For the past 100 years, the National Association of REALTORS®’ Code of Ethics has remained a reliable guide for REALTOR® professionalism—and overall, REALTORS® do a good job of following it, say association executives, professional standards administrators, and trainers around the country. But what can be done to maintain or improve professionalism moving forward into the Code’s second century?
“Right now, no one objectively knows whether REALTOR® professionalism is getting better or worse,” says Ted Loring, a California REALTOR® who serves on the Interpretation and Procedures Advisory Board for NAR’s Professional Standards Committee.
Rather than seeing a rise in the number or severity of complaints, experts pointed to a new challenge: changes in the types of complaints being made due to shifts in the real estate market.
For example, Sue Flucke, president of the Arizona Association of REALTORS®, and Terry Tolman, chief staff executive of the REALTORS® Association of Maui, say that because more properties were rented in a slow market, the incidence of complaints associated with property management rose. Flucke and others also say the housing crisis triggered many complaints about the way brokers handled short sales.
Complaints often reflect REALTORS®’ inexperience, either with the profession in general or with a particular type of transaction. But other complaints, experts agree, reflect genuine moral lapses—REALTORS® responding to difficult situations with shortcuts they know to be wrong but hope to get away with.
Even though the complaint rate is low—and many credit ombudsmen and mediation programs for helping resolve minor issues before they escalate into formal complaints—there is always room for improvement.
Experts, along with AEs responding to RAE’s anonymous survey, suggest a variety of measures that might set higher standards for professionalism.
1. Promote the resources already in place.
“Use the bar, rather than raise the bar,” urges Hank Lerner, director of professional practice at the Pennsylvania Association of REALTORS®. “Guide agents to the resources that already exist so they can pick up the phone, call the other agent and explain, ‘I’m not going to do this because the Code of Ethics says it’s not right.’ We need to emphasize that it’s everyone’s responsibility.”
Among the resources that an association could use to craft a professional standards page for its Web site are links to NAR’s “A Pathway to Professional Conduct: Respect Starts Here” video and brochure.* State and local associations created new and innovative ethics materials last year as part of NAR’s Code of Ethics centennial celebration. These ranged from ethics competitions to a newsletter series (view them online at realtor.org/coe100).
2. Improve the quality of professionalism training.
“Good trainers give case scenarios that relate to the agent,” Flucke says, “but some of them just read the Code. The areas with better training have better results.”
Bruce Aydt, one of the top real estate instructors in the country, says NAR’s initiative to break up its online Code of Ethics training videos into easily digestible 20- to 30-minute chunks is a welcome development. Aydt says in-person training should incorporate a variety of teaching methods—demonstrations, role-playing, quizzes, lectures, and case studies—to accommodate different learning styles.
Tolman recommends that training focus on specific issues that are problems—this would require associations to be proactive in surveying members and keeping track of complaints, whether formally filed or not.
In RAE’s professionalism survey, one AE suggested: “The Code and Standards of Practice needs to be published (and taught) with a second-column commentary written without legalese, in common, everyday English as is done in some study Bibles. The commentary needs to answer the reader’s questions of relevance of the Code: What does this mean to me? How does this apply to my business? How does this apply to my business relationships?”
The National Association does provide a 15-video collection that covers each article of the Code of Ethics (and more) in easy-to-understand language, online at realtor.org/codevideos.
Finding quality instruction is key to making professional-standards education stick. NAR provides a self-populated database of instructors at realtor.org/pstmrsrc.nsf.
3. Increase the frequency or length of training.
Currently, REALTORS® must complete training on the Code of Ethics every four years and take continuing education classes every year or two to retain their real estate license. “If I were king for a day,” says broker Mary Ann Bush, who has several decades of experience training REALTORS®, “I’d make that four to six hours every six months.”
In RAE’s professionalism survey, 28 percent of AEs said increasing education would raise professionalism. Find interactive training materials online at REALTOR.org.**
4. Increase fines for serious violations.
June Barlow, vice president and general counsel of the California Association of REALTORS®, says NAR’s decision to implement a California task force recommendation to increase the maximum fine for violations of the Code to $15,000, up from $5,000, sets the amount of the fine to a level REALTORS® won’t regard as simply a cost of doing business. The $15,000 maximum fine took effect Jan. 1, 2014, but it may not be assessed unless the violation occurred in 2014. In other words, if the infraction occurred in 2013 but the hearing is held in 2014, the maximum fine allowed would be limited to $5,000.
In RAE’s professionalism survey, one AE said: “Too often, unethical behavior is rewarded by increased income to the member, while those who do complain find themselves wondering why they should behave. Making bad behavior really costly would be beneficial.”
5. Publish the names of violators.
The California task force also recommended allowing local associations to publish to their members the names of REALTORS® who receive any punishment beyond a reprimand. (Currently, only suspended or expelled respondents’ names may be published, unless a local board voluntarily opts to publish the names of respondents found in violation of the Code a second time within three years; consistent with Professional Standards Policy Statement No. 45.) The threat of publication would serve as a deterrent, Barlow believes. In addition, she says, “for those reluctant to turn in someone, it shows that something clearly does happen.” The task force also said details of the violation should be included in the publication—which would help other members learn exactly what is prohibited.
At the same time that NAR increased the maximum fine, it clarified other administrative issues. For instance, only individuals (and not corporations or other business entities) may file an ethics complaint, and complaints cannot be brought in the name of third parties.
In RAE’s professionalism survey, one AE said: “The anonymous nature of the COE enforcement process creates the impression that nothing happens and no one is held accountable. The fact that it’s optional whether or not to publish names means very few associations will publish the names of offenders, which keeps the problem in place. Members are reluctant to file against one another since they expect retaliation for what they do, saying, ‘I have to work with these people.’ Most members are ethical but unwilling to stand up to the bad apples.”
6. Create statewide databases of disciplinary actions.
The same California task force recommended statewide databases that would facilitate the search of REALTORS®’ disciplinary records. Loring says consolidating data would help weed out any offenders who move from one locality to another and would also provide information about trends in violations.
In May 2013, NAR approved changes to the Code of Ethics and Arbitration Manual to clarify that hearing panels may include information about a member’s prior violations in its decision, and that the panel must consider previous violations of the Code when determining discipline.
7. Encourage REALTORS® to “live the Code.”
In a proposal Loring made that is under discussion by the Professional Standards Committee, he suggested periodic surveys and tests to study how REALTORS® implement the Code of Ethics in their business practices. Current tests, he said, ask routine questions (“Can you specify gender or race in advertising?”). More useful surveys or tests would ask open-ended questions about complex situations, eliciting information about REALTORS®’ propensity for ethical problem-solving. He explained, “If it’s successful, and it makes education more effective, then the ability of REALTORS® to serve their clients ethically would increase. That’s a huge win for the industry and the public.”
8. Encourage brokers to improve agent supervision.
In RAE’s professionalism survey, one AE said: “Brokers need to enhance supervision of agents and hold them accountable for their conduct. Principal brokers and office managers must be better trained in the supervision of agents and provide more training in real estate best practices and etiquette.” Another AE wrote: “Technology has taken away the broker mentoring from the equation. There are fewer office meetings for the REALTOR® spirit to be communicated.”
9. Increase the requirements for REALTOR® membership.
“The only way to increase professionalism in our membership is to raise the standards for being a REALTOR®,” said one AE in RAE’s professionalism survey. “We will take anyone as a member and we almost never kick anyone out. As long as we’d rather have more members than raise the standards for being a member, nothing will change.”
Another survey respondent added: “With the inability to deny membership and take everyone regardless of history, our result is a large population of members that just do not care to do the right thing. Our true professionals are around 20 percent at most.”
10. Make filing complaints faster and easier.
By far, the most common idea presented by AEs in RAE’s survey focused on improving and promoting the complaint process. Here are some views and ideas:
- “We need to do a better job of letting our members know they can file ethics complaints and how they can do this.”
- “The process to file a complaint is tedious, confusing, and time-consuming to our members. Most of our members don’t understand the process and they want things resolved and handled quickly. It takes too much time, so they say, ‘Forget it’ and move on.”
- “Members feel that filling out the complaint is too much work for a little slap on the hand.” How to File an Ethics Complaint can be found at: realtor.org/code-of-ethics/brochure-before-you-file-an-ethics-complaint.
- To adopt procedures to mediate potentially unethical conduct go to: realtor.org/ae/manage-your-association/association-policy/ethics-mediation.
* View online at realtor.org/articles/a-pathway-to-professional-conduct-respect-starts-here.