Standards in Real Estate? What Standards?
As an active real estate agent for over 30 years I have been irked, as many of you have, at the lack of professionalism of many of my colleagues. Sometimes it was a little thing like leaving lights on after a showing, or replacing the key into a lockbox, or, if picking up a key at a real estate office, failing to return it in a timely manner. Of course, I can go on and on, but I think you get the idea.
Sometimes, however, there have been larger failures that are more than unprofessional, i.e., actually harming the consumer or other real estate colleagues. I recently was an expert witness in a case where a listing broker/agent listed a property in the multile listing service (MLS). While waiting the maximum 24 hours to post the listing into the MLS, he rightfully contacted all the buyers in his database to alert them to his new listing. He made an appointment for one of his buyers to see the home.
Meanwhile, the listing in the MLS restricted showings to begin three days after the publishing of the listing. Because all appointments had to be made through him, calls were not returned when they were left in his voice mail from the day of the MLS entry through the third day. When one agent finally got to show the property and had buyers interested, she was told the property was sold to a relative of the seller. Too bad, because her buyers wrote up a contract for full price and were willing to go $15,000 higher, but the contract was never presented by the listing salesperson to the seller.
Meanwhile, the seller was told any other interest in the property was from buyers who had “problems,” like contingencies. He eventually sold the property for $50,000 less than full price to his own clients! It’s only by happenstance that the seller found out about the other full-price buyer and filed suit against the listing broker.
REALTOR® Code of Ethics
Maybe all REALTORS® should take to heart and practice the REALTOR® Standards, the Code of Ethics we pledge at Orientation. In the ABR® Designation class we continuously talk about the importance of setting standards with potential buyer clients whom the buyer’s agent may choose to work for. In the all important buyer counseling session, it’s not only important to learn the buyers’ needs and wants and desires, but also to ascertain if they want the myriad of skills and services the agent can offer.
A consultant endeavors to provide guidance and help to consumers to solve their real estate needs. In exchange for that guidance and help the agent asks for the loyalty of the buyer to work only with that agent. But, therein lays the problem.
How many agents do you know who actually say, “As a requisite for me working for you, I must have a signed buyer representation (agency) agreement that explains our obligations to each other, viz., compensation, time, my ability to work with other buyers, and the possibility of me acting as a dual agent representing you and a seller, or you and multiple buyers, or me and any other agent in my company representing other buyers”?
Without a thorough buyer counseling session and a signed buyer representation agreement, who determines the scope of work that you must do? Does finding the right home for the buyer include looking at “for sale by owners,” bank owned properties, foreclosures, buyers-preferred neighborhood properties that are not on the market yet, expired listings?
How do you address compensation issues? Will you show property that meets buyers’ criteria but where little or no compensation is paid to you, e.g., a broker puts a listing into the MLS with a $100 commission? Do you show it? If so, how do you get paid the required commission? Or what if the commission offered to you is 1% less than what you require? Who pays that? Our Code of Ethics says that we cannot offer a contract to purchase which changes the offered commission to the buyer agent by the seller and listing broker (cf. Article 16). Or, what if the commission the listing broker offers to you is more than the agreed upon commission with the buyer? Who gets the bonus? You? The buyer? Do you split it?
Do you believe that truly representing your buyer means negotiating their purchase contract with the seller and the listing broker? Really, who knows your buyers’ wants and needs the best? Who can be their agent and speak for them? Only you! Yet, I have found that more than 50% of the time agents routinely submit their buyers’ offer to purchase directly to the listing broker/agent. Whose interest does the listing broker/agent have primarily? The sellers! Something is wrong here.
What if your standard was the following: “I require all buyer agents to negotiate their buyer clients’ offer directly with my seller and me. Call listings sales person for appointment.”
And, what if you did everything in your power to present your buyer clients’ offer to purchase directly to the seller and the listing broker? Would you be more valuable? Did you know that one of the top three requested services/skills of buyer agents by buyers in the 2006 NAR Survey of Buyers was negotiating for them?
In another article I will address standards again. See you next time.
(Copyright © 2007 Joseph Marovich, ABR, e-PRO, GRI ,PMN, SRES. All rights reserved. Licensed for 35 years, Marovich teaches REBAC, GRI, and WCR classes and often acts as an expert witness in legal cases. You can access his course schedule at www.MarovichBusinessInstitute.com, or contact him at 732-961-9618 to discuss speaking engagements or other needs.)
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