NAR should promote Realtor Authenticity

Realtor Authenticity
Rules of Authenticity (infographic from MarketingWeek.com “How to be an Authentic Brand”

Several years ago I told you about the National Association of Realtors’ attempt in shifting consumer attitude towards Realtors.  They are pivoting away from selling Realtor integrity, to selling Realtor value.  In 2014, the NAR voted on creating a Code of Excellence to demonstrate competency.  It wasn’t until this past November that the NAR approved a framework of competencies for agents to achieve.  The eagerly anticipated implementation will allow Realtors to assess and grow their skills and knowledge in many aspects of the business of real estate.  But this Commitment to Excellence, as it is named, may help Realtors increase their competency; but in the end, just like being proficient in the Code of Ethics, it will likely fall short in building consumer trust.  The NAR should promote on Realtor authenticity.

Having agents commit to more training is a good idea in building competency among real estate practitioners.  However, research has demonstrated that showing off accolades and awards doesn’t instill value, nor does it increase sales (Valsesia, Nunes, & Ordanini: What Wins Awards Is Not Always What I Buy: How Creative Control Affects Authenticity and Thus Recognition (But Not Liking). Journal of Consumer Research. Apr2016, Vol. 42 Issue 6, p897-914).

Realtors have a trust gap.  And a badge indicating competency and a Commitment to Excellence won’t bridge that gap.  The business of residential real estate is likened to a game of smoke and mirrors.  Instead of encouraging Realtor authenticity, agents are often taught techniques of persuasion to increase sales.  Many agents devise gimmicks and expensive marketing materials to entice you to do business with them.  Even before you meet with a real estate agent, they are likely scheming how to gain your trust.  Whether or not they earn it is an entirely different matter.

Instead of creating another Realtor badge, designation or code, the NAR should consult with James Gilmour and Joseph Pine II (of the Strategic Horizons LLP).  The title of their 2007 groundbreaking book sums it up nicely: “Authenticity: What Consumers Really Want.”  Realtor authenticity is sorely lacking in the industry, and it’s not just the NAR; it stems from the brokers who train real estate agents as well.  In order for Realtors to build trust, they need to be authentic.

A brief 2004 article by Michael Angier (Authenticity Matters: Are you the real McCoy; Sales & Service Excellence Essentials. Vol. 4 Issue 9, p10) highlighted the necessity for authenticity in the sales environment.  He stated that “People like to do business with people they like. And they like people who are like themselves… Buyers today are savvy. They have more choices. And they can tell whether the company and the people in it are congruent. They seek out, resonate with and tend to be loyal to companies that are authentic. Your uniqueness and the things you’re best at doing are part of your differentiating position. It’s who you are—your identity. It’s what people can relate to. If there’s anything false, made up or covered over, your prospects will sense it. And they can’t even tell you why they didn’t buy…”  Realtor authenticity would certainly positively affect client satisfaction.

Realtor authenticity will not only build trust but can also increase sales.  And indeed, a 2006 research article by Allen Schaefer and Charles Pettijohn (The Relevance Of Authenticity In Personal Selling: Is Genuineness An Asset Or Liability? Journal of Marketing Theory & Practice. Vol. 14 Issue 1, p25-35) confirms that authenticity is related to sales performance.  Their results indicated that salespeople who felt more authentic in their roles performed at higher levels and had a higher commitment to “personal selling.”

What do you think?  Below is the framework of the Commitment to Excellence Program as adopted by the NAR is below (from nar.realtor/policy/commitment-to-excellence). It seems to me that Realtors should already be striving to be competent in these areas:

1) Being current and knowledgeable about the laws, regulations and legislation affecting the real estate disciplines the REALTOR® engages in, and about real estate in their community generally.

2) Understanding the Code of Ethics is a living document, and keeping themselves informed about its duties and obligations on an ongoing basis.

3) Providing equal professional services to all consistent with Article 10 of the Code of Ethics.

4) Advocating for property ownership rights in their community, state and nation.

5) Acknowledging and valuing that honesty and integrity are fundamental and essential to REALTORS® being known as consumers’ trusted advisors.

6) Becoming and remaining proficient in the use of technology tools to provide the highest levels of service to clients, customers and the public, and facilitating cooperation by sharing accurate, current information with consumers and with other real estate professionals.

7) Keeping up-to-date on laws and regulations governing data privacy and data security, and taking necessary and appropriate steps to safeguard the privacy and integrity of information entrusted to them.

8) Committing themselves to enhancing their knowledge and skills in the real estate areas of practice they engage in on an ongoing basis.

9) Providing superior customer service.

10) Appreciating that courtesy, timely communication and cooperation are fundamental to facilitating successful real estate transactions, and to building and maintaining an impeccable professional reputation.

11) As a broker-owner or principal of a real estate company, being committed to creating and maintaining an environment that promotes excellent customer service consistent with these standards.

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Real estate fakery

real estate fakery
Do you really have a choice where you hear news? (from steemit.com)

“Fake news” is the cause du-jour that has energized many into a movement to stop the spreading of falsehoods.  Ironically, the crusaders who point their finger at alleged sources of fake news may also be guilty of promoting it; Fake news accusations are sometimes used to promote misinformation and half-truths.  Unfortunately, fake news has become a meme that is becoming trite and meaningless.  The promotion of fake news may be found throughout history, but real estate fakery is well established in the industry.

Fake real estate news isn’t always a manufactured story.  It is more often a story that is misleading.  When reporting real estate, the media typically sensationalizes a headline without reporting all the facts, which can make you draw inaccurate conclusions.  An example of this is when the local media report on rising national average home prices, giving the false impression that the local market is expanding at the same pace.  This is a mischaracterization of the local market because the regional data is often much different from the national trends.

The National Association of Realtors® is sometimes guilty of real estate fakery too by stating conjecture as fact when explaining market deviations.  An example of this is when existing home sales declined about seven percent during February 2014 (March 20, 2014; nar.realtor).  It was explained away because of the poor weather and snow that occurred that month.  However, if snow is causal to poor winter home sales; then why was there a five percent increase in Montgomery County Home Sales during February of 2010 – when Snowmageddon and Snowzilla occurred? From “Real Estate, Climate Change, and Data-Porn” :

The National Association of Realtors® (realtor.org) March 20th news release reported that February home sales remained subdued because of rising home prices and severe winter weather.  The decline in existing home sales was just 0.4% from January, but was 7.1% lower than last February’s figures.  NAR chief economist Lawrence Yun stated that home sales declines were due to “weather disruptions, limited inventory, increasingly restrictive mortgage underwriting, and decreasing housing affordability.”  And although it may sound bad, Yun actually has a rosy outlook saying, “…Some transactions are simply being delayed, so there should be some improvement in the months ahead. With an expected pickup in job creation, home sales should trend up modestly over the course of the year.”

So, if a snow filled and cold February is to blame for poor home sales, was Snowmagedden and Snowzilla the reason for increased home sales during February 2010?  Of course not.   And although home sales increased 5.1% year-over-year here in Montgomery County MD during February 2010, it was mostly due to increased home buyer demand that some speculate was due in part to the availability of first time home buyer tax credits.

Housing data cause and effect is only conjecture unless it is directly observed.  To make sense of the “data-porn” that is excessively presented in the media, often without proper or erroneous explanation; economic writer Ben Casselman offers three rules to figure out what the media is saying (Three Rules to Make Sure Economic Data Aren’t Bunk; fivethirtyeight.com): Question the data; Know what is measured; and Look outside the data.  Casselman states, “The first two rules have to do with questioning the numbers — what they’re measuring, how they’re measuring it, and how reliable those measurements are. But when a claim passes both those tests, it’s worth looking beyond the data for confirmation.”

Consumers also perpetuate fake real estate news by exaggerating their (good and bad) experiences, usually offering unsolicited advice or posting to the internet (to real estate forums and websites).  Facts are often distorted or misrepresented about specific real estate situations, such as divorce, short sales, and foreclosure.  Unfortunately, people in similar situations who are looking for answers are at their most vulnerable; and can take the “advice” as gospel, seeking a similar outcome with their transaction.

More real estate fakery on the internet comes in the form of fake reviews.  Fake reviews has been an ongoing issue for a number of years.  And although the online real estate portals have claimed to use artificial intelligence and other means to thwart the trend, fake reviews and those who provide them have adapted and have become more sophisticated such that it is increasingly difficult to spot.  Even back in 2011, Cornell researchers claimed that detection of fake reviews is “well beyond the capability of human judges” (Proceedings of the 49th Annual Meeting of the Association for Computational Linguistics, pages 309–319).

From “Are internet Realtor® reviews real or fake?“:

The National Association of Realtors® (NAR) code of ethics prohibits deceptive practices, which includes posting or encouraging fake reviews. However, Lani Rosales of AGBeat (Sketchy new trend – hiring fake online review writers) argues that there has always been an element posting fake Realtor® reviews and testimonials.

Scammers and fraudsters also use fake real estate news to their advantage.  Fake real estate listings have been an issue since the inception of the internet.  Fraudsters publish pictures and information from a prior sale or rental, or may lift the photos and information from a legitimate listing being marketed by an agent.  The con is to have the consumer send money, often before the home can be seen.  Craigslist warns consumers: “Avoid scams, deal locally! DO NOT wire funds (e.g. Western Union), or buy/rent sight unseen.”

Real estate agents are also culpable for spreading fake news, which may be why agents are often characterized as being fake or phony sales people who will bend the truth to make a sale.  Of course there are some in the industry who fit the stereotype, but many are “straight shooters.”  Unfortunately, it is common for agents to use puffery to make a home seem nicer (until you visit it and realize the “rustic charmer” is a neglected home).  Not as often, agents may create a history for the home that is not real to promote a lifestyle or even hide relevant defects.

When it comes to real estate news, advice, and listings – don’t take anything for granted.  Don’t fall prey to real estate fakery – know the source, and verify the information with a local real estate professional or your real estate agent.

Copyright © Dan Krell
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Realtor ethics and presidential election

realtor ethics
Realtor ethics (infographic from visualistan.com)

Allegations of sabotage, fraud, and collusion.  A yearning for power and money.  And let’s not forget about the sex, lies, and video tape.  No, I’m not referring to this year’s presidential election – I’m talking about Realtor ethics (although the similarities are intriguing).  I’ve reported in the past about real estate agents who’ve engaged in fraud, sabotage and collusion while taking part in scams.  There have also been the recent reports of alleged money laundering and extortion.  And let’s not forget the agents caught on video in homes for sale engaging in sexual acts, rummaging through underwear drawers, and stealing.

The National Association of Realtors® (realtor.org) is proud of their Code of Ethics, which was first introduced in 1913. And for years, the NAR has promoted the Code of Ethics as one of the feature advantages of hiring a Realtor®.  And notwithstanding the focus on high ethical standards, some agents still act repugnantly.  And as a result, it’s not a surprise that real estate agents typically fall in the lower to middle range of Gallup’s Honesty/Ethics in Professions poll (gallup.com).  The December 2-5th 2015 poll indicated real estate agents ranked below journalists, bankers, and lawyers in honesty and ethical standards (lobbyists and members of congress are at the bottom of the ranking).

So, why are agents often viewed as unscrupulous and dishonest?  The answer begins with the purpose of the NAR Code of Ethics.  Jeremiah Conway and John Houlihan’s 1982 study (The Real Estate Code of Ethics: Viable or Vaporous?; Journal of Business Ethics. 1;201-210) determined to find out if the NAR Code of Ethics was just a “clever” marketing scheme or a viable tool for “promoting and enforcing” ethical behavior.  Their critique of the 1982 version of the NAR Code of Ethics exposed “numerous ethical flaws.”  They revealed loopholes for enforcement as well as statements that promoted the interests of Realtors®, contrary to the “service of the public.”

And although required to adhere to the NAR Code of Ethics, there are still some agents who breach their duties to the public and their clients for their own benefit.  George Izzo’s 2000 study of moral reasoning and ethical decisions in real estate (Cognitive Moral Development and Real Estate Practitioners. Journal of Real Estate Research., 20;1;179-188) revealed that cognitive moral development and ethics are mutually exclusive.  While some are more “mature” in their moral reasoning and motivations, the study determined there is no difference among stages of moral development when making ethical decisions.

Sometimes a person’s moral reasoning is just irrational, illogical, or unfounded – regardless of how high the purpose.

It has been thirty-four years since Conway and Houlihan’s assessment of the NAR Code of Ethics.  Of course, the NAR Code of Ethics is updated each year to reflect changes in technology and business; however, the basic purpose remains unchanged – promote your client’s best interest, cooperate with other agents, treat all parties honestly, a commitment to the truth and refrain from misrepresentation (among other things).  Since then, the changes to the Code have been overwhelmingly positive such that the NAR Code of Ethics framework has been adopted into real estate licensing laws across the country.

Nevertheless, after decades of promoting Realtor ethics as a basis for hiring one, it became clear that consumers did not choose their agents based on ethical behavior.  As a result, in 2014 the NAR began to promote Realtor added value.

Copyright © Dan Krell

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Home buyers and sellers at risk

home buyers and sellers at risk
“Real Estate Miranda Rights”

I have always found it curious that area agents feel a need to be licensed in three state jurisdictions (Maryland, DC, and Virginia) as if there is never enough business in any one area.  I get the idea that it potentially helps them make more money.  But are they putting home buyers and sellers at risk?

Being a competent real estate agent requires more than just a license.  It also requires more than an understanding of the neighborhood housing market nuances.  A competent agent knows the jurisdiction and local statutory requirements where they are doing business.  They should also be knowledgeable of and use the latest contracts and disclosures.

It’s more than a full time job to be a local expert; following sales trends, knowing the latest home listings, and keeping up with specific statutory requirements. It’s very difficult (maybe almost impossible) to be a local expert in more than one county, let alone three states!  And as more state and local legal, zoning, and disclosure requirements for buyers and sellers become enacted – Home buyers and sellers at risk from incompetent agents.

For example, the statewide requirement of licensees to ensure home improvement contractor referrals are licensed is a consumer protection that many are unaware.  The requirement ensures that consumers can go to the MHIC if the work is faulty and/or there are issues with a licensed contractor.  If your agent unwittingly recommends an unlicensed contractor for home inspection repairs, (besides any potential action against the licensee), a home buyer could demand you make additional repairs and/or obtain certification from a licensed contractor that repairs were completed properly.

And effective October 1st, Maryland is altering its agency law again.  Among the requirements, agents conducting an open house must conspicuously post a notice from the Maryland Real Estate Commission.  The notice (sounding like Miranda Rights) states that any information provided to the open house agent is not considered confidential and buyers are “entitled” to representation.  What would your reaction be if your agent was unaware of this and the buyer is now seeking to void your contract because they were not given their “Real Estate Miranda Rights?”

Recent home seller requirements in Montgomery County are further example where you could be at risk if your agent is unaware of the local statutory requirements and ordinances (such as utility costs and radon test requirements).  Non-compliance and/or non-disclosure could possibly result in a fine.  And of course any future ordinances (such as a sign ban) furthers the risk.  Who knows?  Maybe the County Council will devise a local registry of agents doing business in the county to promote real estate agent competency and protect consumers.

Do yourself a favor and hire a competent real estate agent who is not only aware of sales trends and neighborhood values, but the local practices and regulations as well.

Increasing statewide and local regulation is making local real estate sales a specialized endeavor.  And as a home buyer or seller, you should bear this in mind when hiring real estate agent.  If you’re not being advised properly as a home seller, you’re at risk of non-compliance with statutes, regulations, and/or ordinances – which has potential for fines and a contract dispute.  If you’re not being advised properly as a home buyer, you’re at risk of missing specific local disclosures and notices that could affect you financially and/or physically as a home owner.

Copyright © Dan Krell

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Real estate confessions

“How Working with a Real Estate Agent Benefits You” from rsimedia.com

When asked about their real estate agent, consumers logically list characteristics such as savvy, sharp, and knowledgeable.  Some may even describe their agent as efficient, or someone who made the process easy for them.  These descriptions usually attest to the agent’s business acumen and typically focus on the agent’s ability to market a home and/or negotiate a contract.  However, one trait that is often overlooked is “authenticity.”

And it’s not just in the real estate industry.  Authenticity just isn’t the trait that most seem to care about in a sales person.  The reason may seem obvious; for most consumers and salespeople, it’s about money.  So what role, you may be asking, does authenticity have in real estate sales?

In a recent article, Don Kottick wrote about the need for authentic leaders in the real estate industry (8 examples of authentic leadership in real estate; inman.com; March 17, 2015).  Kottick talked about authentic leaders as creating their “legitimacy” through honest relationships.  These are individuals who “remain true to themselves;” they are positive, truthful, empathetic, “introspective and aware of their own strengths and weaknesses.”  Kottick reminds us that authenticity doesn’t come from what’s learned at business school, but what is gained through life’s journey.

Keeping that in mind, we agents are in an advantaged position.  As real estate transactions tend to be associated with life events, we often experience these events as well; sharing in the promise of a new family, the joy of a new baby, the sadness of the loss of a loved one, and even the ambivalence of a divorce.  And we spend a good amount of time with our clients, regardless if it is in person and/or on the phone.  We become acquainted with who our clients are; we learn their vulnerabilities, and sometimes (whether they know it or not) we also become aware of their “dirty laundry.”  Being in such a position, we become trusted advisers if not treated as part of the family (at least for the duration of the transaction).

The nature of the real estate transaction, and our involvement with our clients, places us (real estate agents) in a fiduciary role.  Regardless of our feelings (positive or negative) toward our clients, or our personal and financial situation – we are to look out for our clients’ best interests.  Unfortunately, many in the industry have forgotten that.

Similar issues about agent competency and ethics were discussed last year in The National Association of Realtors® DANGER report.  And although concerns about agent competency and ethics have been discussed for years, the media glommed onto such quotes as “the real estate industry is saddled with a large number of part-time, untrained, unethical, and/or incompetent agents…” as if to say “we told you so.”  But the truth is that competency does not guarantee ethical behavior, and vice versa.  Additionally, competency and ethics do not assure a positive buying and selling experience for the consumer.  The answers, like the issues, are complex; and advancement in the subject is debatable.

Don Kottick’s point, that authenticity is a foundation upon which agent competency and ethics is built upon, is overlooked by many industry leaders, brokers, office managers and agents.  Considering authenticity, competence, and ethics together may not only facilitate an environment that creates a meaningful transaction for the agent and consumer; it may also be a response to treating consumers fairly, and putting clients’ best interests first.

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