients navigate some of life’s biggest financial and emotional decisions. In many cases, they’re more than just professionals—they become trusted advisors during one of the most significant transactions their clients will ever make. That’s why it’s so important for agents to hold themselves to high ethical standards, whether or not they’re members of the National Association of REALTORS® (NAR).
Ethical behavior builds trust with clients, keeps transactions running smoothly, and upholds the reputation of the real estate industry as a whole. But let’s be honest—ethical missteps can happen. Issues like misrepresentation, conflicts of interest, or mishandling client funds can come up and quickly damage relationships and tarnish an agent’s reputation.
The good news? These challenges are completely avoidable. Whether following a formal code of ethics, state laws, or just a strong moral compass, agents who prioritize doing the right thing will protect their clients and set themselves up for long-term success.
Below are some of the most common ethical violations in real estate—and how to avoid them.
Disclaimer: Real estate laws and regulations vary by state, and the information provided in this guide is intended for general educational purposes only. It should not be considered legal advice or a substitute for consulting with a licensed real estate attorney, broker, or local regulatory authority. While we strive to provide accurate and up-to-date information, laws and ethical guidelines change over time, and interpretations may differ based on specific circumstances. Always verify any legal or ethical requirements with your state’s real estate commission, licensing board, or professional organization.
1. Misrepresentation and Exaggeration
Sometimes, agents unintentionally (or intentionally) misrepresent or exaggerate details about a property, which can mislead buyers. This violates Article 2 of the NAR Code of Ethics, which requires REALTORS® to avoid misrepresentation or concealing important facts.
How to Avoid It:
- Stick to the Facts – Always verify property details using reliable sources, like public records, surveys, or professional inspections, before sharing information with clients.
- Be Clear – If you’re unsure about a property’s condition or features, don’t guess—communicate the uncertainty clearly. Avoid overstating benefits.
- Keep Learning – Regularly attend training sessions on property valuation and disclosure rules to stay up to date.
- Document Everything – Keep written records of all representations made about a property and make sure clients receive all relevant disclosures in writing.
2. Failure to Disclose Dual Agency
Representing both buyer and seller in the same transaction without proper disclosure is a serious conflict of interest—and it’s even illegal in some states. Article 1, Standard of Practice 1-5 requires REALTORS® to disclose dual agency and get informed consent from all parties involved.
How to Avoid It:
- Educate Clients – Explain what dual agency means, including potential conflicts of interest and how it might affect the transaction.
- Get Written Consent – Before acting as a dual agent, get written approval from both parties and keep it in your records.
- Stay Neutral – If dual agency is allowed, act impartially and avoid favoring one party over the other.
- Follow Brokerage Rules – Work with your broker so that you’re complying with state laws and brokerage policies on dual agency.
3. Inadequate Communication and Cooperation
Poor communication or refusing to cooperate with other brokers can delay transactions and cause unnecessary friction. Article 3 of the NAR Code of Ethics emphasizes the importance of cooperation with other brokers unless it’s against the client’s best interest.
How to Avoid It:
- Set Expectations Early – At the beginning of a transaction, outline clear communication protocols with clients and cooperating brokers.
- Be Responsive – Return calls, emails, and messages promptly to avoid unnecessary delays.
- Work as a Team – Focus on the shared goal of closing the transaction successfully while still protecting your client’s interests.
- Resolve Conflicts Professionally – If issues arise with another broker, address them proactively instead of letting disputes escalate.
4. Inaccurate Advertising
False or misleading advertising can damage an agent’s credibility and erode trust with clients. Article 12 of the NAR Code of Ethics states that REALTORS® must present a true picture in their advertising and public representations.
How to Avoid It:
- Be Honest in Marketing – Verify all claims in your marketing materials, including property features, pricing, and availability.
- Use Professional Photos – Invest in high-quality photography and make sure property descriptions are accurate and realistic.
- Get a Second Opinion – Have another agent or your broker review marketing materials for accuracy before publishing.
- Include Disclaimers – Use disclaimers like “Information deemed reliable but not guaranteed” to clarify details that might change.
5. Confidentiality Breaches
Sharing sensitive client information without proper authorization can lead to loss of trust and even legal consequences. Article 1, Standard of Practice 1-9 states that REALTORS® must protect confidential client information, even after the agency relationship ends—unless disclosure is legally required or the client gives explicit consent.
How to Avoid It:
- Keep Data Secure – Use encrypted systems and password-protected files to store client information safely.
- Limit What You Share – Only disclose information that is absolutely necessary and authorized by the client.
- Get Client Approval – Always get written consent before sharing any confidential details, even with cooperating agents or transaction professionals.
- Stay Educated on Privacy Laws – Keep up with data privacy laws and best practices to ensure you’re handling client information appropriately.
Final Thoughts
Ethical issues can come up in real estate, but staying proactive and informed will help agents avoid complaints and maintain a strong reputation. By prioritizing honesty, communication, and professionalism, agents can protect their clients, their business, and the integrity of the industry.
At the end of the day, ethics isn’t just about following the rules—it’s about doing the right thing, even when no one is watching.