Ethics of the Real Estate Industry as Seen By a Discount Broker

Monday, March 13, 2017, 6:56PM

By: Keith Gordon

After 32 years as a Florida Realtor and co-owner of 3 reputable Florida-based real estate companies (discount, hybrid and traditional) and doing business in every city in Florida with over a billion dollars in sales I can say without any doubt that a decent number of “Realtors®” lack ethics and will continue to create an environment of their own demise.

According to public surveys, the public perceives Realtors® with less credibility than lawyers and the behavior I’ve witnessed over the years explains this distrust. The supposed back bone of the residential real estate industry is the NAR Code of Ethics (Code of Ethics and Standards of Practice). These 17 articles ensure the public that our licensees will adhere to a “code” with an intention of ensuring professionalism, integrity and trust within the industry and for the public.

Unfortunately, many Realtors I’ve encountered do not adhere to the NAR Code of Ethics.  In fact, they blatantly disregard it by soliciting sellers whose listings are clearly disclosed in the MLS as being Exclusive Agency/Exclusive Right to Sell. This is all done in an attempt to get the seller to cancel their listing with my company and list with theirs (poaching).  This is in direct violation of NAR Code of Ethics, Section 16 which states:

“REALTORS® must carefully avoid taking any action inconsistent with the exclusive relationship between the seller and the listing broker and avoid any action that could be construed to induce a breach of the contractual agreement made with the client. The client has made a decision and is entitled to the benefit of his or her bargain. This includes relief for the duration of the relationship from direct overtures of other REALTORS® seeking to interest the seller or lessor in the services they provide. This limited protection from direct solicitation does not preclude general advertising efforts by other REALTORS®, but does prohibit efforts to induce the breach of an existing contract so that another REALTOR® can substitute himself in the place of the current listing broker.” 

These predatory Realtors® (whom I will now refer to as “agents” since a true Realtor® would adhere to ethical standards set forth by NAR) often use puffery or blatantly lie to entice sellers to list with them, often stating that they will get it sold because they “have buyers.”  I’ve also been told by sellers that agents attempting to poach listings will present untruths about valuations, make up false issues with our company such as difficulty setting showings or other unfounded accusations. (Luckily, our phone and software systems log and record everything and we can quickly refute any statements aimed to discredit us).  

Unfortunately, a small percentage of sellers do nevertheless fall victim to these fear tactics and leave our company because this other agent has convinced them that they have some sort of magic rabbit in a hat; a hidden treasure trove of buyers at their disposal or some advantage that we don’t have.  But the truth is, if that agent had buyers, they would have already shown the property to those supposed buyers.  And the MLS we list in is no different than the MLS that the other agent lists in.  The goal of this fearmongering is to steal the listing and lock the seller into a 6 month listing term.   And by the time the seller realizes there is no special “buyer tree,” they are trapped.  Not only that, they will now pay drastically more in commissions.  It’s a costly mistake and one that NAR aimed to protect the public against with their Code of Ethics.    

My resentment for this unscrupulous behavior runs deeper than the loss of a listing and the opportunity to help my sellers sell and save them money doing it.   My business partner and I have spent over a decade building the reputation and good will of our company through tireless hard work and dedication.  We’ve gone above and beyond to offer customer service that surpasses most traditional agencies by answering our phones live, 7 days per week.  We have invested hundreds of thousands of dollars into software to ensure efficiency.  So, to have fellow colleagues slander me and our company for their own selfish gain is, as I see it, criminal.  Not only that but it’s highly damaging to the industry because it perpetuates confusion by the public about how real estate really works.

Interestingly, we have tracked the stats of all of our listings lost to full service agents and our research shows that no agent has ever sold a home for the same or higher price than my last listed price. That means these sellers that are scammed into leaving our company were overpriced in the first place. But that doesn’t excuse the behavior by the other agents. 

As the industry evolves and becomes more transactional in nature as the tech savvy generations continue to emerge, I do believe the demand for traditional/old school agents will dwindle.  Perhaps the fact that the trend is already moving in that direction explains the desperate acts by these agents who are slow to adapt.  While my partner and I have seen this coming for over a decade and have planned accordingly, many traditional agents have resisted stubbornly and have refused to evolve.  Perhaps NAR needs to begin focusing its energy toward helping agents transition and prepare better for the future direction of the real estate industry as opposed to tenaciously grasping onto the stone ages and refusing to adapt…because as I have experienced, this only results  in them being tempted to act in unethical ways to make a living. 

I hope that over time, the integrity of our industry can be fully restored and that the public will once again see Realtors® as trusted, professional advisors in the field of real estate.  In the meantime, a certain percentage of unethical agents will go on doing what they’re doing at any cost.  I will continue to educate our sellers and fellow agents as much as possible since my priority is and has always been the public’s best interest.   To uphold this responsibility, I have begun filing ethics complaints against the violators either with the licensing authorities or the agents’ managing brokers.  If nothing else, this helps to bring more awareness to the statutes.

 

 


Powered by the ADDvantage Real Estate Network