What is considered advertising?
The Virginia Real Estate Board’s definition of advertising:
“Advertising means all forms of representation, promotion and solicitation disseminated in any manner and by any means of communication to consumers for any purpose related to licensed real estate activity.” 18 VAC 135-20-190(A).
As you can see, advertising, from VREB’s perspective, is a broad concept, covering everything from a page you pay for in a newspaper to potentially the contents of your emails and your posts on social media sites. Its regulations encompass all communication media (although they require different disclosures for print and electronic media advertising).
Also, consider that real estate advertising can be in the eye of the beholder. For example, I post on my Facebook® page that I just sold my 25th listing this month. I might just be attempting to garner praise from my friends, but I might also be attempting to tell the world what an incredible agent I am and to work with me ——–advertising!
A suggested guideline to go by to determine whether you are engaged in regulated advertising is: Could what I am sending out be perceived as attempting to induce business? If it could be, follow all disclosure requirements.
What do I need to disclose in my advertising?
Your disclosure obligations are different depending on whether you are a firm or an individual licensee and whether your advertising is in print form or on electronic media:
Electronic media advertising for a firm must include:
- Firm’s licensed name;
- City and state in which the firm’s main office or branch office is located; and
- All jurisdictions in which the firm is presently licensed (as per the Code of Ethics Article 12)
Electronic advertising for an individual licensee must include:
- Licensee’s name;
- Firm’s name;
- City and state in which the licensee’s place of business is located; and
- Jurisdiction(s) in which licensee holds a license, active or not (as per the Code of Ethics Article 12)
Print advertising for a firm must include:
- Firm’s name
Print advertising for an individual licensee must include:
- Licensee’s name; and
- Firm’s name
There are now additional disclosures required for signs and business cards:
For Sale or For Rent Signs on the property must at least include:
- Firm’s licensed name;
- Firm’s primary or branch office telephone number (can use a rider, sticker, etc); and
- Licensee’s name is also recommended
Business Cards must at least include:
- Firm’s name;
- Licensee’s name; and
- Licensee’s contact information (either telephone number or web address)
Where do the required disclosures need to be displayed within my advertising?
According to the VREB, your firm’s licensed name must be clearly and legibly displayed in your advertising.
However, there are additional requirements for the placement of disclosures in electronic media:
All firm and REALTOR® main home pages must clearly and legibly display the electronic media disclosures on the viewable page.
All firm and REALTOR® non-main page(s) may clearly and legibly include all electronic media disclosures on each individual online page OR include a link to those disclosures on the viewable main page.
What are the requirements for team advertising?
There are currently no laws in the Commonwealth of Virginia regulating Teams. Ultimately, Teams are subject to the same advertising disclosure regulations as an individual licensee. Something to note here is that the regulations require licensee names on licensee advertising. There is nothing that states that a Team name may or may not also be used. There is a lot of confusion and ultimately disagreement surrounding the issue of whether a Team can use their Team name in advertising. Technically, in order to be a licensee you must have a broker’s license, salesperson license, or a business entity salesperson (BES) license from the VREB. Nothing in the regulations specifically states that a Team must have a BES to advertise as a Team, but without it, licensee names of team members should be listed on the advertisement as well. In fact, many attorneys in the field recommend listing your Team name and all licensee names no matter what in your advertising. Teams should confirm their broker’s policies on advertising as well, and investigate whether they should, with their broker’s permission, work with an attorney to form a business entity, register it, and apply for a BES license.
Both the Code of Ethics and the VREB Regulations impose additional considerations for legal and ethical team advertising.
- 18 VAC 35-20-300(9) states that knowingly making any material misrepresentation is grounds for disciplinary action, including fines, suspension, or revocation of license.
- The Code of Ethics, Standard of Practice 12-10 prohibits REALTORS® from misleading consumers.
The concern here is that the public is clear as to whether you are operating as a team or as an independent brokerage. To protect themselves, firms and licensees should be cautious with team names and avoid the use of terms that might cause confusion, such as realty, real estate, associates, partners, company, sales, limited, and properties. Use of the terms “team” or “group” is less risky. The VREB is also very sensitive to team advertising in which the team name is so prevalent, and the firm name so hidden, that the public could be confused. Remember, the law states that your firm name must always be clearly and legibly displayed in your advertising. The key question to ask yourself is – does the ad leave the impression that the team is a brokerage firm acting independently? If so, there might be a violation.
Is it true that the agent name (or team name) cannot be in larger print than the company name?
No, there is no such regulation. The bottom line is that all advertising – including team ads – must be clear and unambiguous as to the identity of the firm and that the team is a team, and not a brokerage.
May a buyer agent who sells another agent's listing advertise that she sold the property?
Yes. Code of Ethics, Standard of Practice 12-7 provides that:
Only REALTORS® who participated in the transaction as the listing broker or cooperating broker (selling broker) may claim to have “sold” the property. Prior to closing, a cooperating broker may post a “sold” sign only with the consent of the listing broker. (Amended 1/96)
May a buyer offer to rebate a portion of his commission to a client?
A licensee may rebate to a client, as long as the lender approves (there are maximum total concessions that buyers are permitted from all sources on most loan programs).
The rebate must also be listed on the settlement statement. Concessions to buyers may be of interest to lenders for determining loan-to-value ratios. If someone tells you a rebate can’t go on the settlement statement, it almost certainly must.
Also, keep in mind that when you advertise a potential rebate there should be disclaimer language making clear that it is subject to lender approval or any other conditions that may apply.
May we advertise that our firm will pay nonlicensees for real estate leads?
Section 8 of RESPA expressly prohibits this, unless the source of the referrals is licensed. Section 8 of RESPA provides that it is illegal to pay or to receive anything of value pursuant to an agreement that settlement services will be referred. Real estate brokerage is a settlement service. (This prohibition applies only if there is an institutional mortgage loan in the deal.) RESPA contains an exemption in the case of referrals by real estate licensees to each other.
This is also a violation of Virginia law, which provides that referral is a licensed activity. See section 18 VAC 135-20-280(1) which states that “[o]ffering to pay or paying a transaction-based fee, fees, or other valuable consideration to any person not licensed in this or any jurisdiction for services that require a real estate license. . .” results in an improper brokerage commission. The VREB regulation 18 VAC 135-20-165 also specifically defines agreeing to a referral fee as a licensed activity:
The supervising broker undertakes reasonable steps to ensure only licensees undertake activities requiring a license, including but are not limited to: a. Show property; b. Hold an open house; c. Answer questions on listings, title, financing, closing, contracts, brokerage agreements, and legal documents; d. Discuss, explain, interpret, or negotiate a contract, listing, lease agreement, or property management agreement with anyone outside the firm; and e. Negotiate or agree to any commission, commission split, management fee, or referral fee.
The landlord wants to pay a "finder's fee" to existing tenants who bring in other renters. Can the landlord directly compensate his tenants in this fashion, even though a real estate firm is managing the property?
Section 54.1-2103A7 of the Code of Virginia gives the answer. This section deals with exemptions from the requirements of licensure, and exempts “Any existing tenant of a residential dwelling unit who refers a prospective tenant to the owner of the unit or to the owner’s duly authorized agent or employee and for the referral receives, or is offered, a referral fee from the owner, agent or employee.”
An agent in my office is selling his own home and has heard that he doesn’t have to use the Owner/Agent sign anymore - are Owner/Agent signs still required?
Agents must include in all advertising that the owner is a real estate licensee if the licensee owns or has any ownership interest in the property advertised, even if the property is listed with a licensed firm. This requirement includes for sale and for rent signs placed on the property, which may require a sign rider.
Also please remember that in all cases, the Owner/Agent must disclose to all parties in writing his interest, or potential interest, in a real estate transaction.
May a Virginia licensee advertise South Carolina property in Virginia publications?
Sure. The real estate license is not property-sensitive, but activity-sensitive. In other words, it’s not a function of where the property is located, but where the activity occurs.
I am co-listing a property with another Agent. Does this need to be disclosed?
There is no difference in advertising rules for one listing agent versus two. If there are two listing agents, then whenever the law or Code of Ethics requires a licensee name in advertising, both names must be listed (e.g. for sale signs). The same rule applies if two different brokerages are working together to list a property. Both firm names must be clearly and legibly displayed in the property advertising.
What kind of disclosures, if any, need to be included in text messages?
Text messages that are being used for advertising purposes, as opposed to communications between existing clients, should be treated the same as emails and must have all electronic media disclosures or a link back to the REALTOR® or firm main home page where the disclosures are already listed.