Realtor ethics Archives - Page 3 of 4 - Real Estate News and Commentary

October 21, 2016July 14, 2019

Realtor ethics and presidential election

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 2-5^th 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.

By Dan Krell
Copyright© 2016

Original published at https://dankrell.com/blog/2016/10/21/realtor-ethics-presidential-election/

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Disclaimer. This article is not intended to provide nor should it be relied upon for legal and financial advice. Readers should not rely solely on the information contained herein, as it does not purport to be comprehensive or render specific advice. Readers should consult with an attorney regarding local real estate laws and customs as they vary by state and jurisdiction. Using this article without permission is a violation of copyright laws.

September 23, 2016July 13, 2019

Notice to home buyers and sellers

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. Maybe they are putting home buyers and sellers at risk. Home buyers and sellers should be on notice.

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 1^st, 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. You’re on notice.

Original published at https://dankrell.com/blog/2016/09/23/home-buyers-and-sellers-at-risk/

By Dan Krell
Copyright © 2016

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April 8, 2016December 13, 2022

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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Copyright © Dan Krell

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November 24, 2015November 23, 2021

Home marketing may be limited due to agents’ personal wealth strategy

From stagingworkstoronto.ca

If you ask a real estate agent about their home sale strategy, you may get a sanctimonious presentation of the best way to sell a house. However, if you question why they advocate specific procedures over others, chances are they will answer “experience.” Even in the face of an abundance of research, many continue to hold on to old and outdated beliefs about how to sell a house. Furthermore, consider that a real estate agent’s strategy to sell your home may not necessarily benefit your bottom line.

The latest study by Allen, Cadena, Rutherford & Rutherford (2015. Effects of real estate brokers’ marketing strategies: Public open houses, broker open houses, MLS virtual tours, and MLS photographs. The Journal of Real Estate Research, 37(3), 343-369) is the most recent extension of home sale strategy research. The study reinforces the outcomes of some strategies, while shedding light on others; and asks a compelling question about agent motives.

The study looked at home sale price, time on market, and the likelihood of a sale in relation to: broker open houses, public open houses, MLS photos, and MLS virtual tours. The results indicated that all four tactics positively influence home sale price. Additionally, conducting public open houses and having MLS photos have a positive influence on time on market. However, there is little evidence that having more than six MLS photos increases that positive effect. Surprisingly, MLS virtual tours and conducting broker open houses have a negative influence on time on market. The authors conclude that as a package all four strategies may be worthwhile to consider when home sale price is the goal, even though the time on market may be slightly extended.

However, if your goal is a successful home sale, you may consider another strategy. The study concluded that the probability of your home sale success increases when you have broker open houses, MLS virtual tours, and eight or more MLS photographs. The study found that public open houses actually decrease the probability of a successful home sale.

In light of these findings about home sale price and success of sale, the authors rhetorically ask: “Why do all sellers/brokers not use these marketing strategies in every transaction effort?” They propose that, “Perhaps the answer is that brokers follow a wealth maximization strategy that may result in an agency problem with sellers.”

It should come as no surprise that there are agents who have a “wealth maximization strategy” for themselves, and place their own needs before their client’s. However, the authors’ suggestion about agent motives could be problematic with respect to the National Association of Realtors® Code of Ethics (realtor.org). For example, Standard of Practice 11-2 indicates that, “The obligations of the Code of Ethics… shall be interpreted and applied in accordance with the standards of competence and practice which clients and the public reasonably require to protect their rights and interests considering the complexity of the transaction, the availability of expert assistance, and, where the Realtor® is an agent or subagent, the obligations of a fiduciary.”

If you’re selling your home, one takeaway you might have from this study is that you should exercise due diligence when choosing your listing agent. Consider discussing the sales strategy, and getting it in writing. Additionally, protect yourself by ensuring that your listing agreement can be terminated without penalty and within a reasonable amount of time.

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November 5, 2015November 23, 2021

when real estate agents go over the line

Although not listed in this year’s Careercast’s annual Top 10 Most Stressful Jobs, “real estate agent” has been included in previous years’ lists. Supposedly, real estate is one of those industries where “frequent or difficult interactions with the public or clients” along with high levels of stress may also be responsible for high levels of depression, as described by Wulsin, Alterman, Bushnell, Li, & Shen in their 2014 study (Prevalence rates for depression by industry: A claims database analysis. Soc Psychiatry Psychiatric Epidemiology, 49,1805-1821). Results suggested that the real estate industry has the second highest rate of depression, second only to bus drivers and transit workers. Certainly to be included in such lists is not an achievement. However, it may explain the erratic behavior of the few agents who are willing to go over the line to gain an edge over their competitors; such as in this recent account…

In their November 2^nd Miami Herald article (Secret tapes, blackmail threat: Luxe real-estate rivalry turns nasty in Miami; miamiherald.com), David Ovalle and Nicholas Nehamas gives us insight to the highly competitive Miami uber-luxury real estate market. What seems to be the plot of a TV crime drama is the real life story that will soon conclude in a court room. Having pleaded not guilty, a middle aged real estate agent is now awaiting trial for “felony extortion, resisting arrest with violence and attempting to deprive an officer of his weapon.”

The story’s main characters are the agent duo known as “the Jills” and Kevin Tomlinson. The Jills have been recognized as being a top producing team in Miami’s luxury real estate market for some time. Tomlinson is no slouch either. He has also been recognized as a top Miami luxury agent, and in the past served on the board for the Miami Association of Realtors®. And although Ovalle and Nehamas’ report suggested that the Jills garnered jealousy from other agents; others have also questioned their business practices.

At the heart of the matter was the allegation that the Jills hid expired listings so the properties would not be solicited from their competition. The allegation is that MLS listing data (such as address, city, and neighborhood) were changed to “hide” expired listings. In an attempt to end the practice, Tomlinson filed a complaint of listing manipulation in April of this year. And that’s when things got interesting.

Rather than waiting for the ethics complaint to process through the system, Tomlinson allegedly asked the Jills on several occasions for large sums of money (up to $800,000), to rescind the complaint. Tomlinson supposedly also threatened to go public if they didn’t pay up.

The combination of high end real estate, allegations of unethical behavior, extortion claims, a police sting operation, may already be the basis for a night’s entertainment. However, the ending sounds like a “take down” scene from Hawaii Five-0: no one expected that Tomlinson would be also charged for going for a policeman’s gun while charged for resisting arrest.

Although the public details may seem incriminating, it appears that there’s more to the story; and maybe each is a “villain protagonist.” Many in the Miami real estate community have rallied around Tomlinson, and some “have petitioned the Miami Association of Realtors® to take ‘disciplinary action of the highest severity’ against the Jills.” For the thrilling account details, please read Ovalle and Nehamas’ story at (miamiherald.com/news/local/community/miami-dade/miami-beach/article42178872.html).

Original published at https://dankrell.com/blog/2015/11/05/when-real-estate-agents-go-over-the-line-to-gain-edge/

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