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Ethics

Can Ethics be Graded?

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Who are these people?

This morning I was reading “Nurses Shine, Bankers Slump in Ethics Ratings” from Gallup.com. My first thought, at the headline alone, was… well duh! Letting curiosity get the best of me, I read further. Of course, being in the Real Estate Industry I was curious as to where the Real Estate Agents placed. I’ll save you the suspense – it doesn’t look like we’ve moved much, but we have moved higher. However, upon further preponderance I realized that I simply didn’t care where I was on the Gallup Poll. It matters not in the least what the poll says. Most people only use the poll when trying to build a case for that which they already believe.

Are Ethical Judgments Fair?

For those who still must know, here’s what Gallup says:

Ok, so Nurses are the highest. (But on a scale where Journalist rank as high as they do, does any of it matter) This attests to my opinion that this is a useless poll. Why? Because comparing varied industries is dumb. Nurses are great, I am not taking anything away from them, but for the most part people recognize the work of the nurse, when they are sick and need assistance, the nurse is paid to “mother” in most cases. After all doesn’t a Nurse typically follow a Doctor’s orders? Transversely, even when a Nurse screws up; it’s the Doctor who takes the blame. When the bill comes from the hospital, it doesn’t reflect the salary of the nurse. Consumers get to see the salary of the agent and typically a good agent doesn’t “mother” a client – usually they have to deliver difficult news. The poll also shows Clergy as being lower as well, but lets take away TV Evangelist and see how the numbers look. What I am saying is that I’ve heard more than a few agents siting this poll as a need to exclude other practitioners from the Real Estate career.

What Really Matters?

Here’s a survey I’m more interested in….who would use their agent again. That is far more important to me than how I would rate against a Funeral Director. The NAR 2007 Profile of Buyers and Sellers say this:

62% of those surveyed say that they would “Definitely” use the same agent again and 19% said they would “Probably” use the same agent again. Yes, I know… you might disagree. But I’ve found that there is a great deal of arrogance in the real estate industry. Everyone believes that others should do business “just the way I would” or they are otherwise inappropriate for this career or “unethical.” I’ve been teaching Mock Hearing Road Shows lately. In this, we actually setup a staged hearing for both a Procuring Cause Case and Ethics. Overwhelmingly we’ve found a gross misunderstanding of how things work. Everyone keeps relying on what’s “fair.” There is nothing fair in real estate, therefore fairness has little to do with unethical behavior. In the mock hearing we allow the students to be the judge and jury. They ask questions, cross examine etc… it’s one of the most popular classes we’ve ever done. The funny thing is that when we find folks asking questions, they say things such as “shouldn’t you have done this or that?” I keep countering with “where do you find that requirement in the real estate laws, Code of Ethics or Company Policy?”

How do YOU determine who is ethical?

In the past five years or so, I’ve worked with Professional Standards, I’ve read most Real Estate Board disciplinary actions from my state and tons of case laws. More and more I’ve been convinced that the causation of inappropriate behavior is far more relevant to the amount of education and less than the nefarious intent of the provider. Let’s ask this question: When was the last time that you informed a buyer, as they made the offer to purchase, that offers were not confidential and the seller could do with them what they wish – including copying them to everyone in their office? Read COE 1-13 and 1-15. How about the agent who warns another, that if they make an ethics complaint, they would counter with a slander suit? Did you know that was a potential violation of 14-3 article. (I only use the Code of Ethics, because state laws vary) How many agents understand the RESPA regulations? Frankly there are too many governing entities in Real Estate for everyone to know all the rules. Usually when I hear an agent rant about the behavior of other agents, I can trace it back to a fear of competition. Just because you and I may not like how they do business, it doesn’t make it wrong. Be very careful when you make an allegation… Remember that there are others who may not like how you do business, as well.

Who do you trust?

Let’s remove our own heterogeneity. Let’s look at more than if the person’s doing stuff they way that we don’t like. I desire higher education, I do think this is the answer. I desire better enforcement of the existing rules, but I also want people to judge individuals on the sum total of their existence, not their last worst mistake. Teach them – don’t alienate those who need to improve. Let’s stop looking for a Poll to tell us how to define our industry. I would bet that if we all spent more time on our own business and improving it one person at a time, we’ll do much better in the long run.

Matthew Rathbun is a Virginia Licensed Broker and Director of Professional Development for Coldwell Banker Elite, in Fredericksburg Virginia. He has opened and managed real estate firms, as well as coached and mentored agents and Brokers. As a Residential REALTOR®, Matthew was a high volume agent and past REALTOR® Rookie of the Year & Virginia Association Instructor of the Year. You can follow him on Twitter as "MattRathbun" and on Facebook. Matthew's blog is TheAgentTrainer.com.

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12 Comments

12 Comments

  1. Clint Miller

    November 28, 2008 at 8:30 am

    “…want people to judge individuals on the sum total of their existence, not their last worst mistake…”

    What a fantastic statement!

  2. Missy Caulk

    November 28, 2008 at 10:32 am

    We’re below journalists? Shameful, maybe that will change after this election. LOL

  3. Matthew Hardy

    November 28, 2008 at 1:37 pm

    Most nurses are aware that their “last worst mistake” could result in a patient’s death, which of course, would greatly effect their future career options. An agent’s “last worst mistake” could result in a bad story for their client; which of course, the next client will never hear.

    This points not so much to ethics, but to business competence. That “62% of those surveyed say that they would “Definitely” use the same agent again” should probably have the phrase “if they could find them” appended to it. Most agents simply move from deal to deal – without having the operating methods and systems in place to leverage today’s business into future business. Of course, this hurts the agent, but also effects the level of service they provide their clients and the reputation of the industry generally.

  4. Bob

    November 30, 2008 at 9:21 am

    “An agent’s “last worst mistake” could result in a bad story for their client; which of course, the next client will never hear.”

    Yep.

    One of my sellers contacted me yesterday. A C21 agent here (an agent who is easily in the top 5 for c21 here) contacted this seller and had them sign a listing agreement pending my canceling the listing. Only one problem (aside from the initial contact, discussion of listing a property already listed, and actually having my client sign the listing), the property has a a pending offer from it. I assume that since the buyer agent works for the same C21 brokerage they have already determined that it wont be an issue.

    Not the first time this agent has done this and it wont be the last. Even worse, the broker will back their agent because this agent does enough biz to keep the broker’s doors open. In this biz, when it comes to some agents, money talks and BS gets swept under the broker’s carpet.

  5. Steve Simon

    November 30, 2008 at 10:51 am

    Ethics and mistakes are not the same.
    One can be completely ethical and make mistakes. In fact in some arenas a certain percentage of mistake is expected. The acceptable range varies (an umpire or ref. is expected to blow a certain percentage of calls, however a lasik eye doctor would have a much lower level of acceptance of error). Ethics on the other hand has to do with knowingly committing a “Wrong”. Even if the letter of the law permitted you do do so, you could still be violating good ethical practice. Ethical action is a more strict measure of behavior (rather than legal action).
    Ommission when done knowingly is unethical and may be illegal as well. Ommission that occurs without knowledge aforethought may be a sign of lack of competance, but does not have to be unethical…
    The post’s points were mixing Apples and Oranges…

  6. Lisa Sanderson

    November 30, 2008 at 11:49 am

    I think the key is getting agents to know what they don’t know and making them want to learn. You can lead a horse to water but the old dog’s tricks are hard to break. Or somethin’ like that 🙂

  7. Mike Farmer

    November 30, 2008 at 6:51 pm

    Lisa, I think the saying is — You can lead a horse to water, but you can’t make a duck cackle.

  8. George McCumiskey

    December 3, 2008 at 4:37 pm

    It’s a teeter totter situation. Everyone makes a mistake sometimes. It’s the intention that counts OR whether or not the individual meant well doesn’t matter cause the end result is the same. We need Aristotle or one of those ancient dudes out looking for one honest man here.

  9. Stephanie Castillo

    February 3, 2009 at 10:48 pm

    I realize I’m a late comer to this conversation, but as a registered nurse and licensed Realtor, I feel the need to comment. I would ask of anyone not to judge what you do not know. Many of the author’s comments concerning doctors and nurses are blatantly WRONG in fact and in context. Nursing requires education, critical thinking, and many other skills and is not “mothering” by any stretch of the imagination. Please remember to be more open-minded to different people and professions and less whiny about how low your current profession rates. Don’t forget online information is public information and may cast you in an unfavorable light.

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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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