Has the Code outlived it’s relevance?


What’s the Point of the Story?

In recent months I’ve adopted Jim Duncan’s response to people who complain about other agents. I saw him ask “How did the complaint process go?” to a commenter on a blog; and I thought that it was brilliant.  I can safely say that on an almost daily basis one member or another will tell me about a bad deal or woe they’ve encountered with another agent.  After hearing tales of woe, I offer them Mediation and the Code of Ethics complaint form.  Almost every time, some series of excuses come forth.  The excuses range from lack of time, not wanting to really get anyone in trouble, lack of serious penalty or that the VREB is a quicker and easier solution.  My thought is that if it isn’t serious enough to reduce to writing; than the conversation is just gossip.       

Have We Seen Better Days?

My understanding (as I wasn’t there) is that in the early 1900’s when NAR was started, it was intended to bring real estate men together to uniform the industry and provide a level of responsibility.  Then in the 1920’s the Standards of Practice were developed and was the rule book for these folks.  License law came about around the 1950’s and since then a lot of changes to the regulations have followed the changed to the Code of Ethics.  So, in essence we’ve been trying to improve the practice of Real Estate for 100 years or better.  And we’re still trying…  It’s clear that the Code of Ethics has influenced regulation; but has it otherwise served its purpose? 

I hear agents lamenting the “old days” of real estate when people behaved better; but I have to wonder if there were really better days in the past, why did the previous generations need to keep creating new regulations, if everyone was so much better?

If a Violation Happens in the Forest…

The Virginia Regulations closely mirror the Code of Ethics, at least in the major areas.  If an agent can write a complaint and simply turn it over to a trained investigator at VREB; why is filing with the Association a better option?  I’ve been asked this question a few times, and I really don’t know how to answer.  (It’s important to note that many Associations will forward complaints that are a proven violation, of the public trust, to VREB, after the Ethics hearing)  Of course the Association has a place in Arbitration, of course the Code of Ethics is a valuable tool, but if you don’t use these items why would you expect others to?

To all the folks who think the Code is irrelevant, I would submit, it’s because you aren’t using it.  It’s relatively low rate of utilization is weakening it….not the lack of adherence.

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17 Responses to Has the Code outlived it’s relevance?

  1. Pat Hallesy says:

    Part of the problem is the lack of transparency (to the public) regarding ethics complaints. In other words, most Associations have their closed complaint process and nothing (either guilt or innocence) is disclosed.

    As far as VREB goes, I’ve had the opportunity to inquire about filing a complaint and the impression I received was that they wanted ME to investigate and then give them all the details – not my job. That’s why they have investigators.

  2. Pat,

    All Associations keep the findings confidential. There are a variety of reasons for this, none the least is the hearing panel is driven by peers and their objective is correct bad behavior, not public humiliation. The decisions of the panels are based on “a preponderance of the evidence” and not “beyond a shadow of a doubt”. If it were held more to the standards of the courts, I would support a release of the findings.

    Here’s a good article on AgentGenius.com about this. Good comments, too.

  3. Also… “As far as VREB goes, I’ve had the opportunity to inquire about filing a complaint and the impression I received was that they wanted ME to investigate and then give them all the details – not my job. That’s why they have investigators.”

    I think if one is going to file a complaint, than in the interest of due process, the person complaining should have to present a solid case; of otherwise the VREB could be used as a tool to mess with the respondent who did nothing wrong. Besides, so few agents know a real violation when they see one, that VREB could be tied up for years chasing windmills if they didn’t require people complaining to present some pretty solid evidence.

  4. William J. Wyllie says:

    Doctors, lawyers, police officers have long not wanted to cross the line and report a fellow traveler. The fear being: “Will you do unto me as I did unto others?”

    I have been an RE instructor and agent for many years. Why have ethics training: “You either have ethics or you don’t?” That is the depth of ethics knowledge many agents have. You can even take ethics on line just to get rid of it. The Code of Ethics is nothing more than an NAR marketing tool. Do you have to be a REALTOR to have ethics? Can you just be an agent and have a Code of Ethics? Isn’t real estate law ethical? We use ethics and agency until it becomes inconvenient and attacks the bottom line. Why have a Code of Ethics when it is ok to represent both parties in the same transaction (duel agency) to make sure you capture both ends of a transaction? How about admin fees to bolster brokers overhead costs; or paying relo money to non-brokers or in-house lenders, in house title companies. Ethics, paying for overhead and salesmanship can be a conflict of interest. Until we see our profession as a duty to the client the Code is a sham. The latest Gallup (2009) poll holds real estate agents near the bottom, in answers concerning Honesty and Integrity. Something isn’t working!

  5. William, it’s not working because of human nature (IMHO).

    I do agree that there is a difference between a moral code and what we call a Code of Ethics. For example, my moral code says it’s wrong to do Dual Agency, but there is no regulation against it.

    The COE is a Standard of Practice…. Most people who violate it are not unethical, they simply didn’t know or understand the rules.

  6. Well said, it is a shame that as associations we somtimes look at what we do rather than what is the result. Ethics is for the most part a behavior coupled with education and what is expected. These days it seems many agents are missing both.

  7. Jim Rake says:

    Provacative title, and a subject that many of us have written on recently.

    Matthew – while I don’t use absolutes, this time it seems fitting. I’ve Never heard another agent say the Code is irrelevant. Many simply disagree with the current process.

    But, maybe we’re asking the wrong question. Could a better question be, “Is there a way to improve the process?”

    Should we carefully examine the current greivance/complaint process, and see how it can be, or what can improved? How do we make it more attractive/responsive to those filing, with greater transparency, while at the same time “protecting” the parties involved? Don’t think there are many in favor of humiliation. Most are simply after what’s fair for all involved.

    Somtimes in our attempt to find solutions, we fail to see that problem solving rarely results in ideal solutions. But, if closer scrutiny of the greivance/complaint process results in some changes and improvements, then I’d argue that the end justifies the means.

  8. Jim,

    I suppose I may have a hyper-exposure to the feedback / excuses of agents in regards to their feelings on the COE. Having taught for several years, working as an administrator and Grievance; I have had to convince a number of agents that the COE was relevant, but only if they actually used it. This has also been a comment theme I’ve seen over the past few years writing and commenting in RE.net. I’ve also recently had conversations with other staff members across the US and many are facing the same issues. It’s a small movement and hopefully we can turn these folks around before it becomes more ubiquitous.

    I happen to think that the current process does a good job of protecting “due process”. Is it lengthy yes….does it require the burden of proof to be on the Complainant – yep.

    All that’s left is for agents to engage the process and follow through with the complaints; otherwise an used tool is irrelevant.

  9. I think the Code and the Regs are basically the same now. In the early 1900’s there was no Code, but now the REALTOR organization Code has had such an impact on the state regs that they basically mirror one another. I can only name one thing that the Code is stricter on than the regs – verbal offers.

    I wrote a fun article on this for a blog called “Raising the Bar, or Bellying Up to It.” It is a fun read – http://www.bloodhoundrealty.com/BloodhoundBlog/?p=2979

    I do think that we still need to educate licensees on ethical issues because our case studies make it easier to understand than the regs.

  10. Jim Rake says:

    Dave – good point, and article. And, you’re right, case studies are a very effective teaching tool.

  11. Dave,

    The Verbal Offers was one of the standouts, as well as the obligation to disclose to the buyer that their offer isn’t confidential.

    All the rest are for the benefit of the Realtor community and not necessarily beneficial to the consumer. Having said that, I’m now wondering if all the other states so closely match the COE…

  12. Tina Merritt says:

    When I was a new agent, I was involved in a transaction with an agent in my own company who failed to disclose that the earnest money check had bounced. I was in complete shock when the President of the company didn’t terminate the agent nor even reprimand her. When I told my Manager that I was going to file a complaint with VREB and HRRA, I was told, “Agents don’t do that to each other, just drop it”. A few years later, a co-broke agent failed to deposit the EMD. This time, I reported it to VREB and he was fined. The Managers and Brokers don’t hold agents accountable, so we must police ourselves.

  13. Jim Rake says:

    Agreed, “we must police ourselves.”
    However, a necessary first step to improving our business is to hold Brokers accountable for the behavior of their agents.
    Guidance like “Agents don’t do that to each other, just drop it”, is simply unacceptable and should be something our profession refuses to tolerate.

  14. Tom Duckett says:

    Let me just state right up front…I do believe that the Code is relevant. I think that the VREB regs and laws of Virginia did well by shadowing the Code over the years. And yes the Code is a good business model for agents to follow.

    Now, all that said I think what is missing from the discussion is that agents don’t pull the complaint trigger because they possibly have “self doubts” about their own actions. Or at least that little voice in the back of their heads is maybe thinking, did I really understand what just happened? Was I complacent? Was I negligent?

    As with so many problems that I’ve seen come up in the day to day doings of the real estate world, failure to properly communicate is what sets the stage for most agents having an unfavorable opinion of the other agent. Or it could be that an agent wants to look like a big shot or the one who saves the deal from the actions or inactions of that other crummy agent. That said I would hope that most agents would have second or even third thoughts about filling a complaint. I want that agent to know that when they file a complaint they are about to make the other agents life a real big pain in the …they better be right.

    Now don’t get me wrong, an agent that looks the other way can be considered just as guilty as if they had been the one violating the Code. This is serious stuff with serious consequences. I just want it done with forethought and no margin of doubt. Tina, the Code is relevant and we need the Code to survive as an industry.

  15. Tony Arko says:

    Tina’s example illustrates the one glaring problem with the Code that undermines any and all efforts by the ethical and moral against those that are not. There is no “non-toleration” clause to the code. Agents and brokers that know of a violation and do not pursue action or discourage others against taking action against the offending party should be just as guilty as the offenders themselves.

    Without this clause, it is easier to just ignore the offenses instead of doing the right thing which is rid the real estate profession of these unethical and immoral practices and practitioners.

    As a former cadet at West Point, each cadet had to abide by the Honor Code. It was a very simple code but one that was infinitely more effective than the verbose, ineffectual NAR Code of Ethics. “A Cadet will not lie, cheat, or steal, or tolerate those who do”. The first 8 words of the code were written by Gen. Douglas MacArthur in 1922 and the final 5 words were added in 1970. 13 words is all it takes.

  16. Jim Duncan says:

    What Tony said.

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