Standard of Practice 3-1 obligates REALTORS® to communicate any changes in compensation:

The correct answer is that Standard of Practice 3-1 obligates REALTORS® to communicate any changes in compensation prior to the cooperating REALTOR® producing an offer. This standard promotes transparency and fairness in real estate transactions, ensuring that all parties involved are aware of the compensation terms before negotiations progress to the point of making an offer.

Notifying the cooperating REALTOR® before an offer is made allows them to relay the appropriate information to their clients, facilitating informed decision-making and preventing misunderstandings regarding the terms of compensation. This requirement is essential in maintaining ethical practices in real estate, as it helps create a level playing field for all parties involved.

The timing of the communication is crucial; waiting until after the offer is produced or the purchase agreement is signed can lead to confusion and conflict, undermining trust between REALTORS® and their clients. Therefore, the focus on ensuring that any compensation changes are communicated early in the process aligns with the ethical standards that govern real estate professionals.