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Ethics

But, We’re ALL Ethical!

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The (NAR) doth protest too much, methinks.

Did you see this? (not too many people have, apparently).

10 Things Your Real Estate Broker Won’t Say

Many of the “10 Things” are arguably true. Some are laughably easy to dispute. Calling the article “dumb” is silly.

1 – “Your house is really just a networking party for me. True. In my market, this is an absolutely true statement.

3 – “My fees are negotiable.” Duh.

7 – “I won’t let termites – or pesky inspectors – kill a deal” – this is just an asinine statement, barely worthy of a response. I never have been, nor have I heard of, any Realtors being in “cahoots” with anybody. The best part about this entire paragraph is this, “For information on where to find your own home inspector, see item No. 4 in “10 Things Your Home Builder Won’t Tell You,” on page 94.”

At least they are transparent about their attempt to sell a book – ridiculous claims are sure to sell a few books.

In short, it’s a good article insofar as it gives reasonable insight into what consumers – and our clients and potential clients – think of Realtors.

But it’s the defense put forth by the NAR that got me.

While some home sellers do choose to market and sell their homes on their own, unrepresented sellers have no access to fundamental marketing services, such as a Multiple Listing Service.

First, I appreciate his using “unrepresented sellers” – it’s a true descriptor of what FSBOS are. Unrepresented. Second, (however) – the above would have been much more powerful if there was at least one more “fundamental marketing service” other than the MLS. Seriously.

But here’s the rub –

Realtors® are trained professional real estate practitioners, and only Realtors® are members of NAR and subscribe to the association’s strict code of ethics.

No, no we’re not “trained professionals.” When I finished my 60 hours of real estate “education” I was no more prepared to practice real estate than I was to fly a plane off an aircraft carrier.

Making the argument that Realtors are all trained professionals devalues the Realtor brand. It’s well-documented that becoming a Realtor is a frighteningly easy task.

Some. Some Realtors® are trained professionals – and this training comes from years of experience, not from a classroom. In the Commonwealth of Virginia, “trained” means “60 hours” of non-relevant “training.” Members of the NAR subscribe to their respective MLS’; the Code of Ethics is a means to an end – that end being the MLS.

How many of you have actually read all 17 Standards of Practice?

Photo courtesy of https://www.flickr.com/photos/scobleizer/ / CC BY 2.0

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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32 Comments

32 Comments

  1. Bill Lublin

    July 21, 2009 at 10:07 am

    I hate to start the day arguing with someone I like so much, but I think you’re wrong here.
    REALTORS are trained professionals – and regardless of their intentions about the Code of Ethics, they are accountable because they subscribe to them, and have additional training from their local associations in most cases when they become REALTORS.
    Now where I find myself agreeing with you is that the entry level training we receive is only entry level education, and the training process needs to continue all the time during our professional lives.
    And I also agree with you that too many members don;t bother reading the Code, and as a result , may fall foul of it as a result of their ignorance rather then a malicious intent on their part, making your last point awesome!
    Great read Jim – even the parts where you were wrong 😉

  2. Jim Duncan

    July 21, 2009 at 10:31 am

    Bill –

    What’s wrong with a little argument? The only thing that would make it better would be if it were in person with drinks in hand.

    Saying that all Realtors are trained professionals is an inaccurate statement – newbie Realtors (not said derogatorily) aren’t all trained. Maybe I should have clarified by saying “we’re not *all* trained professionals …” Frankly, my (and others’) experience sets us apart – and rightfully so – from new Realtors.

    A lot of Realtors are experienced and trained professionals, but I would argue a lot more are not.

    God knows I’m better than I was, but nowhere near where I hope to be …

    A question: what training does the NAR provide that grants them the credibility to say that “all Realtors are trained professionals”?

  3. Bob Schenkenberger

    July 21, 2009 at 11:19 am

    Although education to get licensed is tougher these days, when I got my license the only thing I knew about real estate was some legal decision allowing me to practice limited law, and the number of sq. ft. in an acre. How’s that for highly trained!

    I’m happy to say, 18 years later, I know a bit more.

  4. Erion Shehaj

    July 21, 2009 at 11:33 am

    I’m with Jim on this one. Fresh off the school agents don’t even know how to fill out a purchase contract yet they are able to practice on same footing as an experienced agent. Calling it “entry level” training does not make it okay to offer open book tests and send severely unqualified agents out in the market to represent clients. There has to be a minimum competency standard.

  5. Joe Loomer

    July 21, 2009 at 11:42 am

    I think there’s a middle ground in this argument – perhaps by adhering to your adjusted opinion about “some” Realtors.

    I was no more trained after taking the Georgia Pre-License course than the other folks you describe, so the “newbie” out there better pick a good firm with solid educational opportunities to get their feet off the ground.

    Years later I do absolutely believe I am a trained professional, but more self-trained than anything else. Heck, it’s what got me coming to AG in the first place. If the brokers hold their agents accountable to train, train, train, and offer robust education opportunities above and beyond the run-of-the-mill CE courses, then you have Bill’s position. If not, you have Jim’s.

    Any industry has bottom feeders that give the vast majority of us a black eye – but overall my experience has been people want to be professional, and seek information to better their abilities in any profession.

    Navy Chief, Navy Pride

  6. Benn Rosales

    July 21, 2009 at 11:45 am

    @jimduncan et al. Agent’s are trained, however, there is no requirement above a cleared check to become or remain a Realtor.

  7. Joshua Dorkin

    July 21, 2009 at 11:49 am

    Jim –
    I got my license; I joined the NAR and local boards; I didn’t know what the hell I was doing.

    Was I a trained professional?
    Far from it!

    I’ve dealt with NAR members of many years who are as far from being “professional” as you could imagine. I even had one rip me off of a commission split that I was due. I regularly hear about agents who don’t submit all offers, and the list goes on.

    Membership does NOT equate with someone’s being a “trained” or “ethical” professional at all, IMO.

    I’m with you 100% on this one, my friend!

  8. Ken Brand

    July 21, 2009 at 11:54 am

    @jimduncan Hmmmm. It’s the same in most industries.
    To succeed requires remarkable Mind Set and Skill Set. I know plenty of hot-stuff, know the rules, forms, etc. types and they are utterly unsuccessful in sales, conversation, connection, business development and client appreciation.

    I also know people with moderate to poor technical skills that are wildly successful and their clients would kill for them.

    Time in service is a poor benchmark/gauge. It’s mind set/skill set that’s the killer combo. My 2 cents.

    The cheezy-annoying part is hearing people pontificate when they suck.

    Nice post about real estate’s Rubik Cube.

    Cheers.

  9. Rocky V

    July 21, 2009 at 11:58 am

    Saying all Realtors are “Trained Professionals” is like saying all NASA Space Monkeys are “Trained Astronauts!”

    They may mimic but they don’t understand.

  10. Joe Loomer

    July 21, 2009 at 11:59 am

    @Ken – I’m going to use that line for the rest of my life “pontificate when they suck.”

  11. Lani Rosales

    July 21, 2009 at 12:00 pm

    I think the question here is HOW can NAR claim that REALTORS are trained, any more so than just a licensee?

  12. Tony Arko

    July 21, 2009 at 12:09 pm

    Writing a check does not make you trained nor does it make you ethical. Disagreeing with these facts is incredulous.

  13. Erion Shehaj

    July 21, 2009 at 12:11 pm

    Ken, my man I disagree with you on this. It is not the same in comparable “representation based” industries. A CPA fresh off a three day exam is much more qualified a pro than a real estate agent at the same stage. Same thing with a certified financial planner.

  14. Benn Rosales

    July 21, 2009 at 12:22 pm

    Ah @erionhouston we cannot discount any professional level we held before becoming an agent and paid to be a realtor- many many people come to the profession armed with other experiences that make (some if not most) them great agents- but I’m still not sure in the end still how realtor added or adds to that experience. I actually believe I and most others held even higher ethical standards even from a human level before writing the check to realtor.

  15. Ken Brand

    July 21, 2009 at 12:24 pm

    Erion – What. No way I’m wrong.

    Just joshin’n ya, seriously, you’re right. I’m talking about most industries, maybe should have said “some”. But as far as a CPA goes, a freshly minded UT grad isn’t as trained or as valuable as veteran who’s had her clients audited a few times, or previously worked for the IRS etc.

    Same thing with a Financial Planner. Also, both the CPA and the FP may know technically how to do their jobs, but can they find new clients, build client relationships, etc.?

    Of course in most industries, the most skilled professional charge more for their services, in ours oddly, they compete on price instead of results, experience, results, etc. Blows my mind. Instead of monetizing their magnificence, selecting the better clients and earning more, they do something different and unbusiness like. But that’s a whole different subject.

    Real estate is weird business – generally speaking, to succeed you have to do it ALL well.

  16. Jim Duncan

    July 21, 2009 at 12:44 pm

    Lani hit the nail on the head: “I think the question here is HOW can NAR claim that REALTORS are trained, any more so than just a licensee?”

    And I really would like an answer to the question – asked in an adversarial yet respectful way – what does NAR offer that qualifies them to say that “REALTORS are qualified”?

    Some are, some aren’t.

    To Benn’s point – I don’t need no 9 pages of a Code of Ethics to prove that I’m ethical. I have my own personal honor that surpasses that of the Realtor CoE. Again, saying that Realtors “subscribe” to the CoE is statement that doesn’t hold water.

    If the CoE was such a draw for Realtors, why do Associations have to offer MLS access in order to get/hold members?

  17. Jim Duncan

    July 21, 2009 at 1:02 pm

    Ken – regarding this:

    Of course in most industries, the most skilled professional charge more for their services, in ours oddly, they compete on price instead of results, experience, results, etc. Blows my mind. Instead of monetizing their magnificence, selecting the better clients and earning more, they do something different and unbusiness like. But that’s a whole different subject.

    Even more baffling is that newbies (notthattheresanythingwrong with being new) frequently get paid the same as the wizened veterans …

  18. Ethic Marketing

    July 21, 2009 at 2:51 pm

    But, We’re ALL Ethical! | Real Estate Opinion MAG – AgentGenius: While some home sellers do choose to market.. https://bit.ly/BPXfw

  19. Michelle DeRepentigny

    July 21, 2009 at 3:05 pm

    @LaniAR How? (tongue in cheek) we have to have that ethics class when we become an R and then every quadrennial 🙂

  20. Baltimore Homes

    July 21, 2009 at 5:22 pm

    Well I actually have read the 17 Standards of Practice, but I know for a fact that most “Realtors” would not even know what the Standards of Practice are or who published them. The entry level training we receive is only entry level education. In Baltimore, we have petitioned the local board of realtors and the State or Maryland to increase the minimum education requirements in order to obtain a real estate license. Let me say that I do not mind real estate competition, but when you take a class and call yourself an expert I have an issue.

    From the meetings we have had on this issue, the general consensus was to add an additional on-the-job-training component to becomming a licensed real estate agent. The class would allow you to get a trainee license and after 2 years and/or 30 completed transactions under the supervision of a licensed realtor you could start practicing as an independent agent. Unfortunately, big brokers lobbied against this proposal since it would have negatively impacted their bottom line.

  21. David Olsen

    July 21, 2009 at 11:46 pm

    But, We’re ALL Ethical! | Real Estate Opinion MAG – AgentGenius https://bit.ly/WMYJH

  22. Big Dave

    July 22, 2009 at 12:32 am

    But, We’re ALL Ethical! | Real Estate Opinion MAG – AgentGenius https://bit.ly/bME9A

  23. Russell Shaw

    July 22, 2009 at 2:51 am

    In Arizona 45 hours were required when I first got my license in 1978. But now it is 90 hours – so there.

    Also, one thing I learned in real estate licensing school that I actually use is: an acre is 43,560 square feet.

    Knowing that is professional isn’t it?

  24. Jim Rake

    July 22, 2009 at 7:57 am

    Jim – Topics near and dear to my heart. Ethics and training. We know where we are, but how do get to where we need to be as a profession? Do we think NAR is going to lead us there?

    A few weeks ago, one of our local Board staff members defended the Ethics complaint process status quo very strongly. One has to wonder, why aren’t we asking ourselves if the complaint/greivance process can be improved?

    We bemoan our current state, i.e., the lack of professionalism & accountability, but what have we done at our local Board, or nationally, to change things?
    How do we convince our industry that there’s something missing when it comes to agent training and accountability?
    Two weeks of classes, a few hundred dollars & we’re qualified to conduct business? No standardized, mandatory mentoring program for new agents? Why not?
    Re-occurring Ethics training, the same thirty powerpoint slides each time. And we wonder why things don’t change?

  25. Jim Duncan

    July 22, 2009 at 7:59 am

    @Jim Rake – Shhh! That’s the topic of my post next week! The short answer is – not a damn thing, and the ethics complaint process is broken.

  26. Jim Rake

    July 22, 2009 at 8:23 am

    Jim – good to hear, I can’t wait. I’ve written on the topics recently as well. Hopefully, the chorus continues to build!

  27. Memphis Real Estate

    July 23, 2009 at 3:39 pm

    From the RE.net – But, We’re ALL Ethical! | Real Estate Opinion MAG – AgentGenius: Read the Sma.. https://bit.ly/vLfq3

  28. John F. Eisner

    July 23, 2009 at 4:03 pm

    Some interesting information from Realtor Jim Duncan: https://bit.ly/pLsJV

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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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