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.

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?

Last month I spent a day at a seminar for real estate agents. The hotel I stayed in was packed with other real estate agents all attending the same event and following dinner, I went to sit down in the packed lounge. Tables were filled and there were very few empty chairs, however one nice guy, we’ll call him John Doe,  invited us to join his table.

This article was first published here on September 09, 2009.

Poor John… can you imagine poor John’s surprise when he realized that his business trip coincided with this huge real estate extravaganza?  He was surrounded with 100’s of those in the real estate industry.  And guess what?  He wasn’t a huge fan…he didn’t really like real estate agents.

John Doe Has Some Questions

When I sat down initially we talked about family, our kids, their ages, and then of course – ‘what do you do?’ came up and I could sense the hesitation when I gave my occupation.  He was really pleasant and I think he genuinely was curious to hear my answers to some of his questions.  As we talked, another agent had just joined our table and conversation.

John said, “It doesn’t seem right to me.  Our last home purchase, I did all this research and found the homes we wanted to see online and the agent just showed them and got this big paycheck.  Can you explain that to me?”

Of course, I have a lot of knee jerk responses to this question but instead I really wanted to know more about what he had experienced.  Sadly, my agent counterpart took this on as a challenge.  Clearly, it had become her goal to convert our John Doe friend before the night was over.  I admit I did withdraw from the conversation a bit as she worked her magic and he glanced over at me periodically with eyes glazing over.

No Conversion That Night…

…and not likely ever.  Poor John may have been one lone voice in a sea of Realtors that night, but the reality is, he is very common.  His perception of our industry is pervasive and was probably only further validated that night by the verbal barrage of justifications he received from my agent counterpart.   Yet, I know that his one question is the tip of the iceberg.

The Perception Versus The Reality

The perception is that this job is easy.  Income is unearned.  We make too much.  Real estate agents lack training and real knowledge.  Real estate agents are just looking for a sale.   Maybe real estate agents aren’t necessary at all.

Maybe that’s all true – I don’t think that it is – but the fact is that it really doesn’t matter.  We can debate it with the same verbal justifications that John Doe heard that night or we can really hear our consumers and respond in ways that provide real tangible value and real industry change.

I cringed a little when I saw the cover to our local association’s publication.  I know the idea of promoting the value of a ‘Realtor’ has become so important but I think it’s fallen on deaf ears.  While I know how hard many of us work and I know how dedicated we are, I also know that if John Doe were to read that cover, ‘The hardest working letter in the alphabet,’ his eyes would surely roll.

When the industry starts to hold itself to a higher standard, when we as agents start providing real value rather than marketing pieces dripping with ego, when we talk less and listen more, when integrity begins to be more that a catch phrase on our cards, only then will we see the John Doe’s of the world not cringe at a hotel filled with real estate agents.