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Ethics

Buying Your Type of Neighbors?

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$10,000

…for Suggesting the Right Kind of People

Buying neighbors is not a good thing, nor is attempting to decide their religion, or any other issues in relation to fair housing. But apparently one Mortgage Broker has allegedly attempted to do just that in an upper income New Jersey neighborhood.

Jack Lefkowitz a New York Mortgage Broker allegedly mailed out the above postcard to a neighborhood warning they BEWARE! “Help Save The Neighborhood from Negative Elements!”

Beware of…

What makes this story an even bigger story is that this home is an Exclusive For Sale by Owner, and the website brags about the lack of commissions on the home, yet offers a $10,000 referral fee to residents of the neighborhood when they recommend a suitable buyer.

I think in this case, it may be buyers who may want to beware of not only FSBOs, but maybe even mortgage brokers practicing real estate.

More Facts…

click to see listing 1pdf

click to see listing 2pdf

Postcard/Story Credit

Benn Rosales is the Founder and CEO of The American Genius (AG), national news network for tech and entrepreneurs, proudly celebrating 10 years in publishing, recently ranked as the #5 startup in Austin. Before founding AG, he founded one of the first digital media strategy firms in the nation and also acquired several other firms. His resume prior includes roles at Apple and Kroger Foods, specializing in marketing, communications, and technology integration. He is a recipient of the Statesman Texas Social Media Award and is an Inman Innovator Award winner. He has consulted for numerous startups (both early- and late-stage), has built partnerships and bridges between tech recruiters and the best tech talent in the industry, and is well known for organizing the digital community through popular monthly networking events. Benn does not venture into the spotlight often, rather believes his biggest accomplishments are the talent he recruits, develops, and gives all credit to those he's empowered.

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34 Comments

34 Comments

  1. Bob Schenkenberger

    May 30, 2008 at 9:35 am

    I didn’t notice the Fair Housing logo on the postcard, maybe I just missed it?

  2. Daniel Bates

    May 30, 2008 at 9:44 am

    I’d love to see how many minutes it took for a Realtor to lose their license if they tried this. I guess the mortgage industry isn’t as tightly monitored in its advertising, but the Fair Housing folks should fine this guy.

  3. Benn Rosales

    May 30, 2008 at 9:48 am

    This is a clear case of a mortgage broker practicing real estate. Maybe NJ is really relaxed, I’m not sure, but there is absolutely no disclosure on this postcard whatsoever.

  4. Ken Smith

    May 30, 2008 at 10:21 am

    Wow that is crazy. Forget that it’s a mortgage person practicing real estate, but seriously “Negative Elements”. That blows my mind that in this day and age someone would even think of using that as an advertising method. Not only is it illegal, but it would turn off more people then it would attract IMO.

    Amazing what people will resort to when then aren’t making any money.

  5. Matthew Rathbun

    May 30, 2008 at 10:27 am

    Well let’s see: Practicing Real Estate without a license (and doing it poorly) mixing licensed activity with lending (where is that number for RESPA), Text book Fair Housing issue, Stupidity in public, Steering (oops, I guess I already said Fair Housing once), paying commissions/incentives to unlicensed entities….

    Does he have an ActiveRain account, by chance?

    I’m not an attorney, but does one really need to be see how dumb this is?

  6. Jay Thompson

    May 30, 2008 at 10:29 am

    Un-freaking-believable.

  7. Matthew Rathbun

    May 30, 2008 at 10:29 am

    from the other post: Really….

    Mr. Lefkowitz replied to my request for clarification with the following. (I am paraphrasing here) “We didn’t intend to hurt anybody. We are just trying to give the neighbors a chance to bring in their kind of people. The kind of people they want as neighbors.” He went on to say, “We had a Realtor who was holding open houses and advertising this very widely and they weren’t bringing in the kind of people we wanted.” He said, “It was a poor choice of words and we are going to send out a new postcard next week with different words.”

  8. Benn Rosales

    May 30, 2008 at 10:33 am

    Matthew, thanks for posting that- we decided not to post it in the post as (rephrasing) it was not a direct quote.

  9. Matthew Rathbun

    May 30, 2008 at 10:41 am

    I wasn’t sure if that was an update to the original or not, but it’s important to say that it’s third hand information from the original post. Has the whole world gone mad!?!?! On of my best friends is the former director of Fair Housing for VA, he’s a private practice attorney now and I’ve sent it to him for feedback…

  10. Ken Smith

    May 30, 2008 at 10:45 am

    Would love to hear the reaction of the attorney. Sure he has seen it all before, but sure he will have some thoughts.

  11. Ann Cummings

    May 30, 2008 at 10:56 am

    I’m still having trouble getting beyond my reaction of “WOW”….. could someone really REALLY think that’s okay to do??

  12. Doug Quance

    May 30, 2008 at 11:13 am

    To quote Jay (as he is quite quotable)

    Un-freaking-believable.

  13. Matthew Rathbun

    May 30, 2008 at 11:17 am

    Since when does RESPA allow loan officers to advertise and market properties!?!?!! BTW: Contrary to the orginal author’s post, it’s not redlining. Redlining is when a lender charges different rates or fees for particular area. Blockbusting is trying to alter the makeup of a certain area by using (usually fear) tactics and of course Steering is to purposefully take action to discourage a buyer from a particular area due to protected class issues.

    So… the winner will probably be Blockbusting. Nice federal Fair Housing issue….

  14. The Harriman Team

    May 30, 2008 at 11:19 am

    Geez, even Mr. Lefkowitz’s “clarification” is whacked! “…not bringing in the kind of people we wanted”?? What kind is that, pray tell? The ready, willing and able kind with money? And it doesn’t matter what different words they send out on the next postcard, you can’t unring this bell…

  15. Doug Quance

    May 30, 2008 at 12:29 pm

    They’re asking $2.6 million for that dump?

    You could buy the Mansion Madame’s House and still have enough left over to buy the neighbors house, too!

    Y’all need to head south. I’m just saying.

  16. Julie Emery

    May 30, 2008 at 12:37 pm

    I have to admit I originally thought this was a joke. Wow! I’m speechless!

  17. Chris Lengquist

    May 30, 2008 at 1:43 pm

    Oy.

  18. Bill Lublin

    May 30, 2008 at 2:02 pm

    My cousin lives in Englewood. We’re up there a lot. Its a lovely area, but stupidity hides everywhere.

    In reading the post, I don’t think there is a licensing issue, since the owner (one of a partnership) seems to be the seller.

    I do think that the sender should be ashamed.

    In the words of Jay “Un-freaking-believable.”

  19. Benn Rosales

    May 30, 2008 at 2:15 pm

    Bill, it shouldn’t need to be a debate, the way everything in the single property site reads, Jack is representing the property owner and offering a referral to non-licensed individuals which implies brokerage- if the line is so thin then why are we bothering to pay licensing fees? If Mr. Lefkowitz is not brokering/representing the owner, then why is his contact information on the postcard.

    These are just my feelings on this, but that’s the point of disclosure, it leaves no room for feelings and that’s where I believe the problem lies- this mortgage professional is selling a house for the owner.

  20. Benn Rosales

    May 30, 2008 at 2:16 pm

    which btw may be perfectly legal in NJ?

  21. Matthew Rathbun

    May 30, 2008 at 2:32 pm

    Bill / Benn: I was under the impression that there were some Federal issues with lenders offering incentives and marketing properties as if there were sales agents. I can’t put my finger on it all, but I am sure that I have my notes from a briefing around here talking about just this sort of thing.

  22. Frank Jewett

    May 30, 2008 at 2:41 pm

    The whole thing seems like a con designed to get the neighbors to try to convince some sucker their friends to make a full price offer based on the “already discounted” asking price. According to Zillow, the assessment is $1.1M and the neighborhood appears to contain a wide variety of homes, so the FSBO and the mortgage guy may have wanted to distract attention from a valuation of the home.

  23. Frank Jewett

    May 30, 2008 at 2:46 pm

    I have a very rare $5 that is worth $10. I would hate for it to fall into the hands of the wrong type of person, like someone who might burn it to protest against our government, so I’m willing to sell it at a discount of $8 and I will give $1 cash to whoever refers the buyer to me.

    Discriminatory yes, but that element is merely a distraction to draw attention away from the fact that I’m selling a $5 bill for $8.

  24. Jonathan Dalton

    May 30, 2008 at 2:56 pm

    Frank – it may be a con, but it’s also one that runs afoul of a number of statutes at the same time.

    There are lots of cons – auctions, short sales, etc. – but most aren’t so blatantly illegal.

  25. Frank Jewett

    May 30, 2008 at 3:25 pm

    Jonathan, I understand that and I hope there are consequences for the seller and the “helpful” mortgage broker. I’m simply suggesting that the appeal to bigotry may have been part of a larger con. It sometimes seems like those within the industry are slow to question the listing price. I get flyers promising bonuses to the selling agent for bringing in a full price offer. Seems like someone is getting scammed on those deals, too, but they don’t draw much attention.

  26. Benn Rosales

    May 30, 2008 at 3:49 pm

    Just a reminder that Mr. Lefkowitz has owned up to a poor choice in words and is attempting to correct it through some means- I really doubt anyone would dive into a pit this deep, intentionally- and all of the possible wrongs are simply speculation at this point.

    Based on everything I could read on Mr. Lefkowitz he seems to be a professional who may have made an inexcusable error.

  27. Chris Kieff

    May 30, 2008 at 4:11 pm

    Benn,

    Thanks for picking up my story. I’m happy to provide further information to anyone who would like it. I still have the original postcard, including the front side that I’ve not yet posted- it’s simply more of the same.

    Based upon the discussion here I’ve filed a Federal Fair Housing Discrimination Complaint. Although I’m not sure if that’s the best way to go, it is a multi-state issue with Mr. Lefkowitz in NY and the property in NJ.

    If anyone here has further suggestions on how I should proceed please let me know either here or on my blog at http://www.1GoodReason.com

    Thanks,
    Chris

  28. Brian Brady

    May 31, 2008 at 8:44 am

    I love the phrase “choose your neighbor”; it goes downhill from there.

    I love the phrase “choose your neighbor” because it suggests bringing a friend or relative in. In NJ, (where I grew up), it’s not uncommon to have siblings, parents, and cousins living within a 2 minute walk of each other (mansions or rowhomes).

    The rest is a REALLY poor choice of words. I I can’t believe this guy has a CMPS designation and doesn’t know better.

  29. Bill Lublin

    May 31, 2008 at 9:28 am

    Benn – I see what you mean, and I agree that a mortgage guy shuldn’t do the job of a real estate guy – or even try to skirt the issue-

  30. Brian Brady

    May 31, 2008 at 10:15 am

    “I see what you mean, and I agree that a mortgage guy shuldn’t do the job of a real estate guy – or even try to skirt the ”

    I agree, Bill. Why should the two jobs be different? Conflict of interest?

  31. Thomas Johnson

    June 1, 2008 at 12:17 am

    Truliatitis. Has Mr. FSBO posted his “How do I get the right people to move to my neighborhood?” Question to Trulia Answers yet? Just the kind of Fair Housing question that I see on Trulia.

    Of course!-New Jersey-To earn your ten grand do you bring in the Sopranos or try to keep them away? Is ten grand an offer they can’t refuse? Was Vito Corleone seen looking at the house? Maybe this is just a “family” dispute. Where to we hold the sit down? Don’t let Michael near the rest room.

  32. Ken Smith

    June 2, 2008 at 1:06 pm

    Brian said: “I can’t believe this guy has a CMPS designation and doesn’t know better.”

    Brian there are plenty of designation holders that get the designation purely because they want the letters behind their name, not because they want to improve on their business knowledge or skills. This guy is proof of that.

  33. Eric Blackwell

    June 2, 2008 at 1:45 pm

    I am still staggering over this one…this is a textbook case of why you should leave some things to the professionals. Somehow I don’t think I am “his kind of people”…(and happy about that!) …yes he has called it a poor choice of words…methinks it is more like a poor choice of thoughts.

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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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