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New Restrictions?

After the Mid-Year meetings in Washington , a change was made to Standard of Practice 15-2, and a new standard of practice was approved for use with article 15 of the code of ethics. Standards of practice are used to clarify and explain articles of the code of ethics, and these two were designed to enhance member’s understanding of their obligations as REALTORS in respect to blogging and other form of electronic publication.

Article 15 discusses the obligation of REALTORS to avoid “bad-mouthing” their competitors. It states:

REALTORS shall not knowingly or recklessly make false or misleading statements about competitors, their businesses, or their business practices. (Amended 1/92)

The changes to the existing standard of practice, and the creation of the new were aimed at having REALTORS ” publish a clarification about, or to remove statements made by, others on electronic media the REALTOR® controls once the REALTOR® knows the statement is false or misleading”.

And immediately , everyone became an attorney.

It’s not a big deal

The change is really a clarification, not a new obligation, And though the big concern that was raised was regarding the removal of the untrue statement, and some concern was expressed about the enforcement, the issues arose from a lack of understanding about the obligation and the professional standards procedure.

To begin, if you think you have some liability by removing an untrue statement, all that would be required to comply would be to add a comment that says, “It has come to my attention that the statement made above by so and so in inaccurate – or untrue (whichever is appropriate)”.  Personally, if someone used my blog to make improper statements about a competitor, I would have no problem removing the statement, and accepting the consequences that my “right action” might create.

In terms of the enforcement of the Article (standards of practice cannot be violated, only articles of the code can) the professional standards process requires the review of the ethics issue by a grievance committee and then, if the grievance committee determines that the complaint, if taken as true would constitute a violation of the code, it is referred to a  professional standards hearing panel.

And That was the Second Concern

A comparison was made to the legal defamation process. But professional standards hearings are not courts of law, and are not bound by the evidentiary rules of those august bodies. These panels are made of of educated real estate professionals who review the matter in the light of their experience in the industry. Their job is to provide the respondent with due process, and come to s determination on the matter, applying appropriate sanctions if the respondent is found guilty of violating one of the articles of the code.

In this case, only by not clarifying or removing the untrue statement would the respondent be guilty of anything – a matter thaa should be simple to comply with.I think that the concerns raised were raised by people with legal backgrounds that had more limited knowledge of the professional standards process. Most of the bloggers I have spoken to were not concerned about the modifications.
I would  like to hear from you what concerns and issues active bloggers and REALTORS might have about the matter… I look forward to the conversation.

photo credit: “money will come to you when you are doing the right thing” courtesy of creativecommons.org

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9 Comments

9 Comments

  1. Joe Loomer

    May 27, 2009 at 7:56 am

    Bill,

    I would completely agree with you on this. If you’re down at the level that you have to make comments (posts) about your competition, you probably need to find another line of work (at least from an agent’s perspective).

    I think what you’re seeing is a symptom of the market. Recently, my wife took a Buyer out to the Aiken area. Over the previous months, this lady had spoken via email with a few of the listing agents of the properties they were viewing. A couple of the listing agents – seemingly in cohoots – where so upset with the fact that their own lack of professionalism had led this woman to choose to work with my wife as her Buyers Agent that they decided to hurl insult and slander on my wife and our firm – at the same time as setting up the appointments to show the properties!

    Instead of heading to Aiken with our boxing gloves – my wife and I talked about this at length and came to the conclusion that since Aiken is a higher-end neck of the woods, these agents where merely voicing their own desperation – intent on being on both sides of the deal instead of serving their clients interests. Less than 3% of properties listed over $350K in our area sell right now, and this client was signficantly higher in price range.

    Instead of responding in kind, my wife took the high road, thanked God for the opportunity to work with this client, and set the appointments. She’s an amazing woman with no qualms about defending herself, but it was what it was, and she and I both understood the underlying current of the market which no-doubt affected these other agents (and their families).

    Don’t know the source of this quote, but it rings true:

    “Never underestimate your competition’s ability to make a bad decision.”

    Navy Chief, Navy Pride

  2. Brandie Young

    May 27, 2009 at 7:29 pm

    Interesting. The fact is, in today’s litigious society, anyone with enough time could find something they consider defaming.

    Sounds like we need some E & O insurance for bloggers.

  3. Jay Thompson

    May 28, 2009 at 12:08 am

    If someone comes on my blog “talking smack” about someone else, their comment will be swiftly deleted. If they come back and do it again, they’ll be swiftly banned.

    If they don’t like it, tough. It’s my blog, my rules.

    I don’t need the NAR, the judiciary or anyone else to tell me what is right and what is wrong and what I can/can’t/should do. My parents did a pretty good job of that 40-something years ago.

  4. Lani at Agent Genius

    May 28, 2009 at 10:09 am

    Brandie, hush yo mouth! There are already too many hands in these pockets, girl! 😉

  5. Bob Wilson

    May 28, 2009 at 11:18 am

    “I don’t need the NAR, the judiciary or anyone else to tell me what is right and what is wrong and what I can/can’t/should do.”

    Or at least we shouldn’t.

  6. Bill Lublin

    June 14, 2009 at 9:09 am

    Jay; I agree with you that neither you nor I nor most of the folk we know would do that, but we do need a Code of Ethics to establish the standards of practice for those foks who didn;t get the benefit of understanding just what the right thing is – and sadly there are too many people like that out there.

    Brandi; Not sure its about legal liability, more about what we should be doing to each other though a big shout out to Lani who points out that we have way too many univited hands in our pockets

    Joe; I don;t underestimate the ability of an opponent ot make a bad decision, and your wife did absolutely the right thing – but this also addresses comments tat mght be made by consumers that are untrue- and our responsibility to correct the problem

    Thanks for reading

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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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