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Ethics

Public Versus Private Conversations in Real Estate

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Realtors are ethical, right?

How do we know if we don’t talk about it?

We know cities are safe because there are statistics.

We know how politicians are motivated because we know (mostly) who gives them money.

We know which local restaurants are good or bad.

How do we know Realtors are ethical?

Because we trust us?

What Realtor discussions should be held behind closed doors? Free from the view of the general public?

What are we afraid of?

A few weeks ago I wrote a post discussing the (lack of) differences between Realtors and real estate agents – a story that caused a bit of consternation by some who felt this sort of thing should be discussed by Realtors, ostensibly with Realtors, rather than in public. Obviously, I disagree.

In any organization, there are conversations that should be private – political strategies, financial standings, employment decisions … but ethics?

Here’s the thing – Realtors are public, as is our profession that we are more ethical than mere real estate agents. We depend and – trade on – the public’s trusting us.

The Code of Ethics is your pathway to professionalism. Make sure you understand what separates you, as a REALTOR®, from other real estate professionals, and get your office talking about and living by the Code.

Shouldn’t our discussions about our collective ethics be held in public?

How about a badge on local associations’ pages, “no ethics complaints in the past 123 days”? To be credible our system has to be credible.

It is incumbent upon us to discuss our collective ethical successes and shortcomings …

How much transparency is too much?

Dad, Husband, Charlottesville Realtor, real estate Blogger, occasional speaker - Inman Connects, NAR Conferences - based in Charlottesville, Virginia. A native Virginian, I graduated from VMI in 1998, am a third generation Realtor (since 2001) and have been "publishing" as a real estate blogger since January 2005. I've chosen to get involved in Realtor Associations on the local, state & national levels, having served on the NAR's RPR & MLS groups. Find me in Charlottesville, Crozet and Twitter.

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14 Comments

14 Comments

  1. Atlanta Real Estate

    October 20, 2009 at 4:54 pm

    Are “ethics complaints” commonplace or something?

    And just exactly what are we going to be publicly discussing about ethics?

  2. Keith Lutz

    October 20, 2009 at 6:28 pm

    Here’s what I don’t get. How much business can you have without being a REALTOR? I mean maybe it is different in other parts, but for me to get the MLS data (CMLS), you need to join the REALTOR organization (for us that is CRRA). Without that, I would have to depend on Zillow or Trulia or drive around and look for homes for sale. Am I missing something?!?! I know in Manhattan they have there own entity and do not belong to NAR, but that is the exception, not the rule.

  3. Atlanta Real Estate

    October 20, 2009 at 8:52 pm

    Keith:

    As far as I know, in Atlanta, it doesn’t matter as far as access to MLS data, etc.

    But, many brokerages require membership.

    But you know, I’ve never tested it, I just begrudgingly pay the dues.

  4. Ted Mackel

    October 21, 2009 at 2:43 am

    Actually it is against the law for an MLS require you to be a member of the AOR. Here is the catch 22. If your Broker is a member of the AOR, The AOR rules state that all agents under that Broker must join the AOR. What this means is that since your Broker will also be a MLS member, you will join the MLS because you need the data and you will Join the AOR not because of the MLS, but because of your Broker is a member of the AOR.

    You can move companies and find a Broker that is not a member of the AOR and only the MLS, but NAR is not a bad thing. It’s lobbying power is extremely important to our industry and home owners.

  5. teresa boardman

    October 21, 2009 at 7:02 am

    Interesting. I don’t have a clue how many ethics complaints are filed and I don’t have any sense for how ethical our local agents are. I guess the general public doesn’t either.

  6. Atlanta Real Estate

    October 21, 2009 at 7:06 am

    teresa

    that’s what I’m talking about

    and if we are going to have “public” debates about ethics for realtors, why not have them for every other profession out there: teachers, mechanics, doctors, etc.

  7. Bob Wilson

    October 21, 2009 at 11:36 am

    People have public debates about ethics in many industries.

    Jim, are you suggesting that the debate over what defines ethics be public, or the accusation of unethical behavior be made public?

  8. Jim Duncan

    October 21, 2009 at 11:40 am

    Bob –

    I’m thinking that we should have public conversations about the efficacy of our ethics system –

    How many ethics complaints are filed per year?

    Accusations should be (in my thinking) private, but “convictions” public.

    Atlanta –

    “and if we are going to have “public” debates about ethics for realtors, why not have them for every other profession out there: teachers, mechanics, doctors, etc.”

    We do now – transparency has been moving towards these respective industries slowly, and with some fight, but it’s happening.

  9. Matthew Hardy

    October 21, 2009 at 1:40 pm

    There’s no such thing as an “ethical” organization or an “ethical” industry. Discussing ethics is good, especially when the discussion serves to clarify what is generally ethical behavior, but only individuals can be ethical, or not.

    The idea of marketing “no ethics complaints in the past 123 days” is a little like a doctor marketing “no patients killed in the last 123 days”, or a CPA “sober for 123 days”…

    People know that there are ethical people and unethical people and they know that there are methods of redress. I’m not sure that heralding how unethical behavior is handled group-wide would do anything but cause the public to assume that there are more ethics problems in real estate than perhaps there really are; i.e. would contribute to *more* disdain for the industry.

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Ethics

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.

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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.

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Ethics

Ethics hearings in private a disservice to consumers?

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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.

Appalling conduct

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?

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Ethics

Realtors, we really need to get over ourselves already

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A letter from the child of a Realtor.

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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