When is Enough, Enough? Ethics Concerns

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Real Estate Agent with Rocky Mountain Real Estate

Any real estate agent that has been in the business for multiple years has inevitably gone through the following situation, or something similar.  I'm just curious what you would do in this scenario.

I had a newer agent in my office come to me with a concern the other day.  He had just cancelled a luxury listing that he had been trying to sell for a couple of months.  The owners were going through a divorce, and are within months of losing the home.  This agent tried and tried to get them started down the lonely road of short sale, but they would not cooperate.

Long story short, he gets an email from them saying they no longer need his services, so he cancels the listing, no questions asked.  A few days later he realizes that the new agent that listed it had accessed the home just 2 days prior to her taking over the listing.  After speaking to the husband, he finds out that the agent that took over the listing had contacted them and told them she was a short sale expert, and that if they needed her services she was happy to help.  Yep, a total violation of the code of ethics!!!!  She now has the property listed $400,000 less than what they had it listed with our office.

But what advice do I give this poor guy.  Does he go through the time and energy of submitting an ethics claim, or does he just let it go.  He's between a rock and a hard spot in my eyes, because more than likely the claim will not result in any punishment, and will take away from time that he could be spending being productive.  But if he doesn't this agent gets away with this, and might continue to practice this way. 

What would you guys do? 

What advice should I give this agent?

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Rainer
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Ron Parise
LocateHomes.com - Cape Coral, FL
Thank You,  Jon. I find that I am usually alone in discussions like this. Its good to know there is someone else out there that puts the customer first. ....And John, the listing does not belong to the broker either, at least not exclusively...it belongs to the customer too.
Apr 30, 2008 10:03 PM #39
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Margaret Woda
Long & Foster Real Estate, Inc. - Crofton, MD
Maryland Real Estate & Military Relocation
Welcome to real estate - life in the trenches.  This may be the first, but it probably won't be the last "bad" experience your new agent has out there in the cold hard world of real estate.   In theory - yes, file a complaint.  In practice, the agent's energy would be better spent doing something productive. 
Apr 30, 2008 10:49 PM #40
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Wayne B. Pruner
Oregon First - Tigard, OR
Tigard Oregon Homes for Sale, Realtor, GRI

It does sound like there are grounds for an ethics complaint. The out come would be less certain. On the flip side: A new agent, a short sale situation, a pending divorce, and a $400,000 price reduction! I dunno. Maybe this agent was in a little over his head. On balance, it's one of those learning experiences we all go through. He had no discussion on why they wanted to cancel. Maybe he was not feeling so great about this listing after all.

You have started a very good conversation here. Thanks.

Apr 30, 2008 11:29 PM #41
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Cami Pinsak
Keller Williams Realty - Camarillo, CA
Regardless of the terms of the cancellation, if another agent approached the homeowners when the home was listed with someone else, it is a violation and it should be reported.  Yes, one report may not result in any kind of punishment.  However, if the agent receives more, they will start to add up.  I would suggest that he file a complaint.  Why should some people get an advantage by breaking the rules, while we all try to adhere to the ethical guidelines set out for our profession?
Apr 30, 2008 11:53 PM #42
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Jon Zolsky, Daytona Beach, FL
Daytona Condo Realty, 386-405-4408 - Daytona Beach, FL
Selling Daytona paradise for heavenly good prices

Cami,

Just a note. These guidelines are NOT set out for our profession, better say they are not professional guidelines.

Professional guidelines are set by the State Law. If I remember it correctly, the State licenses you.

The guidelines you are talking about are set by NAR, which is a professional association. Why we tend to forget that being with the Association is a matter of choice (often forced, though) is not clear to me, but you clearly make an assumption that COE is a professional standard, while it is more a Union standard. And before proud Realtors start screaming, let me ask you - Where is the customer? The customer voted by terminating the agreement. What doyou want to do? Tell him that he is married to the agent they are not happy with?

Is that ethical?

You spent money on them, and you have it in the Listing agreement, so charge the Seller and learn a lesson.

When this happens to us, we do not charge. It is a cost of learning. Would't you feel ashamed to miss the mark by $400K?

May 01, 2008 12:52 AM #43
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Terri Hayley
Plantation and Coventry Homes - Dallas, TX

We had a situation recently that was pretty unbelievable. It was a short sale and we represented the seller and another agent represented the buyer. It was a very long process and throughout the process this agent kept in contact with us on the premise of updating his buyer and representing the buyer. We later find out the agent is in fact a loan officer. So, we think, ok the agent has dual purposes here. The tenant in the home has been in contact with the buyer, is a Realtor, has been advising the buyer, and has not been paying rent as he's aware of the impending transaction. Finally, after months and months, the home finally closes. Then, the "agent" calls the buyer and tells them that he's not actually an agent at all - he's really only a lender. The buyer is a cash buyer and even though we're technically closed, says that they are unable to fund the transaction until they have representation - which was offered to the buyer. The buyer hires the tenant who's been in the seller's home not paying rent. If the seller wants to close and fund on the transaction now, the seller has to pay the non rent paying tenant a commission for being involved in the transaction for 45 minutes.

Trying to keep a long story short. So, after it was all complete, we talked to our legal advice team and they've advised us to gather all e-mails, notes made, conversation recaps, any kinds of documentation we have and they are going to take it to the governing body. That's a situation in which ethics were involved and what we're doing. I know part of it's more cut and dry in this case, but it's still an ethics situation.

My dad, whose a pretty smart guy, told me that you just want to leave documentation in people's files who are like this. It's like barnacles they carry around with them in their careers and everywhere they go, they have to explain their behavior.

Hope it helps. :)

 

 

May 01, 2008 09:24 AM #44
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Ben Myers
Rocky Mountain Real Estate - Meridian, ID
Broker, GRI, SRES, Boise, Idaho

LaNita - It is a lot about principal here.  I agree.  Thanks for the support.

Lynda - There is a large difference between a real estate agent, and a REALTOR(R).  REALTORS willingly belong to the National Association of Realtors, an organization that has a written Code of Ethics that every member agrees to abide by.  Great point, there is a HUGE difference.

Betty - I see.  I think you have a great point.  It would seperate the serious sellers from the ones wanting to test the market.  Thanks!

Buddy - Thanks for the supportive words.

John - Your exactly right, the broker will deal with this behind the scenes, and the agent needs to move forward and focus on present and future business.

Rick - We've let this kind of activity go on and tarnish our industry for way so long, that some think its o.k. to practice this way.

Jennifer - I applaude your ethics in your situation.  I hope you ended up getting the listing!

Margaret - I agree with you, but if we all take the passive stance, these unethical practices will continue.

Wayne - The agent is very intelligent, and very business savvy.  I think sometimes we hear newer agent and assume, and sometimes rightfully so, that they are incapable.  In this situation he handled it the right way.  I see your point though definitely.  Sometimes letting a listing go can be very beneficial.

Cami - Great point.  There should be no advantage gained for unethical business practices.

Terri - Sounds like a mess!  Good luck, and I completely agree with what your dad said.  He does sound like a smart man!

 

May 01, 2008 12:06 PM #45
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Ben Myers
Rocky Mountain Real Estate - Meridian, ID
Broker, GRI, SRES, Boise, Idaho

Jon - I thought I better open a new comment, you've made a lot of points.  I have an issue with a few of them however.  It sounds to me like you feel you are being forced to be a member of NAR?  In my area, Boise, Idaho, it is a completely voluntary association.  If I did not want to be in it, I am not forced to.  That being said, I would not be entitled to some of the benefits that go along with being a member of that association, but it is my choice to be involved.  It sounds like you've had some bad experiences with Unions in the past, but I wouldn't really compare NAR to a Union.  I do believe there are some similarities, but to say NAR is a Union is way off base in my eyes.

Also, the agent did not miss the mark by $400,000.  He listed the property for what the sellers needed to net to not go short sale.  After a short trial he and the sellers realized that a short sale was there only route of getting the home sold.  His CMA did not advise the initial sales price.  Maybe not the best way of doing it.  But it is unfair to say he missed the mark by $400,000.

It sounds like you and Ron feel like an ethics claim against this agent is in some way not keeping the clients best interest in mind.  I understand that they made the ultimate decision to cancel the contract, and relist.  Thats not the point.  The point is how this other agent went about acquiring the listing.  And if in fact she contacted the client while they were in contract with my brokerage, she is in violation of the NAR Code of Ethics.

I don't believe that you have to be a member of the NAR to have access to the MLS.  At least in my area, they are two sole and seperate entities.

I agree with you that the client has a choice to change agents, but if they were being advised to do that by another agent, thats highly unethical.

I do appreciate your comments though!  Thanks!

May 01, 2008 12:30 PM #46
Anonymous
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Anonymous

Ben,

That agent does not understand the "golden rule"  and to me violated the ethics of real estate.

May 01, 2008 01:14 PM #47
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Katherine Anderson
Coldwell Banker Hobin Realty, LLC - Hampton & Rye, NH, USA - Exeter, NH
Managing Broker
Yeah, I've seen similar things happen.  We would never just let a seller out of a listing so easily though.  If we do release a seller, it's conditional.  We cover our bases.  Our agents don't have the authority to release a listing.  They must come to a managing broker.  They said, I believe in filing complaints.  I feel that this type of behavior is overlooked far too often. 
May 01, 2008 01:31 PM #48
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Bill Gillhespy
16 Sunview Blvd - Fort Myers Beach, FL
Fort Myers Beach Realtor, Fort Myers Beach Agent - Homes & Condos
Need to get the brokers into the discussion.  Then a conference call to the seller to verify.
May 01, 2008 02:02 PM #49
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Jon Zolsky, Daytona Beach, FL
Daytona Condo Realty, 386-405-4408 - Daytona Beach, FL
Selling Daytona paradise for heavenly good prices

Ben,

There are some areas that tie MLS access to membership, and some that don't. There was a discussion a few months ago, and it was funny, that many agents were very surprised that it could be not tied (including me), like in your area, and many agents were very surprised that it is tied, like in other areas. Everyone assumed that their model is national, and it wasn't.

As to the similarities and differences between the Association and Union, I will not argue. I am not a guru.

This is not to defend the other agent, this is more an attempt to see the Seller's side. He sign something hoping that everything would be going as expected, and it did not. When things turn sour, people get unhappy, and they can try to change the course.

The overwhelming majority are very harsh to the Seller, even though they do not even think about the Seller.

Please, understand that the unhappy Seller would himself be going around and talking to people, and there will be friends and relatives, who would try to hook him with somebody, and ask their agent-friends to help, it is not easy.

But being harsh to the agent, we forget about the Seller. 

 

May 01, 2008 04:22 PM #50
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Ben Myers
Rocky Mountain Real Estate - Meridian, ID
Broker, GRI, SRES, Boise, Idaho

Mary - Elegantly said.  I'm in total agreement.

Katherine - In my area, the Seller Representation conctracts are unilateral, so either side can cancel at any time.  With the sellers being as uncooperative as they were, the agent from my office wasn't really heartbroken that they wanted to cancel.

Bill - I think your approach is the best "next step" that should be taken.

Jon - I am one of those that thought MLS and NAR were not linked.  I do find it interesting that they are.  In that instance I can understand your thoughts about being "tied" to NAR, but from my experience NAR works very diligently to make sure that our best interests are being met.  I applaude them for the time and effort they put in on our behalf.  I think the fact that it is voluntary to be a member in a lot of areas, and they still have such a large membership is evidence that the do a very good job for us.

I agree with you that an unhappy seller has the right to cancel their listing contract, and even approach other agents to provide services for them, but in this case, from the information that I've recieved, the other agent contacted them.  That is where the ethics violation occurred.  If the sellers contacted the agent, no violation would have been made.

May 01, 2008 04:45 PM #51
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Kate Elim
Dockside Realty - Spotsylvania, VA
Realtor 540-226-1964, Selling Homes & Land at LA

Ben...File an ethics comlaint. 

I serve and have been serving on a Grievance Committee in Virginia for several years.  We have the privilege and duty to police our profession.  Therefore we must do so when we see the Code being broken. 

As far as the Seller, it does not benefit them to deal with an unethical agent.  I do not want to deal with an unethical lawyer or doctor just because it might save me money.  If they are going to be unethical with someone else what would prevent them from being that way with me.  Perhaps Ron and Jon should consider that.

Interesting and important post.

Kathleen

May 02, 2008 12:36 AM #52
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Todd Clark
Keller Williams Realty - Beaverton, OR
Broker - Beaverton, Oregon Real Estate Expert - (503) 524-9494

File the complaint! There is a possibility that this person just had a business card that said she was a short sale expert and they called or e-mailed her. But, if she did do what happened, she needs to be fined so it doesn't happen again.

May 04, 2008 12:14 AM #53
Rainer
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Darleen McCullen
Raleigh, NC
Broker - Raleigh, NC Real Estate

Ben ~ Most definitely report it as an ethics violation! She should not have been soliciting someeone else's listing.

Who knows, your local Board may even charge this unethical agent a FINE - which would get her attention. Money talks! Best wishes to your agent.

May 04, 2008 11:05 AM #54
Anonymous
Anonymous
Anonymous

Ben, I agree with so many of the statements above:  namely -- if this person is not hit where it hurts most, their pocketbook and hopefully, embarrassment from being known as being unethical, then they will never learn nor will others learn from her mistakes.  To be labeled unethical just makes me cringe, I would hate to have something like that pinned on me and proven to be true, how would anyone trust me again?  I say file it, its worth the time and the Broker should get involved as well.  Great post and situation to bring to light.  Thanks for sharing.

May 04, 2008 01:55 PM #55
Rainer
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Bill Schwent
Casa Tierra Realty - Santa Fe, NM
Santa Fe Broker

Ben,

The majority seem to agree that an ethics complaint sould be filed.  However, remember that you must prove your case.  From the scenario you have given, the testimony from the seller would appear to be paramount for you to prevail.  Your argument must be "clear, strong and convincing".  Otherwise, it's a "he said; she said" argument.  If the property is stilll for sale and the seller is happy with the new agent, it is unlikely that the seller would agree to testify at the hearing.  Also, since the seller has lots of other pressures on them, they may not be receptive to getting involved in what they may perceive to be a Realtor problem. 

And bear in mind that Darleen's comments are not accurate; you don't "report an ethics violation", you file a complaint.  A Board cannot fine an unethical agent, only the hearing panel can do that after hearing the testimony in a formal hearing.  That "due process" thing must be respected.

May 04, 2008 02:30 PM #56
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Frances C. Rokicki
Fran Rokicki Realty, LLC - Bolton, CT
Broker-Mentor,CRS

I'm in agreement with Bill S.  Is is worth the time and effort?  If they were not working well with him and taking his advice, why fight for them?  How do you know who to believe?  Would any Realtor really put themself at risk to jeopardize their career?  I would ponder that question. How would you know who contacted who?  Why assume that the wrong thing was done? If you can, have the new listing broker talk with your broker.  You may feel better when you hear their side of the scenario.

It's a Good Life!

Fran

 

May 04, 2008 03:22 PM #57
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Jim Crawford
RE/MAX Paramount Properties - Atlanta, GA
Jim Crawford Atlanta Realtor - Atlanta Real Estate
Ethics complaint would be best, but the next course of action may just be "NEXT!"
May 04, 2008 05:35 PM #58
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Ben Myers

Broker, GRI, SRES, Boise, Idaho
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