Are we having fun yet? I usually like to try and guess the answer to my own rhetorical questions, but in this case I have no idea what percentage of Realtors would say that they enjoy their career. It could be 50/50, I suppose. Why do I ask? As an instructor, I get to see agents when they first get into the business and they are excited and having fun. The freedom, the new toys, the healthy income, all the lunches from vendors, Realtor Balls and awards make it a very fun job. However, it seems that over time, some folks become less excited and less friendly toward the industry.

We’ve all met them unfortunately, the folks who just seem to be negative all the time. It seems that there is almost nothing that can be done to make these folks happy.

Here’s the thing… This is a tough industry. Practitioners give and give of themselves to their clients, while balancing shrinking income and meeting the needs of their families. The often times unrealistic demands of the consumer and constant need to reinvent themselves is a difficult task to achieve.

There are always things to consider when interacting with another, and at times these folks who may seem difficult are simply subject to the many demands of the industry. I’ve found that there are very few people who truly have malice intent to another and even fewer who realize that their negativity affects you so heavily. My belief system encourages me to forgive those who offend me seventy times seven per day. I’m not real good with math, but that’s a lot!

I have a difficult time being upbeat and happy all the time and the current market conditions aren’t helping. However, this is still a fun job and maybe all of us would benefit by addressing it as a new beginning each day. I’ve heard it said that you are most greatly influenced by those who you surround yourself with.

Try learning something new each day, look for opportunities to do something new and, start each day as if you are in your first year. Also, try to understand where that other person is really coming from. At the core of our Code of Ethics, is the belief that we should do unto others, as we would have done to us. That Golden Rule has been a cornerstone of most religions since the beginning of recorded history.

Above all, make sure you’re having fun and let others know!

But how/why is this acceptable?

From a great post by Jillayne Schlicke at RCG about potential RESPA reform.

Sections 8 and 9 of RESPA say we are not to give or receive an item of value in exchange for a referral of a federally related loan. We = any person that earns a fee on the sale or refinance of a one-to-4 family, owner occupied, federally-related loan. Realtors and mortgage lending workers have tremendous power to influence the direction of business for third-party vendors to companies such as title insurance, escrow, home inspectors, home warranty, hazard insurance, private mortgage insurance, appraisers, attorneys, and so forth. For example, title insurance companies do not chose to spend their advertising dollars on general public promotions because a title company can have a much stronger effect on market share by focusing on the people who are in a direct position to refer lots of business: Mortgage lenders and Realtors.

Naturally, there are exceptions:

Nothing in this section shall be construed as prohibiting (1) the payment of a fee… (2) the payment to any person of a bona fide salary or compensation or other payment for goods or facilities actually furnished or for services actually performed, (3) payments pursuant to cooperative brokerage and referral arrangements or agreements between real estate agents and brokers, (4) affiliated business arrangements so long as (A) a disclosure is made of the existence of such an arrangement to the person being referred and, in connection with such referral, such person is provided a written estimate of the charge or range of charges generally made by the provider to which the person is referred.

However, this possible arrangement is codified in the Virginia Association of Realtors‘ standard Contract to Purchase.

BROKERS: LICENSEE STATUS: (a) Listing Company and Selling Company may from time to time engage in general insurance, title insurance, mortgage loan, real estate settlement, home warranty and other real estate-related businesses and services, from which they may receive compensation during the course of this transaction, in addition to real estate brokerage fees. The parties acknowledge that Listing Company and Selling Company are retained for their real estate brokerage expertise, and neither has been retained as an attorney, tax advisor, appraiser, title advisor, home inspector, engineer, surveyor or other professional service provider.

Consumers (and Realtors) should question everything. Why this product? Mr. Realtor - why are you recommending your “in-house” lender?

What am I missing here? Are these types of entanglements kosher/ethical/”ok so long as I get my cut?” Has the real estate business become so intertwined and commingled with the various, disparate yet related, services that these types of arrangements are in fact, good for the consumer?

Technorati Tags: ethics, real-estate, realtor

If we quickly look at some possible alternatives to dual agency we may learn something about, not only the feasibility of its removal but also about what truly stands in the way of  change.  Please keep in mind that designated agency involves dual agency as the broker acts as a dual agent in that scenario though the two agents involved in the transaction each represent their clients.

1.  Single Agency? -  Licensees can only be one type of agent (seller or buyer agents) but not both.

2.  Transaction Management Agents - licensees do not represent either side but merely perform ministerial duties.

3.  Optional  Designated Agency -  Either seller or buyer  choose to hire an agent from another agency to represent them in a transaction so as to avoid dual agency. This would not be mandatory in the event the seller and buyer elect to work with the listing office after full disclosure is made.

There’s a lot to be said about each of the above but they all involve radical changes to our business practice.  These changes, I  believe, would probably result in a significant drop in the number of active licensees as it will become harder to be successful and, therefore, less profitable for those who don’t adapt. We’ll only be eligible for one side of any transaction and that could mean a drop in income unless volume is increased.  It will also probably mean considerably less income for professional organizations due to significant drops in membership.

Does it look now like the movement for the elimination of dual and designated agency will come from the Realtor community?  There is no ground swell from membership so why would leadership seek to rock the boat?

In the end, like a lot of other things, it all boils  down to money…surprise!…..surprise!

That’s why I believe that the impetus for radical change, if at all, will not come from within the industry.  Like a lot of other things, such as all of the legal  requirements for the various disclosures we have to make, consumer demand can and probably will be an effective impetus for change at some time.    Who knows when?

On the other hand, I do believe that  improvements can be made in the existing laws governing the way dual and designated agency are practiced in our state.  Such changes might also lead to further adjustments down the road.

For example, let’s remove the words “represent” or “client” when referring to any agent or seller/buyer involved in a dual agency situation.  Those words imply advocacy as they do for attorneys and other professionals.  I don’t know what word can be inserted in its place but I’m sure there is an appropriate word that conveys the proper explanation of the ministerial services performed by the licensee.

Next, require “informed written consent” from  the seller or buyer to either dual or designated agency.  This means that somehow, perhaps in a disclosure, the seller and buyer are fully informed as to how the “representation” they originally agreed to retain will change if they agree to permit “their” agent to act as a “dual” agent.  It should attempt to explain with examples what the agent can and cannot now do for them and that his/her role will be reduced to a ministerial role without advocacy.  It should explain what he/she can and cannot do on behalf of the other party in any potential transaction and should be as specific as necessary to get the point across that an agent would be acting in violation of the law if he/she offered any advice regarding value, price, negotiation strategy, etc to either side.

Next, listing agreements and buyer agency agreements should not be permitted to include obligations for sellers and buyers to agree to dual agency in advance.  They should inform sellers and buyers of the potential for that situation to arise with detailed  explanations as outlined above but not bind them in advance to something completely out of context at that moment.  New home buyers, for instance, have no clue of the implications of what they are agreeing to.  The client should have the option to choose to have other representation without penalty at such time as the offer of dual representation is made to them.  Actually, this will also serve as a protection for the licensee if handled properly.

That also means that a written offer to change to dual representation should be made before any substantive discussion is conducted with a buyer client on a property listed by the buyer agent.  Even if agreed to by the buyer client, the seller should then be presented with a written offer of dual agency before a showing can take place with the same agent.  Of course, both offers of dual agency will contain the informed disclosure information.

Perhaps there are much better adjustments that can be made, however, the purpose of these suggested procedures is to make sure that both sellers and potential buyers be given the opportunity to understand and either accept or deny the use of dual agency by their mutual agent in advance of any services provided by the agent in connection with a potential transaction involving the two.  Anything  that helps accomplish this is a move in the right direction.  That’s about all we can hope for at this time.

Will these changes take a lot more of the agent’s time and effort?  Yes, but they are appropriate, in the best interests of all clients, and are the fair price paid for a choice to act as a dual agent. They will also, in my opinion, serve to protect the agent if properly complied with.

—

The preceding was written by Joe Vita.

Part 2 of 2.
Part 1 is here.

Technorati Tags: agency, dual agency, real-estate, realtor

OK OK I’m going to step up to plate. (do I need a flame proof suit?)

First of all DISCLOSURE: Often I am a dual agent, I work in a niche market - horse properties & farms. I am broker/owner of a small firm Valley of Virginia Real Estate, within my firm I have no possibility of Designated Dual Agency.

When I started in Real Estate I thought seriously about being an Exclusive Buyers Representative but as I started working with buyers & showing farms I discovered many, not all, listing agents of horse properties just did not understand the horse aspects of the property. They were trying to sell the house that oh btw there is a “barn out there too, I’ve never been in it but I think you can store about 6 ponies in it & there’s a riding rink too”. Hint - horse folk usually could care less about the house -they want all the details about the horse facilities. After seeing this type of information more times than I want to count, I started listing horse properties so I could better serve the clients - both sellers & buyers. I guess you could say lack of specific knowledge on other agents part drove me to Dual Agency.

My average time from first contact with a seller or buyer client to closing is often well over a year. I build relationships with clients based on the expected Real Estate expertise & my clients very specific needs which require special knowledge of horses, land, riding styles, hay sources, local instructors, equine vets, show schedules, just to name a few. Most of my sellers require & expect me to be present for all showings - most live in fear of something happening to their horses, dogs, cats. They also know most agents just flat don’t know enough about the horse world to be effective. Buyer clients seek me out because they know I have specialized knowledge of horses & riding.

“Candy has had horses and ridden for a long time and so she was able to understand how functional the farm was. Also, horse people have their own language and she “fit right in” with whoever she showed the farm to”

I’ve had more than one client tell me that if I’d shown up in a fancy car with a dress & heels they would have shared a cup of coffee with me, thanked me for my time & said goodbye. I am one of those blue jean wearing , big loud truck driving agent! So what does all this have to do with dual agency?

On first contact with each seller or buyer I explain agency with emphasis on Single Agent Dual Agency. I let them know up front that my firm cannot offer Dual Designated Agency. I send them home with information on Agency to read. If they are not comfortable with Dual Agency as a possibility, we either make arrangements for referral, identify another agent with another firm that can represent their interests or part ways on good informed basis. This conversation is repeated throughout the process.
Do I recommend Single Agent Dual Agency for everyone? NO!!!
It takes a special REALTOR. One that is a stickler for COE & one that is willing to work hard to do it right. Agency & Agency Law must go hand & hand with the COE. Its hard work, it takes extra time, specific education (I highly recommend taking Marcie Roggow’s Class: Negotiating in Dual Agency), specific consent ( IMHO - above & beyond signing the VAR Form on Agency), specific rules during negotiations, specific education to all parties & above & before all - DISCLOSURE!

I have an agenda, and have for a couple of years, and that is to rid the real estate profession of the scourge of Single-Agent Dual Agency. I’ve written about the problems and solutions extensively over the years, and my position has evolved from advocating against all forms of Dual Agency to acquiescing to the reality that Designated Agency may be a necessary evil. This post has been percolating for some time, but the time is right, and I have found an eloquent ally as well …

Who benefits from Dual Agency? The Realtor.

One of the primary values a Realtor brings to a transaction is representation - representation of his client’s best interests. How can a Realtor advocate for the best interests of both parties and still maintain the perception of fairness and full representation? In my mind, there is a difference between treating all parties fairly and honestly and being able to advocate with 100% vigor for one party.

Realtors practice dual agency all the time - successfully. Never had I had someone remark how much they appreciated their agent representing both sides. I have been told numerous times by clients how they perceived their agent in a shady, less-than-honest manner because that agent had both the buyer and seller.

Dual agency devalues Exclusive Representation.

In a divorce, would you have the same attorney represent both parties?

I am privileged and please to have found a member of the VAR Policy Board is another vehement advocate against Dual Agency. What follows is an email from Joe Vita, an Exclusive Buyer’s Agent in Lexington and Rockbridge County.

—————————————-

While it may seem like an easy issue for people like you and I to address and defend, it would take quite a lot to get the majority of Virginia’s agents to go along with the abolition of dual agency.  While the problems with dual agency are easy to identify, the solution will be complicated.

I know that there are members of the Real Estate Board that recognize the problems with dual agency as it seems to come up at seminars they have conducted at VAR’s meetings as one of the most serious and common complaints about agents they receive.  But I don’t know if they have ever given any serious thought to a proposal to eliminate of dual agency.  While they could be the source of some change themselves, it is much more likely that either consumers or VAR would have to drive the agenda.

I doubt very seriously that VAR’s leadership has ever considered it for a minute as there isn’t any impetus coming from membership that I am aware of at this time .

I don’t know if any legislators are even aware of any problems with dual agency or would care about it unless a demand for change came from the public or VAR.

I’m not aware of any consumer organizations in our state that have expressed concern about it but believe that there are national groups that may be concerned.  I suppose that a consumer’s revolt could occur but it doesn’t look like something that will be coming down the road any time soon.

I’m not aware of the federal government getting interested in this area of our business practice though they always seem to be looking into something involving our business practices.
MLS operations appear to be their soup du jour.

So, it would appear that unless at least one of the five main sources for change decides that it is in their best interest to get behind the eradication of dual agency, it will not get done.

Part 2 to be published on Thursday.

Part 2 is here.

Technorati Tags: agency, dual agency, real-estate, realtor

I think REALTORS have got it… “it” being the connection between current market trends and the need to set reasonable expectations.  The REALTOR seems to know that they are in for the long haul when taking a listing.  I am not sure that brokers and educators are doing a good job of equipping the REALTOR with what they need, to set the seller’s expectations.  Knowing the connection and relaying it to the consumer are two different skill sets.

My wife is a REALTOR and recently she has prepared two market analysis for indvidiuals wanting to sell for lifestyle upgrades.  It’s interesting to me that these sellers haven’t “gotten the memo”.  It’s a buyer’s market.  In the county where we live, in December there were 399 homes for sale and only seven went under contract.  In this same county these folks are asking to get substantially more for their homes than ANYTHING that has sold in the past year. 

I have recently gotten information from a Zillow.com survey that was done.  What was reported in the Real Estate Intelligence Report was of great interest to me.  Zillow reported that 77 percent of Americans do not believe that the value of their home has declined.  34 percent advised that they were going to try and sell their home….this year. 

Wow!  Someone really hasn’t been listening.  For a generation of REALTORS, we’ve been saying that it’s location, location, location; but isn’t that just if there are actually buyers looking?  I think it’s important to remind the seller that it’s price, price, price.  It doesn’t matter where you’re home is located in this current market if it’s overpriced, not compared to the appraisal the received a year ago, but in comparision to the other competition.  Let’s not forget, that even if it is priced well, the chance that a buyer is going offer full price is pretty slim in a lot of cases.

I’m sure that it’s not everywhere, but in plannig district 16 it’s a tough market.  It’s time that we frankly tell your seller just that.  Setting a reasonable level of expectation will help you and the seller sell the home.  It’s the REALTOR’s obligation to sell the home – not simply generate more listings.  I recently spoke to a listing agent complaining that her clients were calling her almost daily upset that there had been no activity on the house.  When I asked about the price point, she replied that it’s very overpriced and was when she took the listing.  She simply took it, so that she could get a sign up to generate more listings.

I have to ask… is the pain and suffering of dealing with a unreasonable seller, in a home that has no chance of selling worth the “free” marketing that you can get.  I would think a busness analysis would probably not relfect that ideology.

A marketing strategy employed by some other practitioners has been to find out who else the seller is interviewing and show the seller the “success rate” of that other agent jockeying for the listing.  If you are an agent who takes every listing, it’ll be pretty easy for these “success rate” agents to show the seller that you’ve failed in selling the listing more than you’ve succeeded. 

Whereas there may be many barriers to agents giving the sellers the hard facts about what’s going on, it’s still your ethical duty to let them know if they are off target.  It’ll save both you and them a lot of headaches in the long run.  As a buisness decision, every REALTOR should know their walk-away point.  You should be able to articulate to the seller why you can help them, and why as a professional you have to give them the tough news.

> This from the Chicago Trib: Should you buy or should you hold off?

> This from Inman: Realtors question Web site name restrictions, about concerns some are raising about a new Code of Ethics standard of practice that says REALTORS shall not “use URLs or domain names that present less than a true picture.” The new SOP, approved last November, is the result of the use, by some members, of domain names that suggest that the REALTOR is actually the MLS (for instance, a broker whose website is “VirginiaMLS.com”). Seems to me such usages are misleading at best…and therefore the new NAR SOP is appropriate. Or in other words, just because it’s legal and you own it doesn’t mean it’s ethical. What do you think?

With apologies to Forrest Gump …

Recounting a tale from the trenches in the Charlottesville Realtor/real estate world …

Another Realtor was showing buyers a development in Charlottesville and an agent was onsite holding an open house. As the buyers looked around, the Buyer’s Agent (BA) and the sellers’ agent (SA) got to talking.

BA: This road in front of the development:  It goes into a neighborhood, correct?
SA: Yes, but you don’t want to take them that way.  It looks much better the way you came in.
BA: I understand, but I want them to see what’s around this property, going both ways.
SA: If you go back the way you came, you can show them how close the grocery store is.
BA: Thanks, but I can do both.
SA: You should really go out this way - it’s much better.

When the Buyers and the Buyers’ Agent got in the car - the wife asked, “Which way are we leaving?” To which the Buyer’s Agent replied - “this way - I want to make sure that you see what’s around the house.  Then, I’ll show you how close this is to grocery store, restaurant, etc.”  Turns out, the wife had heard the Realtors’ conversation.

1 – Your Buyer Agent is supposed to look out for your best interests.
2 - Had this been a Dual Agency situation, do you think the buyers would have been more or less likely to see the “other” areas?
3 - Realtors don’t have an obligation to assess an area’s safety level, but they do have an obligation to be the “source of the source” - provide references by which the clients can determine for themselves.
4 - Recognize two things - not all Realtors are focused solely on “making the sale”; but some are.

Note: This is cross-posted at RealCentralVA.

Thirty-five years ago when I entered the real estate profession, things were very different and in many ways, easier. Contracts were one page long, financing was done by and handshake at the local banks, we had the very modern Polaroid camera to take our instant photos, and, if you can imagine, no MLS. Today everything is different about the business and the advancement in technology has been incredible. For people like me who are still trying to figure out how fax machines work, it is sometimes overwhelming.

Enter the age of the digital camera and Photoshop. How wonderful! We can do our own photo editing and enhancements right at our own computer. We can create a House Beautiful magazine cover out of a handyman special with just a few mouse clicks. After all, isn’t this what we are supposed to do to help your clients sell their houses? Article 1 of the NAR Code of Ethics clearly states that we are to promote the best interests of our clients. So what if we improve the look of the their rather tired looking home? Aren’t we promoting their interest? Doesn’t the seller want a fast sale?

Let’s take a look at Article 12, which states we must present a true picture in our advertising. So, where do we draw the line? Do you think it is okay to photoshop into our listing photos a “new driveway” so the house looks better? Is it okay to “patch the grass?” Remove a mailbox and a telephone pole and stains from the driveway? Is it okay to remove the trash cans the owner forgot to put in the garage?

When have we gone beyond helping our clients and deceiving the public?

From Wikipedia: Speed dating

“is a formalized matchmaking process or dating system whose purpose is to encourage people to meet a large number of new people.

In practice folks are rotated to meet each other over a series of short ‘dates’, usually lasting from three to eight minutes depending on the organization running the event. At the end of each interval, the organizer rings a bell or clinks a glass to signal the participants to move on to the next date.”

On the day one of our first retreat, the 2007 class of Virginia REALTOR Leadership Academy speed dated. Our directions, as I recall, were to ask a real estate related question that would be a good conversation starter. I totally failed on my very first speed date.

My question was, “What would you do if NAR, VAR or your local association decided today to do away with the Code of Ethics?” Should spark lots of great conversation – right?

First Response: “I’d quit.” PERIOD - end of discussion.

WOW – great answer! That’s the REALTOR I want to work with – that’s the REALTOR I strive to be.

What’s your answer?

Related Links:
2008 Code of Ethics
The Code is Good Business
The Code in Straight Talk