Competence & Ethics of Santa Cruz Realtors
November 02, 2008
A few months back, I got a letter in the mail from the Santa Cruz Association of Realtors. It seems that in order to remain a member in good standing of the Association, I need to complete the Quadrennial Ethics Training Course – it is a course that every Realtor must take and pass every four years. The course material revolves around the vaunted Realtor Code of Ethics. It took me a couple of hours to complete the course, and I passed, with a score of 84% (the minimum score is 75%). Hmm, I hope that doesn’t make you think I’m not 100% ethical!
My perception of the public’s perception of Realtors is that the public does not think too highly of my profession. For example, now that housing prices have crashed in many parts of the country (and Santa Cruz is no exception!), many fingers are pointing at Realtors for behaving unethically – by, perhaps, stating as “fact” things like, “housing prices never go down” or “your house is guaranteed to appreciate” or “if you can’t afford the payments, you can always sell and make some money.”
Is it unethical to make statements like that? Actually, I don’t see anything in the Standards of Practice set out in the Code that would prohibit making such statements. However, the Preamble does says Realtor® members should:
eliminate practices which may damage the public or which might discredit or bring dishonor to the real estate profession
Do you think that maybe, some members of the public were damaged by making unsupportable claims such as the ones I mentioned above? It looks to me like making such claims is not a violation of the Standards of Practice and therefore no action could be taken against Realtors for making such statements, however, telling your client these kinds of things clearly goes against the spirit of the Code of Ethics as set forth in the Preamble.
Aside from the public perception that that some (or many!) Realtors may be unethical, there is also a perception that many Realtors are, simply, incompetent. I’m going to confess to something which I perhaps ought not: I share that perception to some degree. In my own real estate dealings, I have found few agents which I would call unethical – but many, to be honest, have demonstrated frighteningly little competence. That is, perhaps, not surprising given the low barrier of entry into the real estate profession.
However, this creates something of a paradox – the fact that it’s easy to become a Realtor, anyone can join so long as they are a real estate licensee – yet, per the code of Ethics:
The services which REALTORS® provide to their clients and customers shall conform to the standards of practice and competence which are reasonably expected in the specific real estate disciplines in which they engage; specifically, residential real estate brokerage…
I am not quite sure how one becomes competent in the field of real estate short of actually practicing it – and practicing it means, in almost all cases, becoming a Realtor. The truth of the matter is, the training for a California Real Estate license is very basic, and in fact, has little to do with the actual practice of real estate, despite the fact that one of the core courses is Real Estate Practice.
For example, one of the key documents we Realtors use is the California Residential Purchase Agreement (RPA-CA). It’s eight pages long, and it is the document most often used in the purchase of Residential Real Estate in California. It is a bit complicated and somewhat involved – however, understanding how it works is not a requirement to get a real estate license, or to become a Realtor.
Ironically, there is no violation of the Standards of Practice if it is “reasonably expected” that Realtor members are clueless about the various forms and documents they use for their day to day business. Of course, another brutal truth is, most Realtors have no day-to-day business – they have week-to-week, or month-to-month: there just are not enough transactions to go around which can support a Realtor community as large as we have here in Santa Cruz, even considering our recently diminished numbers.
I find it admirable (as I hope you do, too) that the National Association of Realtors requires that members take this training course every four years. I found the course to be a good bit above average compared with other on-line, distance-based educational courses I have taken this year.
However, no Code of Ethics, in my opinion, can take the place of educating yourself about your Realtors’ background, skills, education, and qualifications. After all, buying or selling real estate in California is a transaction that typically involves hundreds of thousands of dollars. I strongly advise that before you write up that listing or purchase agreement, you make sure you know who it is you are dealing with, such that you are sure they know what they are doing.
Posted by SantaCruzBroker at 12:36pm
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Home Buying Philosophy in Santa Cruz
August 07, 2008
Yesterday, I popped on down to Keller Williams Real Estate in Santa Cruz for another of their freebie, and generally excellent, training sessions. To my delight, I found that one of my former colleagues from Thunderbird, Kari Kelly, had joined Keller Williams (after a multi-year stint at Vanguard Realtors). Kari’s a great lady, and it was nice to chat with with and catch up. She’s only been at Keller Williams for three weeks, but seems to be enjoying it tremendously.
The topic of the day’s training was “Creating Urgency to Buy.” I personally don’t have a problem with creating urgency to buy – I think that by now, most people can see the writing on the wall – if you want to buy some real estate in Santa Cruz, now is a fine time. Yes, prices may continue to fall over the next year, but there are plenty of opportunities to buy “below full market value” that you can insulate yourself against the coming price declines. The thing is, you’ll never know when, exactly, we’re at the bottom, and by the time we do hit bottom and start coming up on the other side, it’ll be more of a seller’s market and the deals won’t be so easy to come across.
Over at Keller Williams, they teach you that really, you should only show a buyer three properties. That’s incredible. The idea is that you do such a good job interviewing the client and finding out what they really want, you can save everyone a lot of time by only showing them properties that they have a good chance of actually buying.
Interesting idea. My question is, with that philosophy: do you ever show a short sale? I mean, let’s face it – most short sales are a waste of time. More than half (probably about 75%) of short sales go nowhere. The reality is, you don’t have a good chance of actually buying a short sale – not the average one, anyway. Yes, I know, some short sale listing agents are very good and have a “high” success rate – but most do not.
Personally, I hate showing short sales, because most of the time, it’s a waste of precious time, time that I will never get back, no matter what. But I’ll show ‘em anyway. After all, many a nice house is listed at an attractive price as a short sale, and some of them do pan out. And I’ll also show my clients more than three properties. I do encourage folks to drive by on their own, because most of these “well priced” properties turn out to be not so well priced when you discover there’s high tension power lines, or the neighbor has his front yard littered with broken down cars, or the odor from the sewage treatment plant is just a tad too ripe.
Don’t get me wrong, I’d like to show each buyer no more than three properties, because the Keller Williams people do have a point – there’s little point in showing property that you are fairly certain the client will not buy. The thing is though – this is a customer service business. If the client wants to see the inside of the property, and you are their agent – what do you do, just refuse? “Remember, Mr. Client, I will only show you three houses. So choose wisely.” I have a hard time with that. It’s saying, “I know what’s better for you than you do.”
Part of this strategy employs the use of Buyer Broker agreements – where you get the client to sign a contract saying you are their exclusive agent for buying a property in such-and-such a region between such-and-such dates. It’s kind of like forced loyalty – you have to stick with the agent, even if they don’t want to show you a property, because the plan is to show you no more than three.
I have tried getting people to sign Buyer Broker agreements – with no success. I didn’t try too hard, more of a trial balloon a few times, more than anything else, I suppose. Again, the Keller Williams folks make a good point: would you agree to sell someone’s house without a contract? No, of course not. So why would you agree to help someone buy a house without a contract with them?
Food for thought.
Posted by SantaCruzBroker at 5:55am
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From Santa Cruz to Vegas
May 22, 2008
I’m goin’ to Vegas. And no, I didn’t just win the Superbowl, but at times it feels like I did. Other times, it feels like I’ve just been pushed under a bus. Such is the real estate bidness.
I’m going to come right out and admit it: I love Las Vegas. Las Vegas is one of those really polarizing town – you either hate it, or you love it. I have yet to meet anyone who told me, “I feel kind of lukewarm about Las Vegas.” That town seems to bring out some really visceral reactions in people.
As it happens, I’m not going there to have a good time, although I may, in spite of what’s on the agenda. I’m going there to attend a couple of seminars – two in the same week! One seminar is so I can get started on getting my CRS Designation. I’m a great believer in Realtor designations – those are the strings of letters you often see after Realtor’s names: Joe Blow, Realtor, GRI, ABR, SRES. Sound familiar? I have two Realtor designations – GRI (Graduate of the Realtor Institute) and e-Pro (”e-Professional”).
Why do I believe in getting designations, especially since hardly anyone outside the business knows what they mean? For several reasons. One reason is that there is very little training and education that is required for Realtors, really. The barrier of entry is just so low into this profession, all kinds of hacks and wannabes fill our ranks. Getting designations is just one little way to differentiate yourself – at a glance – from the rest of the crowd. Another reason is that I actually care about being knowledgeable and professional, and a little education and training never hurts. And, while I said that hardly anyone outside the real estate profession knows what those designations mean, many of my colleagues in the industry (especially experienced, long-serving Realtors) do know what those mean, and when you see an offer coming in from someone with, say, a CRS designation, you kind of know that this person is likely to have something of a clue as to how the business actually works.
I actually have another designation, too, but it’s not a Realtor® designation. I’m an RDCPro – a Residential Default Certified Professional; in other words, I’m a certified “expert” in REO (”real estate owned” – bank-owned foreclosure property). And that brings me to the other seminar happening in Vegas the week I’m going.
There’s a super-secret, invitation-only, one-day conference going on. Actually, I didn’t get invited, sniff. But I heard about it, and I wrote in and asked to be invited, and they sent me an invitation. I also invited one of my colleagues, who is bound and determined to break into the REO business. This super-secret REO conference is to last just a single day, right smack in the middle of the CRS seminars. So I’ll do one two-day CRS seminar, take a day off to play in Vegas, then do this REO seminar, and then two more days of CRS seminars…and then on Sunday, I’ll fly home.
It’s going to be pretty punishing. Not the seminars, not Las Vegas – no no. It’s going to be punishing staying away from my business right now, for a whole week, during the busiest time of year – how many deals will I lose? Also, when I come home, how much work will have piled up on my plate? I shudder to think. But, onward and upward – I am committed to being the highest caliber Realtor I can be, and if I have to go through Vegas on that journey, well that’s just as well. I’ll be out of town from June 8 to June 15 – I’ll bring a laptop with me, of course, and my cell phone – I’ll be out of town, but not out of touch.
Posted by SantaCruzBroker at 8:04am
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