NAR Code of Ethics — is it meaningful?
Craig on 09 20, 2010
Douglas S. Tingvall is one of the best known and most respected real estate attorneys in Washington — at least in his own humble estimation. According to this noted legal expert:
The [NAR] Code of Ethics and Standards of Practice do not have the force of law, are not specific to any particular state, and do not purport to reflect prevailing practices in the real estate business. Rather, they prescribe lofty ideals of professional conduct to which NAR members aspire.
Mr. Tingvall made this argument in a case where I was opposing counsel (he was seeking to exclude the Code of Ethics from being admitted into evidence in a case involving broker negligence). I was a little surprised, to say the least. In my experience, RealtorsTM rely heavily on this Code of Ethics when discussing the scope and value of their services. But is that really all a sham? Is the Code of Ethics simply a set of “lofty ideals” to which RealtorsTM merely aspire? Or is the Code a meaningful set of ethical principles that guide and influence Realtors on a daily basis?
About the Author: Craig Blackmon
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39 Responses to “NAR Code of Ethics — is it meaningful?”
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If Doug wants to play the game that it is of no value, then by the same logic he would have to argue that the standards of practice/care of Attorneys through the WSBA is of no value. There are ample examples of cases in many industries that argue quite effectively that standards of care/practice/code of ethics are abused resulting in loss of life or other damages.
Tim — the distinction with the WSBA Rules of Professional Practice (the lawyer equivalent) is that the WSBA can actually enforce its rules with serious penalties. Essentially, the Rules of Professional Conduct have the force of law. The NAR Code of Ethics, on the other hand, is purely voluntary. I don’t even know what happens if somebody allegedly violates the Code — is there even an enforcement mechanism?
There’s nothing wrong with having a set of ideals for a profession to aspire to. I was the AIA Ethics
Chair for the American Institute of Architects for many years. JG
Jerry — of course not! I did not mean to imply otherwise. Any ideals are better than none, whether they are enforceable or whether they are merely aspirations.
The point of the post is, are they merely “lofty ideals” to which RealtorsTM simply “aspire”? Or do they have a little more weight than that? RealtorsTM are quick to cite their ethical obligations imposed by the Code. To evaluate whether or not this Code really benefits the client, don’t we need to know (or doesn’t the potential client need to know) whether this Code actually means something? If they are merely “ideals” to which RealtorsTM “aspire,” I think the whole Code is oversold to potential clients. That is my point.
Craig- Peer pressure was what helped me (w/ or w/o a Committee) enforce the AIA Code of Ethics.
Architects really value the respect of other architects- as all professionals the respect of their peers.
Craig,
I have had the privilege of some minor dealings with Doug Tingvall, and would agree with the statement “Douglas S. Tingvall is one of the best known and most respected real estate attorneys in Washington”, with only slight modification to “The Seattle Area”, as I don’t know his reputation in Spokane or Wenatchee. My respect and admiration does not come easily, as you well know, and I think “Doug Tingvall in the room” raises the level of expertise and integrity in most any room he graces with his presence.
As to whether or not the Board of Realtor Code of Ethics has any teeth, hmmm…let’s say it has teeth to chew on things, but not fangs to tear at someone’s flesh with.
Of the 20+ years I have been in the Real Estate business, I was a Realtor Member for the large majority of them, though not currently a member. Still I have a good working knowledge of the organization. Maybe a better perspective than someone who has always been a Realtor Member, given I have gone in and out of it so many times in the last 10 years. I know what it is like to be in “the club” and also what it is like to be NOT “in the club”, and that is rare for any agent in most of the Country.
The Seattle Area is not the best place in the Country to try to establish, or even understand, the power or even the reach of The Code, because we are by national standards an anomaly. That is because we likely have the largest contingent of real estate agents and brokers who are not members, given our mls system does not require membership in The Board of Realtors for access to the mls system. That is not generally the case in the rest of the Country. Of those few in the Country that do not require membership in The Board of Realtors, we are likely the largest.
The whole agent and broker system is built on the 100 year old history of representing sellers of homes. While they have tried to modify The Code and systems to accommodate the last 15 years of buyer rights being introduced into the mix, those attempts IMO have been difficult and inadequate. My guess is you were representing the buyer of a home, and not the seller of a home. To a large degree the Agency Laws of each State have more to do with the buyers of homes. The internal mechanisms and codes of realtors and mls members have more to do with the sellers of homes.
My opinion is that The Code actually has a lot more to do with how agents and brokers treat one another, and not the public at all. It is only in recent history that The Code has been advertised as a benefit to the public at large, and I view that primarily as a marketing gimmick. My $.02 on that. But as to Agent to Agent and Broker to Broker dealings, yes, The Code has teeth.
It was decided a very long time ago that the best interest of a seller of a home jives well with the best interest of the agents and brokers “to sell the home at the highest possible price, in the least amount of time, and with the least inconvenience to the seller.” Consequently Court involvement with the Board and its Code of Ethics has been largely absent in the organization’s 100+ year old history as a “self-governing body”.
The “lofty goal” of The Code for most of its history was based on “underneath all is the land” and we were charged with elevating the value of property, generally. It was decided that all buyers are eventually sellers, so representing only sellers and taking the Realtor Pledge to conduct ourselves always to actions and the integrity of continually elevating property values, worked very well for The Members AND The Country-at-large. The wheels came off the track when this key principle was removed from The Code and we were asked to represent both the best interest of sellers AND the best interest of buyers. As you well know, that just has not worked well. To a large extent Buyer Representation has been more about empty title changes vs true change in the systems and those that govern it, manage it, and work in it. C’est la vie, because the whole original theme that what was best for sellers and brokers does not work when you remove the word seller and try to replace it with the word buyer.
Now to your immediate question and dilemma. To “invoke” an action based on a violation of The Code, you have to name the Article that you feel was violated, and raise that claim to The Keepers of The Code, not a court of law. That said, what Article of The Code was “at issue”? One can’t simply say they feel an agent violated The Code generally without naming the Article, any more than you would go into Court trying to call a behavior “illegal” without naming the law violated. So which Article of The Code of Ethics did you feel was violated?
One does not have to be a member of the code to bring an action…but the person you claim has violated The Code, does have to be a member. So your client can file a complaint as long as the agent was a Realtor Member and there is a specific Article of the Code violated.
A good analogy and answer to your question would be if a kid brings a gun to school vs chews gum in school. Both may provoke disciplinary action under the Rules of The School…but only one of those can, in addition, be introduced in a Court of Law.
The NAR Code of Ethics — its a $.02 marketing gimmick. That’s my takeaway!
Craig’s “$.02 marketing gimmick takeway” (above) sounds more cynical than I hope he really is. JG-
Jerry — my comment is a relatively accurate reflection of my cynicism in regards to this specific topic (NAR Code of Ethics and its relevance to consumers).
A few comments in my defense. First and foremost, I simply repeated Ardell’s comment. She provides great insight into the relevance of the Code, but even she admits that it is really only relevant to relationships between brokers, not between brokers and their clients. To the extent that it is relevant to consumers — well, I think Ardell said it nicely. Its a marketing gimmick.
Second, is there any dispute that the Code is one of the primary marketing tools of the NAR? From the web site:
There is no exam or other bar to entry to the NAR other than being a broker/agent/salesperson, so the notion that each and every one of them has “incomparable knowledge of real estate proceses” is a little empty. Ultimately, all that is left, in terms of the benefit of consumers to working with a REALTOR(TM) is the Code of Ethics. And how much weight does the Code have if it is based strictly on “voluntary adherence”?
So yes, I am cynical in regards to this issue. THAT SAID, I can certainly appreciate the counterpoint. As you pointed out, many professions have a purely voluntary “code of ethics” (whether it is called that or some other term), and each code has value.
But I challenge you to find another professional organization that uses its particular code as a marketing tool. I just perused the AIA site, which does indeed include its code, and I could not find ANY reference to the code as a means of promoting only members of the AIA vs. non-members. Under those circumstances, I think the code needs teeth. NAR should not have it both ways: a voluntary code to promote professionalism across the profession, AND a reliable indicator of quality service from its members (as opposed to non-members).
Off to stage a house in Queen Anne. Maybe you can find a little something more while I’m gone.
I think the marketing costs a lot more than $.02 in the national commercials segment LOL!
This reads to me as the NAR Code of Ethics is unenforceable from any practical perspective; definitely from the consumer angle and possibly even for insiders. Perhaps peer pressure enforcement within the industry might have some effect. But I also bet that ‘accountability’ applies differently within that circle dependent on whether the individuals in question are with the current ‘in’ crowd or if they are considered ‘outliers.’ (Sounds just like High School, doesn’t it?)
Considering agent accountability as it relates to consumer protection, I don’t see that it has any teeth. As a buyer (and someday future seller) I really could care less how agents are ‘supposed’ to treat other agents unless that directly translates as to a tangible benefit to me & from what I’ve seen (for buyers or sellers), it never does… In fact, I’d prefer a system where the agents are more adversarial (in a professional manner) towards each other and more invested in representing their clients.
Advertising “The Code” to the general public is a marketing stunt and complete Blarney. I’ve literally laughed out loud when agents have tried to spout that nonsense to me in person as a reason why I should trust him/her. I don’t call that being cynical – just realistic.
This depends on the context. What was he objecting to, and why would you be introducing the Code of Ethics into a court case?
I was attempting to have the Code entered into evidence as evidence of the standard of care expected by the defendant, who was indeed a REALTOR(TM). Mr. Tingvall objected on the basis that professional standards are not admissible on this basis, based on case law addressing the admissibility of the Rules of Professional Conduct in a legal malpractice suit. I unsuccessfully argued that the RPCs are distinctly different than the Code (Code is voluntary, RPCs are not) and therefore the Code should be admissible for this purpose. The Court disagreed.
Craig,
That has been the court’s historic position on all matters involving internal codes and also rules and internal disputes. It is even more interesting in WA where the State Licensing does not hold the standard of care to a Fiduciary level, as most states do. I remember asking Jillayne and Russ Cofano some time ago if Realtor Membership elevated the level of care here in WA above the prescribed “statutory duty” level. Thanks to you, we now have the answer
Having been acting at the Fiduciary level of care for almost 40 years in my previous career and this one, I don’t think I would know how to change my level of care to “statutory” duties only, but I do understand that I cannot expect other brokers and agents to rise to that level.
I am often told, “But you are only one…and everyone can’t be you, Ardell”. Still, I find it near impossible to have anyone on my team who cannot act in a Fiduciary capacity, even though that is not the standard here in WA. As MONK would say: “It’s a blessing; and a curse.” LOL!
As an FYI and interesting note, the main thing that was changed in The Code back in 1996 or so, to incorporate the fact that we were at times Buyer Agents and not the historical always agents for the seller, was removal of the word FAIR. Prior to that time we had the duty under the Code to be “fair” to ALL parties. This addresses Stillwatcher’s point: ” In fact, I’d prefer a system where the agents are more adversarial (in a professional manner) towards each other and more invested in representing their clients.” Recognizing that aspect of adversarial relationship, The Code kept the duty of honesty…but removed the duty of fairness back in the mid-nineties.
Seems to me that to Code of Ethics is more for the local Board and state agency to use than a court of law.
In my case, the judge agreed with you, Sam! Can’t blame a guy for trying…
This is a fascinating discussion to follow while sitting in the Buyer’s seat. And if I put on my “what if I were selling?” hat, I think I’d find this worrying as well- here’s why.
Ardell mentioned that “It was decided a very long time ago that the best interest of a seller of a home jives well with the best interest of the agents and brokers “to sell the home at the highest possible price, in the least amount of time, and with the least inconvenience to the seller.””
We’re admittedly in a Buyer’s Market and that doesn’t appear to be changing anytime soon. Speaking for myself (and guessing the same for other buyers), this translates to the idea that I’m going to drive a really hard bargain if/when I make an offer on a home.
Noting Ardell’s commentary – it is also clear that all parties in the transaction (including my own agent) are essentially ‘against’ me insofar as my getting the best financial deal possible goes.
Since I’m not a Patsy, I’d probably upset my own agent (and go through a few) because I’d refuse to just “go along” and pay the price that the sellers and both agents want me to pay. I’d probably hear whining noises about my needing to “bargain in good faith” but it certainly doesn’t sound like anyone else feels they need to act similarly.
This gives us gridlock and each side is saying “why should I budge?”
Not buying a house (today) doesn’t have a negative financial impact on most buyers (Saving money-Good. Buying something that continues to drop in value for the foreseeable future- Bad.)
As irritated Buyers go back home to count their savings, the Sellers’ house is sitting unsold. Sellers either face foreclosure or get stuck where they are. Either way, agents don’t get paid. “Keeping prices high” only has tangible benefit if someone is actually buying.
Tying this back to the Code of Ethics topic, wouldn’t it logically follow that if agents (and attorneys like Tingvall) devalue their own Code of Ethics and take the concept that Ardell cited to the extremes that we’re currently seeing in the market, they are actually hurting their OWN best interests and the interests of their sellers? My answer is Yes. And if I were selling in this market, I think this industry attitude would be cause for concern.
Well, yes, in that case the Code is a crock. If you were saying that your client is an ardent believer, or that your client would rather cut off a limb than violate The Code, if it were a point of preference to your clients state of mind, it might be different.
The truth is the National Association of Realtors advocate for Brokerages. Few agents have a choice about joining, so the The Code is just another gimmick. If the Association was open to individual membership then maybe, just maybe, it could put together something that had teeth.
I have paid very few REALTOR(TM) dues. This last alliance they had with the Master Builders Association, and the lobby they had against wet lands, farm land, and safe building practices showed they are just looking to strong arm as many unwitting people they can into giving them the gift of cash. Never have I heard that the national Association of Realtors has done anything for any one including it’s membership.
I’m pretty sure you would have to have been living under a rock these past ten years not to recognize the lies spread by the Association to get people to buy, buy, buy, obviously over priced properties.
For the first time we are in full agreement, so I am curious why you would try to introduce the Code. It doesn’t seem like it’s stigma would help your client.
David — the Code requires things like “protecting and promoting the interests of the client” which the defendant most certainly did not do in my case. I thought the Code would be in sharp contrast to the defendant’s conduct thus increasing the chances of a verdict in my favor. I certainly was not going to tell the jury that the Code was just a $.02 marketing gimmick! But I did think it ironic that Mr. Tingvall, whose practice is focused on brokers and agents, belittled the Code. Hence the post.
So you did tar the defendant with the stigma of The Code. Just kidding, but then again, maybe not.
I’m more curious today, than ever before, about why people are so reluctant to take Real Estate agents into court, and sue the heck out of them. Obviously something has gone seriously wrong with our system of selling Real Estate.
After all of the years of litigating developers over siding, flashing, or construction defects, it seem odd that the Real Estate community was immune. It seems odd with all the people who bought at “the top of the bubble” that no one blames the Real Estate agent.
I’m really curious why any attorney would make a practice of defending the agent against the consumer.
David, my guess is that there is a LOT at stake at defending brokers successfully. Precedent can be incredibly powerful.
There was a case like that David, last year in New York I think. It didn’t go well for the home owner. That would be like trying to sue your stock broker when the price of your stock goes down…a slippery slope.
Speaking of suing if the stock goes down, I was privy to an interesting court issue back in the 70s when The Orphans Court in Philly was trying to decide if investing in Real Estate Investment Trusts (a new investment vehicle started under Eisenhower in 1960 which went to pennies on the dollar by the 70’s) were “prudent” investments for Trusts, or if the Trustee was to be held liable for the losses.
They were high income vehicles as I recall, invested primarily in commercial real estate holdings and sold as stock shares in the open market. As investors of Trust Funds, the standard was called The Prudent Man Rule, and they were held to the highest standard (much higher than a real estate agent).
The Court decided that even though these investments went completely down the tubes, the decision to buy them, at the time they were bought, was within the realm of “what a prudent man might do” based on the information available at time of purchase. I will qualify that to depending on the % of the total assets allocated to the REITs.
That case could have gone either way, and many were surprised (including the Trustees) that the trustees were not held liable for the losses , given that investments that basically went to worthless seemed in hindsight to be about as far from “prudent” as one can get. But how much they gained or lost was not the deciding point. Only the factual information available at time of purchase. Whether or not an investment goes up or down is not the standard for prudent investing…never was, never will be.
If buying something that doesn’t go only up becomes an actionable offense…well, let’s just say that’s not going to happen.
Precedent is exactly why I feel strongly that consumers should take agents, and Brokerages to court.
Brokerages want to hide behind the commission. The dollar amount of the commission is extremely low for the amount of damage an agent can cause.
We have a contracting business geared toward the Real Estate industry. For years I was an advocate for the industry because it is hard work. A home inspector of all people changed my perspective. He was retiring and made me an offer to take over his business. I do have a trade name of Aardvark Home Inspections, with a companion company of http://www.RotWork.com
Back in the day the Inspector was allowed to repair damage they found. I had a contractor at the time who was a genius. His work was perfect, calculated to every detail, and a structural improvement of anything he touched. For many years we advocated for Home Inspections to become a part of the Real Estate transaction.
What this inspector showed me was the agent he was doing the inspection for. The house was a tear down, obviously, that sat on what could be two lots, outside of Seattle. I recognized the value of the property, but the buyer was a young couple. The supporting timber were whole trunk, rough sawn, on site. That’s what made it a tear down. Probably powder post beetles, but I suspect a full termite infestation.
I didn’t care, and neither did the agent. The value was in the lots. If his client was a builder, great, but his buyer was a young couple with a dad who knew they were making a mistake. The inspector refused to write the report. He was honest and told them exactly what he had found and the $50k it would cost for the lower structure. He said it was a tear down.
It was comical that the inspector drove all that way, for no money, and refused to leave when the agent asked him to. He said that the buyer was paying him so he would answer any questions that they had, but he wouldn’t write a report unless they really wanted one.
I just saw him yesterday, and we have worked on some projects together. His point was that the agent was just there making a sale. He didn’t care if the couple got hurt. Yeah, they could have “fixed” the supports. They could have spent a ton of money. They could have done a lot of things, but they were just starting out.
His point is, as is mine, that when we started out we got the advice of old guys, and gals, who were in the business because they loved it. It’s what they did, it’s all they did. Buying, selling, and trading property, is what they did. The hucksters didn’t last.
When you went to sit down with these people, if they let you sit there, it was shop talk about property. Nobody was networking the way into the next deal for the pipeline. These people were looking to buy cash flow. If they liked you they threw you the boner. This is exactly where people get confused. You can know where the property is, but you don’t know the value.
Anyway, I think the consumer has been scammed, swindled, bamboozled, and robbed. In my opinion Brokerages have hired anyone off the street that will pay them a desk fee, or are willing to split commissions. There is no trainer, care, or concern for the agents, and the agents have no clue about Real Estate. Most agents are new within the past ten years, they take some classes, rob a few people get burned out and move on.
They rob people of not just the commission, but of wealth, security, and happiness.
If the industry is going to change it needs to be forced to change. Brokerages need to lose a LOT of money. These people robbed us all, and they should at least be forced to pay that much back, if not a LOT more.
David — your arguments are schizophrenic! Three weeks ago you replied to my last post with the following:
How is that comment even remotely consistent with this comment of yours above?
Note that I’m not attacking you. Rather, I am calling you out in regards to grossly disparate — indeed diametrically opposed — arguments you’ve made over the course of three weeks. Its difficult to take your comments seriously when your position changes apparently on a whim.
Wait, residential Real Estate, mom, dad, and the kids are different than commercial Real Estate, or REITs, fund investors who have the duty to protect the share holders. You also talk about working as a fiduciary, or being held to that standard.
All of these things are the point of the post. Real Estate agents have no obligation to any one, and yet they are in charge of the biggest financial investment most people will ever make.
In 2006, and 2007, it was common knowledge that the residential Real Estate market was over priced. It was talked about, shrugged over, then commissions were made. That’s neither here nor there. For that you could use the prudent man argument, it’s not a fair analogy, but you could.
The real problems are the people who were untrained, unsupervised, and uninformed about the products they were hawking.
Here in the Sand Point area we have the couple who bought a house from an agent that they claim had a rat problem. I’m sure they lost in court, but maybe not, I don’t know, I don’t follow it. All I know is that the wife stands on the side walk with a sign. We were asked by an agent from the same Brokerage if we could remove some dead rats from a crawl space. I asked if he had heard about the court case concerning rats, and he knew nothing about it. I told him he needed a pest control company to remove the dead rats, and should probably get the house certified. He got some one else to remove the carcasses, or did it himself. He didn’t want the owners to have to spend the $250 for a pest person.
The post is asking if The Code is a sham, which it certainly is. People are buying worthless properties for the same price they would spend on building a Real Estate, and yet I’ll bet the vast majority of people selling Real Estate don’t know the difference. That’s just wrong.
It would take a LOT of court cases to set the precedents needed to correct the industry, but that’s what needs to be done.
Actually more specifically Craig is saying in other posts that he opened a Brokerage to elevate the Real Estate industry. I think litigating, in favor of the consumer, would be a much better place to start.
What is the claim being asserted in all of this litigation? There must be a legal basis for any lawsuit. What would be the claim(s) in this tidal wave of litigation you are advocating? And what are the injuries sustained by the consumers? And most importantly, can it be proven that the consumers’ injuries were CAUSED BY some wrongful conduct of the agents? Needless to say, these are thresshold questions to be answered before litigation should even be considered.
One other comment: we launched WaLaw Realty to make money. If we “elevate the Real Estate industry” in the process, that’s just gravy.
Often what’s “legal” is not congruent with the concept of common sense or doing the right thing.
For most RE consumers who have come out of transaction thinking they were robbed/misrepresented, the answers to Craig’s threshold questions probably wouldn’t point to litigation. The general public probably feels they should, but there isn’t much legal basis. If Courts won’t recognize an industry touted “Code of Ethics” as an enforceable standard, then there isn’t any systemic accountability and the so-called “Code” has no teeth.
The avenue that would lead (eventually) to accountability and reform is consumer boycott. Easier said than done because people don’t know what they don’t know- but the info is available & people may be catching on.
I wonder if the current standoff in the market being spun as between buyers and sellers might really be between consumers and agents. You can’t completely blame the recession. There are plenty of us with the means to buy right now, but we can’t find agents willing to bargain at the levels we want. I also bet there are sellers who would appreciate more realistic representation too.
Stillwatching — I can’t help myself! If you want “realistic representation” that is focused on you, your needs, and your direction, then hire a lawyer. We’ll negotiate as ruthlessly as you’d like. That said, we’ve learned that “aggressive negotiations” should not fall below a “good faith” line or it impairs our ability to represent clients in the future.
As an example: Low ball offer? No problem. Want to walk away because seller did not come down far enough? No problem. Seller then comes back a week later at your previously acceptable number, and you want to lower the offer even further? That’s a problem and we would probably not assist you in doing so — we would probably need to withdraw if you insisted in negotiating in this fashion. But “good faith” is a pretty low standard, and we’re happy to assist with everything above it.
Craig-
On the lawyer part- that sounds kind of cool.
However, I’m perplexed why the situation you mention is a bad thing. Did the buyer’s counteroffer expire? Sounds like it did if the seller went quiet for a week. Isn’t there a default expiration on a counter offer? I doubt it is more than a day or so.
If the seller lets the counter expire, isn’t that basically a rejection of the counter and the process dies there? Anything after that event sounds like it is technically a ‘new’ evolution.
I see this as the seller let the deal die, felt remorse and then approached the buyer at a later time, trying to re-initiate the process at their convenience and their new comfortable price. So then why would the buyer be obligated to revisit that number and not bargain back? If the seller wanted the last number, they should have responded within the timelines.
If the situation were reversed and the buyer comes back after a week of no response only to have the seller say “so sorry, the price is different now”, would you be saying the same thing to their agent?
You are right. In a market like this a negotiation can go on for any amount of time, deals can die, come back to life, and move forward. You are describing kind of a common reaction to an initial stall. The buyer thinks that after the stall, if they lower the offer, it will create some urgency, but it doesn’t.
What you would have to do is start the process over again, revisit the facts, and represent in a new light. It’s more work for the agent, but usually a seller can get the sense of the effort.
Also Real Estate is a very small community. Agents know they will need, or would like to, do business again in the future. Grinding doesn’t get the deal done.
There are good people in Real Estate. In Seattle there are probably 200 good agents who work hard every day, are straight shooters, and do the job to the very best of their vast capability.
How many agents are licensed in the Seattle area? Let’s pick a number of 1,000.
Brokerages hire who ever they think will pay the split, or the desk fee. The Brokerage is ultimately responsible for the actions of these agents they throw out into the field.
As you say, you want to make money. Brokerages want to make money.
The people who pay are the consumers. These people should be able to expect a reasonable amount of care in the purchase of residential Real Estate. An agent should be prepared to know the product, market place, and economic trends.
Let’s use my first example of the house with the rough sawn supports. The agent was informed of the condition. From that point forward that agent needed to incorporate that “new” knowledge into selling the property. The agent didn’t. The agent wanted to discuss, or argue the point.
My second example of a Brokerage, that has a woman in front of it’s corporate head quarters, with a sign about rats, should be able to inform, or warn, it’s agents about the issue. They didn’t. They stalled, ignored, litigated, and eventually the thing kind of died after a few years. Still, if it were me, I’d want to get my agents informed.
The legal basis for all of this litigation is a lack of care, or concern, for the consumer. We have Lemon Laws for cars, but not for the biggest financial decision most people will make.
As far as being schizophrenic, you put up the post. I just agreed with you.
I will agree that is more marketing than anything. Most real estate agents I have had to deal with were incompetent enough that I doubt that they can even fully understand them.
As for the NAR themselves, they are dirty enough that I wouldn’t believe any set of ethics that they set forth.
The Realtor name and logo are a marketing ploy, nothing else. In my opinion they do little to actually benefit the consumer, and exist simply as a tool for agents to promote themselves with. However, if the vast majority of agents are Realtors, then the value of declaring yourself one, is basically zero.
This is especially true when all the agents I have wanted to beat to death for their stupidity, incompetence and unethical behavior were Realtors.
Chris said: “Most real estate agents I have had to deal with were incompetent enough that I doubt that they can even fully understand them.”
There are 196 mls rules, 8 or 9 pages of 17 Articles and a myriad of Standards of Practice in “The Code” plus the Agency Laws of the State, a basic understanding of contracts and contract law, property valuation techniques, fully comprehending lending criteria, Earnest Money protection, basic construction and property issues including foundations, roofs, underground oil tanks in use and not in use, recognizing class action suit siding like LP, drainage issues, lead paint, asbestos in building materials, heating systems, septic tanks, wells, bugs and rodents, obsolete floor plans, on and on and on.
Seriously, to be truly competent in this business is an undertaking of monumental proportions. Yet the State might grant approval of a “continuing education” course on how to use facebook or how to blog.
I was thinking about how we can boil it all down to The Two Great Commandments as Jesus did with Love God and Love your neighbor as yourself. How might we apply that to real estate. Boil it all down to a simple all encompassing directive.
This is what I came up with:
1) KNOW WHO you represent…and represent that person WELL
2) Know that the person whom you represent…is NOT YOU!
The simple reality is that the training and rules are leftover from everyone represented the seller days, for the most part.
If an agent walks into their broker’s office and asks:
a) How much should Earnest Money be?
b) How many days should there be for a home inspection in a contract?
c) Is it appropriate to make an inspection request if the roof is not leaking or currently defective in any way, but the age of that roof is two years past its life expectancy?
The sad reality is that most brokers will answer those questions…without first asking…”Do you represent the buyer or the seller?”
Most brokerages focus primarily and almost exclusively on supporting the agent in “closing deals”, with very little discussion about representing the people…the clients…better, best and well. Most training is about protecting the brokerage by doing less, so as to limit the brokerage’s liability (fully delegate to 3rd party companies) and getting more clients.
Almost none recognize that every question has a different answer…depending on whether you represent the buyer or the seller in that transaction. In fact, when an agent asks me a question and I first ask “Do you represent the buyer or the seller?” not only can I tell that they never were asked that question before…but they most often respond with “Does it matter?”
If the only objective is “closing the deal”…it doesn’t matter. If you are seriously trying to represent your client better, best and well…it makes all the difference in the World.
I think its telling when a buyer asks a question about what impacts them and the answers they receive pertain to what’s best for a seller.
David- You mention what may happen if the buyer does what Craig described. Meaning, the seller may not respond well and the buyer’s own agent may turn against them for fear of offending fellow agents and maybe affecting hypothetical future transactions. Good to know.
But you didn’t answer the other half of the question- what happens if a seller behaves in a similar manner? Do they get “the agent freeze” too? Or is it all just hunky-dory?
I see Craig hasn’t answered yet. I hope he’ll address both sides of the question.
Ardell’s broader answer is an indicator of a Professional. It shows that she’s crystal clear who she is representing in any given deal and probably isn’t afraid to take hits from her peers for doing the right thing on behalf of her clients. If her peers are worth their salt, they’ll understand. That’s how you gain real respect in any industry. You don’t build respect by sinking to the same level as your peers just because that makes it easier to get along. So, props to you Ardell!
Stillwatcher,
I am careful to note in most all educational discussions with agents and other Brokers and even consumers, that my expertise in the area of Fiduciary representation comes from my 20 years in Banking and as a Trust and Investment Officer, prior to switching to real estate in 1990. That way my “knowing more” is not a poor reflection on any person or even the industry as a whole.
When you are a Trust and Investment Officer and you are deciding whether to buy a stock or a bond or which stock or which bond, you have to balance the various short and long term interests of all of the current and future beneficiaries, both living and not yet born. Is the beneficiary an 80 year old widow and the remainder interest the 40 year old children? Is the beneficiary a 2 year old baby who gets all the money at age 18? Different strokes for different folks. Same with real estate. It’s not even as simple as one answer for buyers and one for sellers. If I have a buyer who has looked for 2 years for a house and finally found one they love (needle in a haystack) and there are 3 offers…then the Earnest Money is higher than if it is a bank-owned (banks love to keep your Earnest Money) and no other offers and we might need to change our mind about buying that one. Then very low Earnest Money…even lower than “the norm”.
But most any agent training on contracts or real estate gives a single answer, and most agents want to simplify things to a single answer. Many say “just tell me what to DO so I don’t have to THINK” to which I answer…go work at MacDonalds, because this is not a “job” for anyone who does not want to have to think.
Reality though is that whether it’s a real estate agent, or a Doctor, or a Lawyer, or a store clerk, or just about anything in life these days…only about 7% “care” about being good at what they do and the other 93% work for the money and care about something they don’t do for a living. I don’t know how to fix that.
If you care enough about representing your client well…you will spend the right amount of time being “a student of the market” and keeping up to date on changes that benefit your client…constantly learning and changing. But who does that? Sadly I know many, many agents who would…if their brokers would simply help them move in that direction…but they don’t. They are all about “closed deals” and risk management.
This tangent is an interesting discussion that I think merits its own post: Do parties have an obligation to negotiate in “good faith”? And what does that term mean anyway? And what’s the relationship between agent and client in regards to the obligation, if any, to negotiate in “good faith”? All interesting stuff. From a personal perspective, as I gain experience, my answers to these questions has evelved and no doubt will continue to do so.
So Stillwatching, stay tuned.
“Proceeding in Good Faith” really doesn’t begin Craig, until there is Earnest Money in escrow. That’s when “proceeding in good faith” kicks in. Proceeding in Good Faith has nothing to do with the negotiation process.
Once the buyer puts up money…”earnest” money…saying I am NOW going to proceed…in earnest…in good faith…it becomes a relevant concept.
Before that…it’s anybody’s ballgame and it can change in a split second until there is a valid contract agreed to and signed by all parties.
If there were more realtors like Ardell, the profession would be respected.
Thanks Susie. I am a Managing Broker under WA Law. I am not a “realtor”. I know you don’t care, but I have to note that distinction in what you said.