BROKER WARS: Tales from the Front
This is the final part of my series on broker ethics. In Part 1, I gave examples of breaches that I have seen in the last year. In Part 2, I described the minimum amount of training and education that a real estate agent must have to become licensed. In this third part, I suggest a path for dealing with the issue.
To my mind, a code of ethics that imposes compelling penalties must be instituted and enforced.
On the Web site of the Real Estate Board of New York (REBNY), I tried to find anything at all about ethical standards, as I mentioned in my previous post. But the only information on the Web site had to do with class schedules. Not a word on what the standards might be or what to do if a consumer thought they had been violated.
I’ve been told by a onetime sales manager in a now-defunct brokerage that it is possible to report an offense to REBNY. (How continues to mystifies me.) However, said the manager, nothing happens if you do so.
By contrast, the National Association of Realtors (NAR) has a strong Code of Ethics. Reflecting and greatly expanding upon state laws, it has teeth.
The code explains how brokers should relate honestly to and cooperatively with each other. It says that whispering a customer’s or client’s confidences is unethical–for example, how much a seller really is willing to accept.
Moreover, it outlines how seriously brokers need to view honesty as a fundamental requirement–for example, disclosing negative information about a property such as the dog next door that barks ceaselessly when a neighbor is absent.
And the code makes a clear distinction between puffery in advertising (lovely views) and misleading information (recently renovated–20 years ago!). In addition, it also takes a dim view of sloppy, lazy and uninformed brokers. The code declares:
“Ethical standards also apply to relationships between agents and their customers (the party with whom the licensee works, but with whom the licensee has no fiduciary obligation.”
As of mid-March, there were 12,208 licensed real estate brokers and 11,798 licensed real estate salespeople in Manhattan, according to the New York Department of State, which issues the licenses. Of that number, only an insignificant number of agents and brokers are members of the Manhattan Association of Realtors, an affiliate of the NAR.
(Because I am not required to be a member, I am not one of them. Nor do I maintain that all of us need join at this point – unless or until most brokerages require their agents to become members.)
My experience has proved to me that until all of us seriously subscribe to ethical standards that protect buyers and sellers and those who represent them, our reputation will remain tarnished for that reason alone.
There needs to be an enforceable code of ethics for real estate practitioners in New York City. Individuals who violate the code must be reprimanded, fined, have their affiliations terminated and their names, published or some combination of those penalties.
Don’t you agree that it is high time we brokers cultivated – and deserved – the respect that most real estate agents and brokers are due?
Years ago, I covered for the Associated Press a momentous cheating scandal at West Point that pivoted on the honor code, which states with sublime simplicity:
A cadet will not lie, cheat or steal, or tolerate those who do.
Sounds pretty good to me. So does – I hesitate to put it this way – the Golden Rule.
In the end, though, the only rule that makes any sense is the one that rests on brokers complying with the law. If brokers fail to protect their clients’ best interests, consumers and other brokers must have a well-publicized way to lodge a complaint, have it seriously addressed and know that offenders will have severe penalties imposed on them.
Otherwise, when it comes to ethics in New York City, we are doomed to continue living and operating in the Wild West.
Note: Totally different for this blog, the latest issue of the newsletter that I write on alternate Fridays is now available. It’s a digest of news about the U.S and New York housing markets, the mortgage business, celebrity sales and purchases, household tips and prognostications. You may want to check it out.
Licensed Associate Real Estate Broker
Senior Vice President
Charles Rutenberg Realty
127 E. 56th Street
New York, NY 10022