Archive for the ‘real estate ethics’ Category
Tuesday, May 17th, 2016
There are too many mistakes made by real estate agents – some come from a true lack of understanding of the legalities that are inherent in buying and selling real estate, and others from ignorance, selfishness or stupidity. But either way the fact is that real estate agents need more training and licensing requirements should be much stricter.
I was contacted last week by a lady who felt she had been taken advantage of by her current agents. They failed to inform her about the process of accepting a particular tricky offer, and the ramifications associated with doing so, in order for her toÂ make an informed decision on whether to accept the offer. They did not explain many other things she had the right to know. She was beyond frustrated.
The reason this home seller called me is that she had been referred to me, and liked my legal background – she wanted to fire her agents and have me list the home. I counseled her on the terms of her listing agreement, and provided options and advice; in the end I told her she should try to resolve issues with her current agents so that she could get her home sold since they had already done so much work, while renegotiating some terms and making clear that she needed to be kept in the loop throughout the process. She said she felt much better after speaking with me, and I was glad to help.
The listing agent team she was working with is seasoned, so I was rather surprised that they did not provide information and explanations on many of the forms and processes that come with selling a home. They also charged a 6% commission fee, and they offered 2.5% commission to the selling agent, so they were planning to make 3.5% on the sale! She tried to negotiate with them but they would not do so. She was told that was standard and she had no idea that commissions are negotiable. But I am more disgruntled with other aspects of the sale that I feel were not handled properly.
It is time our national, state and local associations set up mandatory training programs for every agent, and license renewal programs that touch on much of that training so that agents are reminded of their professional and legal responsibilities every time they have to renew their license. Here are some suggestions:
1. Real estate exam – this needs to be more difficult and more expensive to take – that will keep those out who are only in it because they think they will make a lot of money.
2. Across-the-board mandatory training programs – these need to be implemented for all new agents – every broker must comply. This will ensure that all new agents have the same degree of basic knowledge about real estate and law, and the practicalities of sales (forms, paperwork protocol, transaction management, etc.).
3. Stricter license renewal requirements – these also need to be addressed, because the license renewal requirements could be more challenging.
4. Stricter punishment for ethical violations and breaking of laws – as the current rules stand in my state, an ethical violation may or may not be punished – it all depends on whether the agent on the other side of the violation, or a disgruntled buyer or seller – reports the behavior. Unfortunately many do not, because they do not want to be involved in a situation where they are pointing a finger. Agents especially do not like to get involved in ethical hearings because they feel their reputation may be at stake for calling out a fellow agent – thus many unethical agents continue to slide downhill. Punishment is also not meted out often enough or enough to match the crime. The same is true of agents who break laws, like committing fraud. Reporting and punishment need to change.
The real estate business would benefit immensely from the above changes – real estate agents would be a more educated, professional and savvy group of people, and home buyers and sellers would win in the biggest way.
Friday, February 12th, 2016
If you are a regular reader you know that I have a thing for ethics and those who violate the boundaries of professionalism in any field. We’ve all known of someone who crosses or has crossed the line. The real estate industry is no exception. Here are the most common ethics breaches made by real estate agents:
1. Going after other agents’ clients. Amazing, but yes there are slimy people out there. This actually just happened to me – another agent took advantage of my client in a very sneaky way. When an agent knows that someone is a client of another agent, to go after that person in order to get them to work with you is not just unethical, but it’s nasty. Karma will get all those people one day, but they really should not be in the business if they cannot be professional and respectful. That agent’s reputation will suffer, especially among area agents.
2. Not disclosing relevant information. This happens all too often. Some agents actually advise their sellers to NOT disclose information that could affect a sale – such as problems that have occurred in the home (broken pipes, electrical problems, roof leaks, etc.). Again, not only is this an ethical violation but it is illegal. Many lawsuits are initiated because buyers were not made aware of past problems – it is one of the main reasons for real estate lawsuits. I tell all my sellers that it is better to over-disclose than leave anything out. If you lay it out on the table it is up to the buyer to check out any issues and make informed decisions.
3. Telling home inspectors not to notify of problems or directing what should/should not be in a report. It is hard to believe but there are agents who do this. One home inspector told me that a successful area agent once told him not to notify him (the agent) of any problems concerning the roof, and to leave them out of the report! I couldn’t believe that. That is far more than an ethical violation – it is illegal. Things like this apparently go on all the time. Thus the reason you need an excellent home inspector that you trust, and also whom your client can trust. Mine is also a civil engineer and a licensed contractor – a little piece of mind goes a long way in preventing problems and legal action down the road.
4. Taking referral fees from lenders or others specified by law or statute as not allowable. This is a big no-no: unethical and also illegal.
5. Giving a client advice that is not in their best interests in order to secure a sale. Clients need to make their own decisions on whether or not to buy or sell a property. The role of the agent is to make sure the client receives all the pertinent information in order to make an informed decision. I never make decisions for my clients – rather, I offer my expertise in answering their questions and concerns. If there are problems with the property that are inherent and could cause issues down the road, I always point that out and suggest expert advice when needed. The ultimate decision belongs to the client – our role is to facilitate providing information. Encouraging a client to buy or sell when it may not be in their best interests is unethical.
There are many other glaring examples of ethical breaches in the real estate industry, and there is always the agent who invents a new one. But the above 5 examples are perhaps the most dangerous because they are crossing over into breaking laws and could have legal consequences. This is why all agents need strong training programs and continuing education to keep them abreast of new rules and laws.
The real estate industry needs to crack down on agent training and make cross-the-board mandatory programs, as well as stricter licensing requirements. Brokers also need to take responsibility with stricter oversight of their agents (if I was paid $1 for every time I had to call another broker to report something their agent did that jeopardized a contract, I would have a lot of dollars). Until such changes are set in motion we will unfortunately see more ethical/legal violations in the industry.
Thursday, January 21st, 2016
The real estate business has definitely evolved over the last few decades, with the growth of technology being the main contributor. But when it comes down to it, working with a real estate agent is not just about finding a savvy salesperson, but rather it is about finding someone who truly has your best interests at heart and is willing to work hard to find the right property or sell your home, at the right price, with the best terms. It is not so much a sales relationship as it is a trusted adviser relationship. An agent plays many roles throughout the buying and selling process – researcher, chauffeur, adviser, negotiator, paperwork coordinator, and therapist – to name a few.
As they always will, many people try to come up with ways to find and convert “leads” to clients, from advertising to cold calling to handing out cards to people all day long and asking for referrals from past clients, friends and family members. In the last year I have seen some interesting attempts to woo potential buyers and sellers, and although I am impressed with those who are trying hard, I must say I have been surprised at some of these methods:
1.Â Recorded Calls: I received my first recorded sales call from a real estate agent last year. I was surprised because the agent, who had a lot of enthusiasm, sounded like he was trying to sell me a used car. He went on and on about how he could help me buy or sell a home, and about his strengths as an agent. Now, I must say that selling real estate is not difficult – anyone can do it. BUT not everyone can do a great job at taking care of the PEOPLE, the clients. I have always said that this business is not about houses, it is about people.
2.Â Print Marketing: Marketing via mail and email has always and will continue to be a very strong way for the real estate agent to get business – s/he creates a lovely flyer or brochure and lists skills and past sales and testimonials to make her/him look amazing. S/he even uses words like “Number 1 agent” and “Top agent,” “sold more homes than anyone else.” The trick is that many agents can say these things by putting a spin on the information, and these statements can be true.
Many of these advertisements actually constitute ethical violations in my opinion (and I have been trying to get the rules changed to prevent this, but that is another story). For example, if you are a broker who oversees say 30 buying agents, and among those agents your brokerage or team sold 100 homes last year, how is it ethical for you yourself to claim you sold over 100 homes last year – you did not do that personally, your agents contributed many of those sales. But to the average homeowner who receives your marketing piece, you look like you have done more business than anyone else. Glossy marketing pieces with claims to being “the top producer” do sway the average Jane and Joe many times. Like the political arena, I think that if agents are going to make claims like this they need to explain the truth behind the claims.
3. TV Commercials and movie theater advertising: These types of marketing can also be valuable, but again the time is limited and the agent has only a few moments to convince you of how incredible they are at their job. There is no fine print – but if it gets you to remember their name and call them then the piece has achieved the goal set by the agent. Again, anyone can make a great marketing piece that makes them look like the best agent ever – and of course that is what all salespeople try to do.
4. Broker Calls to Agents About Homes “Coming Soon” to the Market: This newest method is interesting, and is aimed at local area agents. A broker has an agent make calls to other agents’ voicemails, reading from a script about a home that is not yet listed on the open MLS but soon will be – they tell the agents (it seems agents are chosen based on who sells the most in a given area – not all agents receive these calls) that they are giving them a chance to show the property to their buyers before it hits the MLS. Now, if you happen to be an agent working with a buyer and get a call describing the perfect home, this could be a win-win for your client. But if you are an agent and do not get that call, or if you are a buyer looking online and waiting for the perfect home to pop up, you are truly at a disadvantage in such a situation. So this can be a good or poor method of advertising, depending on how you look at it.
5. “Coming Soon” Listings Posted on Third Party Sites: There are some third party sites (such as Zillow and Trulia) that allow agents to post “coming soon” listings. Not all agents can do this – they must pay to become an elite member of these sites, and then they have the “privilege” of posting such properties. It’s great for the agents – they likely get at least some calls from potential buyers – but for those buyers who are not looking on those sites they get the short end of the stick if the home sells before hitting the MLS. Similarly, agents can send out e-flyers or emails about listings that are coming to the market soon, and if this is done fairly (sent to ALL agents in a county), then that is a great advertising tool. It is not fair to the potential buyer who is not working with an agent and who waits for properties to list on the MLS, but of course this is just one of the many benefits of working with an agent (we tend to hear about up and coming listings from many industry sources – agents, appraisers, lenders, sellers, etc.).
From my perspective I believe that all agents should be able to advertise and “sell” their services and skills. But I think there are 2 rules that need to always be adhered to by real estate agents and brokers: 1. Keep it classy. 2. Be honest and ethical. If the local real estate associations who govern agents and make rules set out to make the rules stricter, I think it would be beyond valuable to potential buyers and sellers.
If you are looking for a real estate agent, remember to get the full picture – what can s/he do for you that is different from other agents? Make sure you will not be just a number – some agents have teams of people working for them and they represent many clients – if you like this than great, if not you may want to look for an experienced agent who treats you like you are the only client. Everyone has different needs, so make sure you get all your questions answered and find the person who is best able to help you; shiny materials and boasts about being a “top producer” should play into your decision minimally (although you do want someone who can sell your home with strong marketing and advertising abilities), but you need to feel comfortable with the person and what s/he can offer you.
Friday, April 20th, 2012
Real estate agents or any professionals, take heed: Do you edit everything you send out? Do you read EVERY document the other side sends over involved with a sale? Do you read the contract (even better yet, have you EVER really read the contract in it’s entirety)?
In the real estate profession, as well as many others, there are those who are detail oriented, those who are completely sloppy, and just about all kinds of people somewhere in between. But it will never cease to amaze me when agents do not check their work product before sending it out. There is absolutely no excuse, as you are dealing with contracts that have legal ramifications.
If you represent somebody in a legal transaction, you better make sure you do the following – not only is the risk of a lawsuit great, but your entire reputation is on the line. As an agent, you are required to represent your clients to the best of your ability. If you cannot do so, you may need to seek another profession.
1.Â Read. This is so basic a requirement, yet it never ceases to amaze me how many agents do not read contracts, both before and after they have written them. First of all, if you have never read the required forms, you should! Once you have filled it in on behalf of a client, make sure you go over it with a fine tooth comb and fill in items you may have missed, change those that need changing, etc. If you forget to check or uncheck a box, it could cost your clients money, heartache, loss of a sale or subject them to a lawsuit. They are trusting you!
2.Â Explain. It is important to go over the contract with your clients before and after it is written. Explain to them what the terms mean, and make sure that you have conveyed their wishes properly.
3.Â Proof/edit. This instruction applies not just to a contract or other document you have written, but to everything you do. I am often dumbfounded by some of the marketing pieces I receive in the mail from real estate agents – typos, improper grammar, unfocused photos, blurry words…I would never send anything out like that! Even some big agents in my area do, and it usually makes me both laugh and feel angry…after all, it doesn’t raise the bar too high for the rest of us, does it?
4.Â Put all communications in writing. As a lawyer I know how important this is – even if your client is your family member. If you have a conversation with a client, make sure to send a message referencing what you discussed, and keep all communications in an email folder. If anything happens down the road, like a lawsuit, this is the only way you will be able to prove what was discussed.
5.Â Admit when you don’t know the answer, and get help or advice! It is ok to not know the answers sometimes – we all face this issue, and we are only human. Admit that you do not know and then find someone who does. This applies to tricky situations too, where you have to make a call. Getting the feedback of another whom you trust (like your broker, or if you are the broker, another trusted broker or attorney) could be a major difference in the outcome. The California Association of Realtors (C.A.R.) has a free legal hotline for members, as most associations do – take advantage of it.
6.Â Do your homework first. No matter what you do you need to investigate before submitting any offers, taking any listings, or venturing into a short sale or lender owned property. Contact your title representative and find out if title is clean and find out about liens on the property. Contact the listing agent and make sure s/he knows what they are doing if it is a distressed property. Pull up the assessor record. Don’t ever jump into something blindly without knowledge of what you may be getting into – it simply isn’t fair to your clients.
7.Â Always act professionally. This applies not only to your interactions with your clients, but also to fellow real estate agents and brokers. There are too many people in many industries who do not treat others in a professional manner. Eventually you will sink yourself with a bad rap if you can’t be a true professional. Real estate agents all know whom they don’t want to work with in their area…you don’t want to be that person.
As in any profession, there are always bad seeds who will tarnish things for the group as a whole, but if we all make sure that we do right by our clients, colleagues and by ourselves, we will not only make others happy, but we will also feel happier and have a productive career.
Monday, December 5th, 2011
No matter what business you are in, if you work with people there are some things you should always do if you want to be successful. By successful I don’t mean financially, although if you do possess these qualities that will follow, but successful in making your clients truly feel well cared for. For Realtors, it’s not just about closing the sale, but making sure our clients are represented properly, are informed throughout the process, and that they have a strong partner and watchdog from beginning to end.
If you want to make sure you are giving your clients the best,Â you need to possess the following traits. This by no means is the entire list, but those which I feel are the most important.
1.Â Listening skills. If you cannot truly listen to your clients than you may want to find another business. Listening is key to understanding your client’s goals and desires, their fears and insecurities. There is nothing more important than being a good listener, since you are representing your client’s interests. It will also give you an understanding so that if you need to tackle tough issues you know how to approach them without offending your client, creating anger or stress, or coming across like you do not care. In our fast-paced world it is easy to want to move along quickly, but take the time to really listen…you will be amazed at how much easier it makes your job, AND how much happier your clients will be!
2.Â Honesty and humility.Â Honesty and trust must be earned, and that is especially true in fiduciary relationships, like Realtor-client. Explain everything, take time to point out the possibilities and consequences of each action, even if your client is an experienced home buyer or seller. If a client asks to do something that does not feel comfortable, let them know. Trust your instincts. Always be humble and use praise as a tool – compliments are wonderful, and you should be happy. But also tell yourself that you need to keep learning, keep educating, so that you can continue to provide the best service as the market fluctuates and needs change.
3.Â Accessibility. Nothing makes me more frustrated than a representative who is inaccessible. If you are helping me throughÂ something, you better be there when I have questions or need something! So many Realtors do not heed this advice, and I think this is one of the biggest mistakes one can make. You surely are not helping your clients or colleagues if you don’t answer your calls, emails, and texts in a timely manner.
4.Â Respect for colleagues. It’s not just about your clients, but also your colleagues – other Realtors, escrow officers, mortgage professionals, title reps and others with whom you work. If you have a listing you need to call people back, provide information that is requested. Not doing so has a big impact on your own clients, and on your reputation in the industry as well.
None of the above traits are any you have not heard of in the past. But it is important to remind ourselves, especially in such a crazy world and an evolving market, that beneath it all we are simply human. Sure, we all want to make a living, but the only way we will survive this business is by putting our clients first and treating everyone with respect (even those peers who don’t seem to deserve it), including ourselves.
Friday, February 25th, 2011
With the world online it has become harder to uphold reputations and maintain your desired degree of professionalism…you actually have to work at keeping them in check. Clients and colleagues can check up on you in an instant, so what you say online and in person needs to be well-thought out. Realtors are no exception; in fact, they probably have to be more careful than the average person, for fear of violating a myriad of laws or regulations. For some tips on how to keep your reputation untarnished read more at http://realestateandwomen.net/2011/02/23/the-importance-of-watching-what-you-say/
Monday, January 10th, 2011
Actually, it never went out of style, but judging from the behavior of some professionals in the real estate industry you wouldn’t know that. To be fair, this can be said of any industryâ€šÃ„Ã®there are always those who slack off, try to get more done in less time at the expense of the details.
The fact of the matter is that with the addition of technology the real estate sales industry has become a more difficult playing field. Buyers and sellers often do a lot of work before they even contact a Realtor. Gone are the days when you stuck a sign in the front yard and waited for offers to flow in, or when you picked a few homes to show in the area to a client who relied solely on your advice. Nowadays clients know the areas, neighborhoods, floorplans. They understand the comparables and why one property may command a higher price than the one down the street. You have to be savvy and actually keep up with them to succeed in real estate now.
Yet, despite all the knowledge available at customer fingertips there are still many agents who throw professionalism out the window on a daily basis. I have heard it from many clients and from the agents themselves! I have seen it on offers written by agents that were clearly not checked over and over again before being submitted.
Here is my list of simple ways to strive for more professionalism in the real estate industry.
1. Return phone calls, including those to other agents. I cannot tell you how many times I have heard or read of buyers who say they called a listing agent with questions, only to never receive a call backâ€šÃ„Ã®unbelievable! This could be the person that presents an offer on your listing, or uses you to purchase another home, not to mention this is a violation of your fiduciary duties to your client/seller.
Oftentimes agents call other agents with questions on listings on behalf of their clientsâ€šÃ„Ã®return these calls immediately! If I don’t hear back in a reasonable time I won’t show your listing. This just happened to me a few weeks ago with a pretty big area brokerageâ€šÃ„Â¶no call back. Well, they lost a showing with an all-cash client. It is about your reputation with clients AND within the industry, and believe me other agents know who are the non-responsive agents. Do you want to have this reputation?
2. Make sure you proofread all your emails and communications. This seems so simple but spelling and grammar errors are a reflection of YOU! This should also be applied online when writing blogs, commenting on other blogs or posts, and even with social media. Again, what you put out there in internet land is permanent and is a reflection of you! Use spell-check and grammar check programs on your computer.
3. Proof your marketing materials, people! You may say, â€šÃ„Ãºduh!â€šÃ„Ã¹ but I get flyers and materials in my mailbox almost every week from other agents that are filled with typos, grammatical errors and terrible, grainy photographs. Again, if you are trying to get new clients this way and you send out pieces that look bad, why would they want to call you? Personally I would rather not send out any materials than send out those that look bad.
4. Look professional. This one is a no-brainer. True, everyone has his or her own style. BUT you can dress casual and still look professional . There is a difference between dressy-casual and the â€šÃ„Ãºjust came from the gymâ€šÃ„Ã¹ look. Again, how you present yourself makes a statement about who you are. You don’t have to wear Armani or Prada but you should look like you take your business seriously.
5. Send a hand written thank you card to the client, other agent and escrow officer at the close of escrow. This is often overlooked in the age of texting and instant messaging, but honestly a handwritten thank you is still the best compliment you can offer. Those agents will remember you next time they show your listing or receive an offer on their listing from your buyer.
It really doesn’t take much extra effort to be professional, but if you don’t have time to do these and other things to maintain your professionalism you need to rethink your goals, expectations and your career path. Not only do our customers expect us to be professional, they deserve it.
Thursday, July 8th, 2010
Ethics play a big role in every profession. Not only does it say a lot about who the individual is as a professional and as a person, but it can make or break any transaction or negotiation. Those who do not adhere to high ethical standards let down the others in the profession and taint their image. More importantly, their actions can hurt others and create legal consequences. As in many professions, there are unethical Realtors in every market. What can be done to help place more emphasis on high ethics? To learn more please click here: http://www.moneypress.com/real-estate-and-ethics-part-1.htm.