Referral Marketing: Mind Your P's and Q's

Don’t target owners of MLS-listed properties for outgoing referrals. Even though it’s not a solicitation of another broker’s listing, it violates Article 16 of the REALTORS® Code of Ethics.
Man reading the NAR Code of Ethics on a tablet

© Stanisic Vladimir /

Q: I belong to a large referral network with connections across the United States. When I’m showing listings of other real estate professionals, if the sellers are home, I’d like to offer to refer them to a broker who operates where they’re moving to. I would never say anything negative about their listing agent, and I feel this is a totally different service. I’d also like to leave flyers with any homeowners with For Sale signs letting them know of my relocation services. I have no intention of soliciting the listings of other brokers. But is this allowed?

A: Article 16 of the Code of Ethics says REALTORS® shall not engage in any practice or take any action inconsistent with exclusive representation or exclusive brokerage relationship agreements that other REALTORS® have with clients.

You’re correct that the service you are considering is a different type of service. So, if you ran into someone in a social setting, such as a Rotary Club meeting, and they mentioned their house was on the market, you could offer them your relocation services. However, the practice that you’re considering would be prohibited because you would be targeting listings from the multiple listing service. Two standards of practice under Article 16 address this further:

Standard of Practice 16-3: Article 16 does not preclude REALTORS® from contacting the client of another broker for the purpose of offering to provide, or entering into a contract to provide, a different type of real estate service unrelated to the type of service currently being provided (e.g., property management as opposed to brokerage) or from offering the same type of service for property not subject to other brokers’ exclusive agreements. However, information received through a multiple listing service or any other offer of cooperation may not be used to target clients of other REALTORS® to whom such offers to provide services may be made. (Amended 1/04)

Standard of Practice 16-18: REALTORS® shall not use information obtained from listing brokers through offers to cooperate made through multiple listing services or through other offers of cooperation to refer listing brokers’ clients to other brokers or to create buyer/tenant relationships with listing brokers’ clients, unless such use is authorized by listing brokers. (Amended 1/02)

Note: While the Code of Ethics establishes obligations that may be higher than those mandated by law, in any instance where the Code of Ethics and the law conflict, the obligations of the law must take precedence.