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20.3 Other Professional Practices
- 19 Dec, 2025
- Com 0
Lesson 20 — Professional Practices
Topic 20.3: Other Professional Practices
What you’ll learn: how professional standards guide real estate practice, what ethical job performance looks like, key duties to clients vs. customers, and modern risk areas like wholesaling and “love letters.”
Recommended approach
- Step 1: Know the “why”: ethics protect the public, your client, and your license.
- Step 2: Separate clients from customers—your duties are not identical.
- Step 3: Memorize the high-risk topics: disclosure, advertising, handling money, wholesaling, and love letters.
Chapter resources
- Read: Chapter 20 section on Other Professional Practices
- Optional: NAR Code of Ethics (for reference): https://www.nar.realtor/about-nar/governing-documents/code-of-ethics/2023-code-of-ethics-standards-of-practice
Next step
You’ve completed Lesson 20. Next up: your next chapter/lesson build.
Note: Ethics standards come from laws, licensing rules, and industry codes. Always follow Alabama law and AREC rules first.
Codes of ethics (where professional standards come from)
Real estate professional standards and ethics come from three main sources:
federal and state legislation, state licensing regulation, and industry self-regulation (trade associations/institutes).
- Laws focus on things like fair housing and fair trade practices.
- Licensing rules focus on agency, disclosure, and regulating brokerage practices.
- Industry codes set standards for professionalism across everyday brokerage activity.
Why it matters: Strong ethics protects consumers, builds trust, and helps you avoid regulatory sanctions and lawsuits.
Job performance (what “professional” looks like)
A professional real estate agent commits to maintaining and improving expertise—especially in:
market knowledge, real estate laws, and evolving standards of practice.
- Submit offers and counteroffers timely and objectively.
- Keep others’ funds separate from broker/personal funds (avoid commingling and conversion).
- Provide equal professional services to all persons.
- Advertise with the highest standards of truthfulness.
- Work within your competence—or bring in a specialist when needed.
- Get agreements in writing and keep transaction documents current.
- Cooperate with boards/commissions in enforcement of standards.
Boundary reminder: Avoid practicing outside your qualifications (law, tax advising, securities, investment counseling).
Duties to clients vs. duties to customers
Ethical standards emphasize that your duties depend on whether someone is a client (represented party) or a customer (non-represented party).
Your obligations to both include honesty and fair dealing, but fiduciary duties apply to clients.
Duties to clients (fiduciary-focused)
- Fulfill fiduciary duties and maintain confidentiality.
- Honestly represent market value and property condition.
- Submit all offers and respect other client-agent relationships.
- Avoid commingling/conversion and manage client property competently.
- Keep transaction documents current and accurate.
Duties to customers (honesty + truthfulness)
- Honestly represent market value and property condition.
- Avoid calling a service “free” if it depends on receiving a commission.
- Advertise truthfully.
Disclosure (common ethical/legal disclosure points)
Professional practice requires careful disclosure to comply with laws and protect the public. Common disclosure areas include:
- Compensation received from more than one party in a transaction.
- Property defects that are reasonably apparent (no duty to discover defects requiring technical expertise).
- Any personal interest the agent has in a listed property.
- Any profits made on a client’s money.
- The agent’s identity in advertisements; broker/firm identity as required by state law.
- Dual representation (if permitted) and the existence of accepted offers (as required).
Wholesaling (what it is + licensing risk)
Wholesaling is profiting from a real estate transaction without actually buying the property. The wholesaler contracts with a seller,
then assigns the contract to an end buyer for a higher price and keeps the difference as a fee.
Exam takeaway: Some states require a real estate license for wholesaling activities—always verify state law.
“Love letters” (why they’re discouraged)
A buyer “love letter” is a personal note attached to an offer to persuade a seller emotionally. The risk is that the letter may reveal protected-class
information (race, religion, familial status, etc.), which can create fair housing liability if it influences the seller’s decision.
- Some sellers refuse to accept love letters.
- Best practice is to avoid them and use other ways to strengthen the offer (price, terms, timing, financing strength).
Professional relationships (how to treat competitors and peers)
Professional conduct includes respecting other agency relationships, avoiding unfair advantage, and keeping disputes professional.
- No disparagement of competitors.
- Arbitrate rather than litigate when appropriate.
- Conform to accepted co-brokerage standards and respect others’ agency relationships.
Quick Check-Ins (Self-Study)
Check-In 1: Which is an example of a professional “job performance” standard?
- A. Steering buyers to “better” neighborhoods
- B. Submitting offers and counteroffers in a timely and objective manner
- C. Keeping client funds in the agent’s personal account for convenience
- D. Advertising a service as “free” when it depends on earning a commission
Show Answer
Correct answer: B. Timely, objective submission of offers is a common professional standard and helps protect all parties in a transaction.
Check-In 2: Why are buyer “love letters” discouraged in many markets?
- A. They are required by federal law
- B. They can reveal protected-class information and create fair housing liability
- C. They automatically void the purchase contract
- D. They replace the need for a written offer
Show Answer
Correct answer: B. Love letters may disclose protected-class details (like religion or familial status), which can be construed as an unlawful basis for accepting or rejecting an offer.
Wrap-up
Professional practices are shaped by laws, licensing rules, and industry ethics. Strong job performance, clear disclosure, and respectful professional relationships protect consumers—and protect your license.