There has been much talk on AR recently about how REALTORS® do not have a lock on morality.  I fully agree that REAlTORS® are not the only ethical agents in the real estate business.  Just read one of the posts by Ardell and you will quickly understand that you do not need to be a member of the NAR to care about your clients and to want to do the right thing by them.  However, I think this debate about who owns morality is slightly off topic.  The REALTOR'S® national code of ethics makes no claim to be the only source of ethical behavior in real estate.  Real estate transactions are often national and run across state lines.  In most instances the REALTOR® is only licensed in one of those states and doesn't know the ins and the outs of the law in another state.  However it is the code of ethics which allows the agent a common language when dealing with problems across state lines.  That adds value for the consumer.  Let me give you an example.

A year ago I had some of my favorite clients ever.  They are good friends to this day.  They were purchasing a home in Washington and needed the proceeds from her home in Virginia in order to close the deal.

Over dinner one night my client let me know that her agent in Virginia said that there was some kind of trouble.  So I asked to take a look at the contract again and the new addenda.  Well after examining the documents I got worried.  My client had received a contingent offer on her home and the first buyer had been bumped for another offer.  However, my client did not have any properly executed paperwork showing the executed bump.

The next morning I started making some phone calls.  It very quickly became clear that this was a real mess:

Red flag 1:  My client's listing agent had been in the business for less than a year.   (Please don't misunderstand; I am not one who always says experience is better.  Often the hungry agent is the best agent and that can be the new agent.  However in this case you will see why experience became a red flag when combined with other circumstances.)

Red flag 2:  The agent for buyer #1 was claiming that he had removed the contingency, and so was entitled to own the home.  However, the contract which I had read stated that he had to remove it by a certain date and in a certain way.  The buyer's agent did not follow these guidelines but had clearly tried to remove the contingency in a different manner.

Red flag 3:  My client's agent did not property execute the bump.  The bump notice was given verbally and on an email instead of on the proper legal contracts.

Super Red Flag 4:  Offer #2 came from in within the listing office

Super Duper Red Flag 5:  It was the broker in the listing office which presented Offer #2.  This broker was also the friend who got the listing agent into the business.

Super Duper Duper Red Flag 6:  The second offer wasn't as financially beneficial to my client.

My client ended up with two legitimate claims on the home in Virginia.  I ended up in my west coast office at 5:30 AM for a couple of mornings helping my clients talk to lawyers on the east coast.  I have to confess that my favorite moment in the whole deal was hearing the owner of the listing company start by defending his broker (as an owner should).  He then got really quiet when I told him what had happened and that my client was talking to a very prominent real estate attorney in town.  He quickly got involved once he heard that the broker had presented the second offer.  I really like moving the world for the sake of serving the consumer. It gives me a satisfaction like nothing else.

In the end we got the thing fixed in time to close on the house here, and I was the hero for my clients.  So where does the code of ethics come in?  Along the way I was able to use the Code of Ethics to explain to the listing agent why he and his broker were in such hot water and how it was in their best interests to figure it out.  Once the listing agent saw what a mess he had made, the poor guy didn't sleep for a week and he and I worked hard to to serve our client.

After all of this, I don't think in the end there was a complaint filed with the local board of REALTORS®.  I don't know, I think my clients were so tired at the end of the transaction that they didn't follow through.  They just wanted to enjoy their new home here in Washington. 

Why didn't I file a complaint?  First, the listing agent was only guilty of any breech in the code because of his broker's advice and it seemed really petty to file a complaint against someone who was only following his broker.  As soon as I used the code to explain the problems he created, he got it and worked very hard for his client.  The upshot of this transaction was that he was thinking of leaving real estate.  I actually thought that he would make a great agent because he cared and wanted to do the right thing, and I told him so.  He was clearly bright and had a good head for contracts.  He was just in the wrong office.  I encouraged him to find an office where he could actually get some training.

Why didn't I file a complaint against the broker?  I heard he was probably going to lose his job.  The owner was not happy at all.  Since the proper remedies were already being handed out there was no need to go through with a complaint.  He was also "fined" $3,000 because he ended up paying for the loss in value when Buyer #2 got the house.  (I guess his commission check wasn't as big as he hoped.  When you add in losing your job and not sleeping at night, is dual agency really worth it?  But that is another topic.)

Besides, to me the value provided for the consumer through the code of ethics isn't only in your ability to pursue punishment after the fact, it is also in the power it has to educate and guide behavior before and during the transaction.  Once I was able to explain to the listing agent that they were on the wrong side of the code of ethics the light bulb went on, the demeanor changed and things got better.  That is value for the client, a value I could not provide them unless the agent on the other end of the transaction was a REALTOR®.  If we understand things correctly, we put ourselves under the code in order to provide a consumer-centric way of doing business across state lines.  It takes a national professional organization like the NAR to provide this service to the public.  I believe that the consumer friendly ways of doing business will always rise to the top and I know that the NAR and the national code of ethics it provides will be there.

Erik Wecks

REALTOR®, ABR

http://erikwecks.com/

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