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An ad overhaul

Big changes to state marketing rules aim for greater transparency in real estate advertising

March 01, 2013

New York State is getting closer to finally overhauling the rules for advertising in the real estate industry — a move that would change the way brokers use social media and even what brokers can name their own teams.

Sources close to the 14-member New York State Board of Real Estate, the government oversight committee debating the rules, say new regulations could be adopted as soon as March 14, when the group next convenes. If that happens, the changes would go into effect around mid-June, marking the biggest regulatory shakeup in real estate advertising in 19 years.

In October, the committee agreed on the proposed rule changes — which dictate how New York City brokers will have to treat all forms of advertising, from web and e-mail promotions to business cards and more traditional mediums like signs and flyers.

If the committee doesn’t adopt those changes within 12 months, the proposed rules expire and it has to go back to the drawing board. Sources who spoke to The Real Deal said, however, that they were fairly confident the new rules would be adopted this month.

For brokerages, the impact of the rule changes would be manifold.

Among the most dramatic changes, broker teams, which have become popular in recent years, would be prohibited from calling themselves “groups,” or from using the terms realty or associates in their names. Instead, the rule — which is backed by the Real Estate Board of New York, the industry’s leading trade organization — would require groups use the word team. (The idea is to avoid giving the impression that they are an independent company rather than a team within a larger firm.)

In addition, if nonlicensed members of the team are named in ads, the material must specifically state who is licensed and who is not.

Titles like “sales associate,” “agent” and “broker” would also be out — with ads indicating the exact license held by the broker, such as “licensed real estate salesperson” or “licensed associate broker.”

Moreover, only a licensed broker would be allowed to place an ad without citing the name of his or her brokerage; everyone else (including teams, associate brokers and salespeople) must include the brokerage name or the broker their license is affiliated with.

Several members of the committee, including Halstead Property’s president Diane Ramirez, either declined to comment or did not respond to requests for comment. The Department of State, which would implement the rules, would only confirm that the proposal will be on the agenda at the March 14 meeting.

Since the rules were last substantially overhauled in 1994, a lot has changed. For starters, neither the Internet nor broker teams were commonplace in the industry back then.

Today’s proposed changes are designed to incorporate those new realities when it comes to holding brokerages more accountable for the online and print actions of their brokers.

“It’s a big deal,” said industry veteran Neil Binder, president of Manhattan-based residential brokerage the Bellmarc Group.

Most brokerages “understand they’re not getting off the hook, and they better make sure they can properly direct and control [their broker teams],” he said, so that the teams “conform to the legal and ethical practices of the state.”

Running afoul of existing guidelines can already result in the loss of licenses for brokers and their firms along with tens of thousands of dollars in state penalties (particularly when it comes to Fair Housing rule violations). But the new regulations increase the likelihood of that happening because they’re more stringent.

Firm heads who spoke to TRD appear to be taking a hands-on approach to the pending changes through training and through installing filters on their websites to weed out any noncompliant postings.

“What [the state is] really trying to do,” said Gary Malin, president of Citi Habitats, “is continue along the lines of transparency for consumers, so [consumers] understand who they’re dealing with and how to get in touch with people. The more transparency in our industry, the better.”

The increased training could be especially important when it comes to brokers’ personal social media accounts like Facebook and Twitter. That’s because the new rules cover things like social networking sites and blogs.

“We’re all kind of asking a rhetorical question,” said Douglas Wagner, the executive leasing director at Bond New York, “which is, ‘If an agent under my supervision goes on to their private Facebook account and promotes their open house and makes some sort of general reference to something that’s not compliant with advertising and licensing laws, how does the brokerage … supervise compliance?’ ”

In other words, is a brokerage responsible if a broker touts a condo’s “family-friendly size” on his or her personal Facebook page — a reference that’s forbidden by Fair Housing laws as discriminatory against buyers who don’t have children?

Under the new rules, both brokers and firms (their principal license holders) would be responsible. So it’s in the brokerages’ interests to make sure their brokers are up to speed on the latest guidelines.

Size doesn’t matter

Though they now appear inevitable, the changes have not been without controversy.

As TRD reported in 2011, REBNY and the New York State Association of Realtors, which represents brokers statewide, differed over several technical points in the proposed rules.

For example, REBNY wanted brokerage names to be larger and more prominent on ads, while NYSAR wanted team member names to be larger. The two sides appear to have reached a compromise: If a broker or team name is used in an ad, including business cards, the rules would require that the brokerage name also appear, though not necessarily of equal or greater size. And if a broker or team wants to include their logo, the brokerage’s logo or name has to appear, too, though not necessarily of equal or greater size.

Such technical tweaks may be more tedious than anything — and some, such as changing e-mail taglines, are cost-neutral.

“I think the agents who are conducting their activities in an already exemplary way, it’s just viewed as extra steps that they have to do,” said Larry Link, president of the brokerage Level Group.

The only changes that may rankle, according to brokers, are those associated with renaming “groups” as “teams” as many of those groups have spent years building brands.

Still, some say the change would affect upstate groups more than ones in the city, which by and large already market themselves conspicuously under the banner of bigger firms like Douglas Elliman and the Corcoran Group. (Besides, the rules would allow groups to cite their former name alongside their new one for 12 months after the rules go into effect.)

“Being part of a large organization like Corcoran is just a benefit and a positive thing,” said Tamir Shemesh, head of the Shemesh Group, which markets itself prominently under the Corcoran umbrella. “[Corcoran] spends a lot of resources and money to maintain its brand, and it’s a good brand. Why not use it?”