Alienation or Amelioration?
It’s been a catch phrase since my first day of licensing class… I remember distinctly the instructor saying, “We need to increase professionalism in this industry and good education is the key.” He then proceeded to ask each student to read a section of the proceeding chapters out loud. And that’s what we did for sixty hours. We read out loud, had some nominal discussions about agency and then took a test. All the while being reassured the the licensing program had little to do with actually practicing Real Estate – great. What a waste of potential time to influence the next wave of practitioners…
Now I am an educator and have also served clients both as an agent and broker. I have worked with some of the best and the worst the industry has to offer, but all the while I’ve heard and participated in talk about “Raising the Bar”. This is almost always on the heals of an agent getting scorned in some way. At some juncture an agent finds something unfair or unsettling about a transaction or practice and shares it with anyone who will hear. Will they gossip and complain about it? Yes. Will they reduce it to writing and put their name to it? Rarely.
The concern I have today is that many people who declare that the “Bar” needs to be raised aren’t utilizing that tools that are out there to actually bring some change to the practice of another agent. I’ve heard the rationale of inaction, but sometimes I don’t think it’s justified. Could it hurt your future dealings – maybe. Could it label you as a tattle-tale – probably. Will it make you any friends – never. Regardless, the real aspiration to change is usually in direct proportion for potential repercussion of indiscretion.
Therefore I am left with the question: Why would a group of people who have the ability to pursue justice desire to not do so and then ask for more regulation? Wouldn’t more requirements simply be just more rules to infringe upon with no real deterrent? Or is it that many would simply like the requirements of education to be higher in order to dissuade individuals from getting or keeping a license thus eliminating competition without the need for actual action?
How High(or low) will You Go?
Mandatory Education as a tool against nefarious action is myth. Mandatory Education as a tool to increase professionalism is a scheme without foundation. People will swim across dry deserts if they think there is an easy reoccurring six figure income at the end. You can increase pre-licensing education all you want, but without actually using the time to teach something of value it’s pointless. Mandating excessive educational requirements in the hope that problematic people will go away, is a waste of good legislation. We can mandate 100’s of hours a year of education for REALTORS®, but all you will have are weary and bitter practitioners in your classrooms… Yeah, that’s a great learning environment. Covering Fair Housing for three hours every year, when it hasn’t changed in my state since 1988, is a great waste of time. Look, I’m not knocking Fair Housing training. Frankly, I think it’s one of the most important issues we sometimes face – but, it hasn’t changed. If you limit someone’s right to live peacefully, because of their color – you’re an idiot and nothing in my lecture is going to change that. This point is compounded by the fact that only 2% (according to some reports) of Fair Housing violation deal with Residential Sales (83% of practitioners) and deals mainly with rentals (4% of agents). Only enforcement of the rules will dissuade you from acting that way, not laboring that point with people who aren’t misbehaving.
Giving educators more time in the front-end of licensing will help to better prepare the agent, if we’re allowed to use that time for budgeting, marketing, business planning, professional development etc. I’m all for that. That better prepares the agent to go serve the pubic – but it wont’ make them more responsive, more ethical or change their desire to put money before people.
At what point do we stop ‘Raising the Bar”? Is it when there is such a high requirement of mandatory education and manure to wade thru that you can’t possible have time to actually find and work with a client. This industry is highly regulated – it’s simply that no one is initiating the process.
The Case Against Mandatory Education
I am all for education – it’s the silver bullet that sets us apart from one another. However, some jurisdictions have taken this too far and have enacted or proposed regulations to make education something agents will resent and not embrace.
Some of the worst white collar offenders are highly educated people. That education just gave them the tools to steal more money, than those who weren’t as highly educated. Way back when I worked in IT, my primary clients were schools. I remember vividly the conversations amongst the teachers talking about the crappy performance of most of the teachers in the system. In one long conversation the teachers pointed out that those educators with Masters Degrees and PhDs were so full of theories that there were no longer relevant to today’s learners. (I don’t think that’s always the case, but I’ve personally been bored more often that not with the uber-educated.) Every industry has good and bad employees…
There is something in people that makes them ideally suited for jobs they do well. It’s the perfect aggregate of personality, intuitiveness and desire to do well. Without the desire to do well, REALTORS® will continue to give poor service – that is not something we can change.
The higher the demands on mandatory education, the more it will push agents to take the path of least resistance. They will go to the online schools that allow you to get 10 hours of credit for 25 minutes of reading and a quiz. What will that accomplish?
No REALTOR® Left Behind
It dawns on me that Public School system as given the “No Student Left Behind” edict and has taken the actually learning process out, in order to ensure passing a test. We’ve done the same with vocational education. Many educators no longer even try to teach Critical Thinking Skills. They simply read or lecture what’s given, never trying to help the REALTOR® actually put the pieces together.
Doesn’t the Infinite Monkey Theorem tell us that given enough time and enough monkeys that they could type the works of Shakespeare? I don’t want to be trapped into to actually getting the attention of an agent in a learning environment, and then have to drill drivel about basic agency theories every year. Let’s make education count and not use it as a broadsword to sweep away competition. Let’s use it as a tool to mold learners.
The Real Answer
So as not to be accused of not wanting to increase professionalism, I want to be very clear. I am of the opinion that professionals need to be held accountable and that we have a lot of growth to be done in this industry. That said, the answer in my opinion is enforcement. No one knows better than an agent what is legal and acceptable practices. Why shouldn’t they also be the primary defense of the consumer against those agents who do not adhere to regulations?
If agents do not want to be accountable to hold others accountable than the only other option is to increase licensing fees and hire people to do field reviews of transactions – but warned… It’s been my experience that virtually no agent has practiced without a mistake somewhere. The issues with investigators is that the will hunt to find something that will justify their existence – you’ve been warned.
I think clearer regulations, more agents holding others accountable and Brokers being made to suffer the same consequence as an agent who causes malice are all better steps to improving the industry than simply making people hate to get training…
What do YOU think will make a difference?
The problem with a self-policing industry: you have to be a narc
Ethics violations in the real estate industry can make or break a Realtor’s career, depending on the severity, so it would stand to reason that all would be mindful of the rules, but there are always individuals in the field that act as if the Code of Ethics is irrelevant.
An animated discussion on ethics training
“Does anyone else find it ironic that NAR – the trade association for Realtors – has to mandate that members take an ethics class every four years?” An agent who attended one of my company’s broker opens yesterday posed that question to the wine and cheese grazing attendees. Of course, that opened up an animated discussion on the value of etchics training and the lack of enforcement when the rules are violated.
One agent volunteered that the guy sitting next to her in her last ethics class played games on his cell phone and then cheated during the test at the end of the class. Seriously, dude? You cannot even pay attention long enough to pass what should be the easiest test you’ll ever have to take in your career? Perhaps he was just seeing how far he could push it by cheating during an ethics test, to see if anyone else around him caught the extreme irony there. None of the other agents around him – including the agent he cheated off – turned him in and the instructor didn’t notice.
This same agent later called one of my sellers and tried to convince him to break a listing contract with me, because he had a “guaranteed buyer” in the wings. The seller was an attorney, and this bozo tried to get me cut out of the deal, offering the seller a reduced fee to dump me. The seller held firm and directed the agent to call me, then the seller called to let me know about the conversation.
“But you know if you file something the other agent will know.”
It gets better. After the deal closed, I requested paperwork from our local Board of Realtors to file an ethics complaint. The person in charge said, “But you know if you file something the other agent will know.” Gee. Really? I asked her to send the paperwork over anyway.
I called the seller/attorney and asked him to repeat the conversation to me, because I was documenting it to file a complaint. He turned wishy washy on me at that point and his story changed from “The other agent tried to get me to dump you as the listing agent to cut you out” to “Well he really only asked a few questions and I told him to call you. He probably didn’t mean any harm by it.” So there goes my star witness, who doesn’t want to rock the boat.
I didn’t file the complaint. I resorted to the “turn the blind eye but never trust the sleazeball again” path. And that is what happens to almost all ethics issues I hear about / see in person.
That’s what happens when you have a self-policing group of “professionals” who would rather not “narc” on a fellow agent. After all you’re probably going to end up on the other side of a deal from this guy some day, right? The guy in my example has sold two of my houses since that run-in. Why tick him off by filing a complaint and going through all that hassle? If he stops bringing buyers to my properties then my sellers ultimately lose, right?
Boiling down the CoE
The NAR Code of Ethics takes up pages and pages of tiny print, and it runs each year in their trade magazine (I think it’s the January issue). Does anybody read that? Probably not many. I’d argue none of us ever should have to read it again. Simply follow this advice instead. The thousands of words in the Code boil down to one thing: Do unto other agents, and consumers, and clients, what you would have them do unto you. It’s the Golden Rule. Simple. Well, obviously not, for many agents and brokers.
The sad part is the agent in my example had no clue how close I was to filing that compaint, and if he did know he’d probably scratch his head and wonder why his actions were “wrong.” Making us take a one-day class every few years won’t “make” the unethical agents suddenly operate ethically. Most of them just don’t get it.
Ethics hearings in private a disservice to consumers?
Fight Club and real estate
For those of you that saw the movie ‘Fight Club’ you’ll remember that Rule #1 is “You do not talk about fight club,” followed closely by Rule #2, “You DO NOT talk about fight club.” Which, believe it or not, brings me to today’s topic: The Real Estate Code of Ethics and Arbitration. Article 17 obligates Realtors to resolve
fights disputes with another Realtor through arbitration (not litigation). Arbitration is conducted at the local board level, and I am not aware of a local board that doesn’t require arbitration to be confidential.
I respect that public internecine warfare amongst Realtors isn’t in the interest of our industry, and doesn’t belong in the public spotlight. I’m not here to advocate the collective airing of our dirty laundry. That said, I wonder if our collective agreement to keep our concerns confidential can inadvertently harm the consumer and ultimately makes all of us look a little shoddier?
To find the first arbitration guidelines created by NAR and distributed as a set of suggested rules for boards to follow, we have to travel all the way back in time to 1929. NAR’s first Code of Ethics & Arbitration Manual wasn’t created until 1973, and it credited a 1965 California Association of Realtors version as its model.
I can think of two instances in the past year where I was so appalled by the conduct of a fellow Realtor that I went to the trouble to inquire about how to lodge a Code of Ethics complaint with my local board. After weighing the time required to make a competent complaint and comparing it with the best case outcome (a closed-to-the-public hearing in which they were found to have violated the code of ethics), I decided not to pursue a complaint in both cases. My association’s bylaws (and probably yours) give it the power to discipline any member based on the results of a Code of Ethics hearing, “provided that the discipline imposed is consistent with the discipline authorized by the Professional Standards Committee of the National Association of REALTORS® as set forth in the Code of Ethics and Arbitration Manual of the National Association.”
“Sanctioning Guidelines” – (Appendix VII of Part 4 of the 2011 manual for the very curious), guides member boards to impose disciplinary consequences that are progressive and fair, taking all considerations into account. Sample first-time disciplinary actions include suggestions of a letter of warning, a fine (amounts range from $200 to $5,000 depending on the severity of the violation), and attendance at relevant education sessions. Not to sound defeatist, but a confidential letter of warning and a fine of around $200 doesn’t seem like an outcome worth investing much of my time in.
Practicing in the internet era
Given that we live and work in the internet era, and review sites like Yelp abound, it seems a bit odd to me that a local board might know of an agent with problem behavior that is documented yet choose to make that information unavailable to consumers. My understanding is that the results of a code of ethics hearing are confidential with disclosure authorized in a few situations, none of which deal with informing the public.
Many of my fellow colleagues feel that the best response to a bad agent is to be patient and give them enough time to work themselves out of business. I can respect and understand their hands-off approach. But what about the damage that individual does to our industry as a whole? While we whisper, warn in confidence and know amongst ourselves how awful they are, the public doesn’t get the benefit of our perspective. Deprived of it, they turn to consumer review sites like Yelp.
How do you think we, as an industry, can help consumers in their quest to find a trustworthy agent?
Realtors, we really need to get over ourselves already
Real estate now vs. 1987
In Real Estate, some things are always changing, like financing, education, laws, rules and technology. The two that will always remain constant, as long as they are within the law, are following our clients’ directions, and working with their best interests in mind. I’m not sure we always follow through with this, though.
Some of us knowingly take over priced listings. Some of us take listings that are out of our area of expertise. Some of us won’t show short sales or REOs. Some of us won’t show homes with low co-op splits. Some of us don’t have Supra/e-Keys, and miss out on those listings entirely.
Putting our interests first
When these things occur we are putting our own interests first, not our clients’. We may think that by having as many listings as possible is a good thing, that’s what we’re taught after all, isn’t it? It may not matter that some are overpriced, eventually, whether one month or four months down the line, the price will be reduced. It’s just a matter of time and money, for our clients, after all. The same can be said when we take listings outside our area of expertise, just to add on to our inventory. If we don’t know what we’re doing, on a short sale listing, for example, it will only cost our clients a lot of time and money. A lot.
By eliminating certain houses our clients see, that may already fit their criteria, we’re taking away their choices. Distressed sales account for close to 40% of the market. This is probably higher in some local markets. There is no legitimate way to ignore roughly 1/3 of the homes being sold. Co-op fees are often a touchy subject, especially when they are, not “enough.” If everyone utilized a Buyer Broker Agreement that stipulated what their fee was, the issue would take care of itself. Not being able to access listings with the use of Supra/e-Keys is a choice. Choosing not purchase one will mean agents will not be able to access Fannie Mae (and eventually, probably additional Gov REO homes) along with the listings that are already using them.
Our priorities versus theirs
We totally need to get over ourselves already. We are not bigger than our clients. Our priorities are not more important than theirs when it comes to the actual listing and selling of homes.
Recently, my awesome parents dug through a few boxes and rounded up one of my first art projects. About 25 years ago I did the poster featured above about my Mom, and her Real Estate career. It was for an Open House (no pun, honest!!!) for the elementary school where I attended first grade. It was just, what she did according to me way back then. Things are way more complicated now, than when I was six. There’s a heck of a lot more paperwork for one. But the same basic principle still applies.
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