Benefit From Knowing the ‘Realtor Advantage’

As you probably know, not all licensed real estate agents are “Realtors.” To be a Realtor, one has to be a dues-paying member of a local Realtor association, which automatically makes the agent a member of the state Realtor association and the National Association of Realtors (NAR).

Many low-producing real estate agents are reluctant to cough up roughly $500 per year in Realtor dues, so they join a non-Realtor brokerage like HomeSmart Realty in Greenwood Village or Trelora Colorado in downtown Denver. Agents with those firms can’t call themselves “Realtors.”

You’ve probably seen TV commercials by NAR saying “Make sure your agent is a Realtor.” Their current campaign features the theme, “That’s Who We R.” Both campaigns stress the point that only Realtors subscribe to the Realtor Code of Ethics. There is no code of ethics for non-Realtors.

In fact, however, violations of the Code, such as failure to disclose negative information about a listing or contacting another agent’s client directly, are also violations of state licensing laws. To me, the greater value of dealing with a Realtor like those of us at Golden Real Estate is our commitment to professionalism and to the industry, expressed in part by our willingness to pay those dues.

NAR’s lobbying on behalf of property rights benefits all agents as it does all property owners, and deserves the support of all licensees.

National Association of Realtors Promotes “Pathways to Professionalism”

As you are probably aware, members of the National Association of Realtors (NAR) are sworn to abide by the Realtor Code of Ethics. It’s what separates them from the men and women who are licensed to practice real estate but choose not to pay roughly $500 in annual dues to be a member of the local, state and national Realtor associations.

Golden Real Estate requires all its broker associates to join the local Realtor association, which automatically enrolls them in the Colorado Association of Realtors and NAR. Most of us are members of the Denver Metro Association of Realtors, although agents have the choice of which local Realtor association to join.

In addition to the Code of Ethics is the voluntary and lesser known Pathways to Professionalism. It is a collection of recommended courtesies which all Realtors should embrace, as we certainly do at Golden Real Estate. Here are those courtesies, broken down into three categories. It should be noted that failure to practice these courtesies cannot form the basis of a complaint by fellow Realtors or members of the public. Here they are, highlighting ones I particularly like:

Respect for the Public

1) Follow the “Golden Rule”: Do unto other as you would have them do unto you.

2) Respond promptly to inquiries and requests for information.

3) Schedule appointments and showings as far in advance as possible.

4) Call if you are delayed or must cancel an appointment or showing.

5) If a prospective buyer decides not to view an occupied home, promptly explain the situation to the listing broker or the occupant.

6) Communicate with all parties in a timely fashion.

7) When entering a property ensure that unexpected situations, such as pets, are handled appropriately.

8) Leave your business card if not prohibited by local rules.

9) Never criticize property in the presence of the occupant.

10) Inform occupants that you are leaving after showings.

11) When showing an occupied home, always ring the doorbell or knock—and announce yourself loudly before entering. Knock and announce yourself loudly before entering any closed room.

12) Present a professional appearance at all times; dress appropriately and drive a clean car.

13) If occupants are home during showings, ask their permission before using the telephone or bathroom.

14) Encourage the clients of other brokers to direct questions to their agent or representative.

15) Communicate clearly; don’t use jargon or slang that may not be readily understood.

16) Be aware of and respect cultural differences.

17) Show courtesy and respect to everyone.

18) Be aware of—and meet—all deadlines.

19) Promise only what you can deliver — and keep your promises.

20) Identify your REALTOR® and your professional status in contacts with the public.

21) Do not tell people what you think — tell them what you know.

Respect for Property

1) Be responsible for everyone you allow to enter a listed property.

2) Never allow buyers to enter a listed property unaccompanied.

3) When showing a property, keep all members of the group together.

4) Never allow unaccompanied access to a property without permission.

5) Enter a property only with permission even if you have a lockbox key or combination.

6) When the occupant is absent, leave the property as you found it (lights, heating, cooling, drapes, etc.) If you think something is amiss (e.g., vandalism), contact the listing broker immediately.

7) Be considerate of the seller’s property. Do not allow anyone to eat, drink, smoke, dispose of trash, use bathing or sleeping facilities, or bring pets. Leave the house as you found it unless instructed otherwise.

8) Use sidewalks; if weather is bad, take off shoes and boots inside property.

9) Respect sellers’ instructions about photographing or videographing their properties’ interiors or exteriors.

Respect for Peers

1) Identify your REALTOR® and professional status in all contacts with other REALTORS®.

2) Respond to other agents’ calls, faxes, and emails promptly and courteously.

3) Be aware that large electronic files with attachments or lengthy faxes may be a burden on recipients.

4) Notify the listing broker if there appears to be inaccurate information on the listing.

5) Share important information about a property, including the presence of pets, security systems, and whether sellers will be present during the showing.

6) Show courtesy, trust, and respect to other real estate professionals.

7) Avoid the inappropriate use of endearments or other denigrating language.

8) Do not prospect at other REALTORS®’ open houses or similar events.

9) Return keys promptly.

10) Carefully replace keys in the lockbox after showings.

11) To be successful in the business, mutual respect is essential.

12) Real estate is a reputation business. What you do today may affect your reputation — and business — for years to come.

Agents Who Submit ‘Love Letters’ Risk Committing a Fair Housing Violation

Until recently it was a common practice for buyers’ agents to submit a “love letter” with their offers, hoping to convince the seller to choose their buyer over others in a bidding war.

That practice has fallen out of favor, however, as doing so might constitute a violation of federal Fair Housing rules as well as of the Realtor Code of Ethics.

Article 10 of the Code includes the following: “Realtors shall not be parties to any plan or agreement to discriminate against a person or persons on the basis of race, color, religion, sex, handicap, familial status, national origin, sexual orientation, or gender identity.” Such discrimination is also a state and federal fair housing crime.

It would be hard not to reveal any of the above characteristics in a “love letter,” especially if it contains a photo of the buyer or buyer’s family. But there are other subtleties to consider. One of the sessions at last month’s National Association of Realtors conference was titled, “How to Stay Out of Trouble: Risk Management and the Code of Ethics,” taught by Barbara Betts, a California Realtor who is also a hearing officer for violations of the Code of Ethics.

In her talk, as reported by Inman News, Betts described how risky such letters could be, especially for the seller and listing agent. “Sellers are humans. Even though they are not purposely trying to create a fair housing situation for themselves, they inadvertently are,” she said. “When the seller gets these letters, they get excited to sell the home to someone they feel will fit into their neighborhood, and that’s where there’s a problem.”

The danger is intensified when there are competing love letters. Imagine, for example, that one of the buyers reveals himself to be a single African American who says your home is perfect for him because he is wheelchair-bound, but your seller chose a family with children who liked your home because it’s close to their synagogue. That choice has offered a veritable smorgasbord of fair housing violations that the rejected buyer could mention in a fair housing complaint, and that their broker could cite in a Code of Ethics complaint against the listing agent.

“We need to consider raising fair housing concerns with our buyers,” Betts advises her fellow Realtors. “Don’t read or accept these letters that are drafted by a buyer. Certainly do not give any support or suggestions. As listing agents, we definitely need to discuss the potential liability during the listing interview and not deliver or accept these letters for the seller.”

Betts added, “If the letter is all about ‘I love your home. It’s beautiful. I love how you’ve remodeled it, I promise I won’t tear it down and remodel it,’ there aren’t any fair housing violations in those statements. The second you start talking about family, color, race, religion, marital status, those things instantly become possible fair housing violations.”

For all these reasons, the agents at Golden Real Estate no longer submit or accept “love letters” from buyers. If we receive one, it’s best that we don’t even read it and that we inform the buyer’s agent that we have deleted it.

There are other ways in which Realtors can commit a fair housing violation, perhaps unconsciously. One is the practice known as “steering,” in which an agent recommends different neighborhoods to different buyers based on where they would “fit in” because of their race, color or religion. We must truly be blind to such characteristics and give the same information to all buyers. Fortunately, buyers do their own searching most of the time. As agents, we must show any buyer what they want to see without comment of any kind.

When a buyer from out of town asks us to describe our neighborhoods, it’s best to avoid all demographic descriptions, limiting ourselves to describing the housing stock, price range, etc. We must not provide such information with an intention to steer them based on their profile.

Meanwhile, sellers expect us to show their homes only to qualified buyers, but if we ask some buyers but not others to be pre-qualified by a trusted lender before showing a listing, we open ourselves to possible fair housing complaints.

We’d all like to believe that racism and other kinds of systemic or cultural discrimination are artifacts of the past, but we are more aware than ever that such discrimination exists even within ourselves, hopefully unconsciously. Unconscious or not, we need to realize that beyond being morally wrong, it can get us into serious professional trouble as agents and that it can also put our clients at risk, making it more important than ever that we educate our clients about the risks they could be facing.

Realtor Code of Ethics to Address Hate Speech

A couple weeks back, I wrote about how the National Association of Realtors is taking fair housing seriously. This week I read in an email newsletter that NAR is proposing changes to its Code of Ethics and professional standards to crack down on racist and discriminatory speech and behavior.

If implemented, the changes would apply NAR’s Code of Ethics and Standards of Practice to all activities, not just those related to real estate, prohibiting hate speech against protected classes. Protected classes under the Code of Ethics include race, color, religion, sex, handicap, familial status, national origin, sexual orientation and gender identity.

Once these changes are adopted, the Code would prohibit all discrimination, not just willful discrimination, against protected classes and would recommend that ethics violations be considered under membership qualification criteria. Ethics violations could also be referred to governmental agencies for action.

 Discrimination would be deemed “particularly egregious” when determining appropriate discipline, which could include termination of membership for up to three years.

Real Estate Agents Have a Responsibility to Report Wrongdoing

As with many professions, we real estate professionals are largely, though not completely, self-policing. Indeed, in a recent continuing education class, we were taught that we have an “affirmative responsibility” to report wrongdoing by our colleagues, whether the offense is illegal, contrary to real estate commission or MLS rules, or, in the case of Realtors, is unethical.

(Many real estate agents belong to brokerages where membership in the Realtor association is not required, and only Realtors are bound by the Realtor Code of Ethics and can be disciplined for violating it. Ask if your broker is a Realtor.)

Of course, the public can also file complaints against licensees. You can do it online here or you can mail a complaint to the Division at 1560 Broadway, Suite 925, Denver CO 80202. You can ask to remain anonymous, but an investigator will call to interview you.

Unless a broker is independent, you can also complain to his brokerage. Ask to speak with the managing broker. If he’s a Realtor, you can file an ethics complaint with his Realtor association. Here’s a link for doing so online.

I have filed complaints about illegal behavior with the Division. I have also sent numerous emails to our MLS about violations of MLS rules and regulations — including last week when a listing agent listed himself instead of one of our broker associates as the selling agent for his listing. (Email compliance@REcolorado.com.) I have also filed ethics complaints against a fellow Realtor through my Realtor association.

By accepting that “affirmative responsibility” to report wrongdoing of any kind by fellow licensees and fellow Realtors, we protect and advance the reputation of our industry and of the Realtor brand. As managing broker at Golden Real Estate, I promote this responsibility, as I did at our weekly office meeting earlier this month.

Although some people like to demean real estate licensees and even Realtors, I have found that the vast majority of us are true professionals who put our clients’ interests above our own, as required by both law and ethics, and I am proud to be a member of this profession.

Thanksgiving’s Here, and We at Golden Real Estate Are Thankful

Some weeks I struggle to come up with a topic for this column, but not so this week. Allow me to share some of the ways in which our broker associates, my wife and I are all thankful.

First, Rita and I are so thankful to be Americans. In school I studied many languages — French, Russian, Latin, Greek, German and Japanese — and I have traveled extensively around the world, although not so much recently. I attended my sister’s wedding in Sweden, attended “citizen diplomacy” conferences in the Soviet Union, and visited Beijing right after the 1989 Tiananmen massacre (and twice since).

I have visited and marveled at Japan and its culture more than once. I visited the Russian port of Vladivostok (the terminus of the Trans-Siberian Railway) on the 50th anniversary of the end of World War II in the Pacific. I remember noting that pay phones there were free because Russian coins were essentially worthless due to inflation, and that most of the cars on the road were right-hand drive Toyotas and Nissans purchased used from nearby Japan.

Rita and I particularly like France and Italy and long to return there again soon. We enjoyed a week in London following a two-week Atlantic crossing on Cunard’s Queen Victoria with stops in  Bermuda and the Canary Islands. When and if I retire from real estate, we look forward to more international travel. 

Every trip is great, but we are always happy to be back in America and especially in Colorado. We are, as I said, thankful most of all to be Americans — and Coloradans.

Part of being an American is the opportunity to participate in our capitalist free enterprise system. I’ve always been an entrepreneur. I like to say that, except for my stints at the Washington Post and the New York Post, every paycheck I’ve ever received was signed by me. I remember when I visited the Soviet Union in 1978 learning that Russians could be self employed but only the state could have employees. I realized then that the freedom of enterprise was the core freedom I value most.

Nearly every real estate agent is self-employed, even if they work for a brokerage. I suspect that 95% or more of all Realtors are independent contractors (1099 workers) responsible for their own taxes and expenses (phones, cars, computers, software, etc.) and receive no benefits of any kind. The dropout rate among new agents is as high as 90% and those who make it five or more years have demonstrated a fortitude that deserves respect. I am thankful for Golden Real Estate’s seven top-producing, highly-experienced broker associates whose cell numbers I am pleased to list below.

Next I am thankful for the readers and other members of the public who recognize that we are professionals, not just entrepreneurs, and that we earn what we charge by providing an invaluable service for one of life’s most significant financial transactions. Not everyone sees our value or respects what we provide, so we thank you.

Not every licensed real estate agent is a Realtor — that is, a member of the Realtor association.  Everyone who joins a Realtor brokerage like ours must join the Realtor association and pay Realtor dues, which run about $500 per year. But there are non-Realtor brokerages such as HomeSmart Cherry Creek Properties, Redefy, and Trelora Colorado, whose agents don’t pay Realtor dues and don’t have to abide by the Realtor Code of Ethics. I’m thankful for all those firms, like ours, that have chosen to be Realtor brokerages.

Why? Because the National Association of Realtors (NAR) lobbies for your property rights, not just the interests of its members. For example, when the Trump administration tried to dilute the capital gains exemption for home owners ($250,000 single and $500,000 married), it was NAR which lobbied successfully against that change. I could cite countless other examples where NAR’s lobbying efforts have benefited home owners and all those agents who don’t pay NAR dues. To me it’s a matter of professional and corporate responsibility to support NAR with our dues. So, yes, I am thankful for NAR, even when I gripe about dues increases!

Like everyone in our profession, I have individual clients — buyers and sellers — for whose friendship and patronage I am grateful.  You know who you are! You have not only granted me the opportunity to be of service, but you have allowed me to learn new things from every transaction. Perhaps you have introduced me to a new service provider such as an estate sales company, a roofer or plumber, or just a great new restaurant! As I have said many times, judge us agents not by our years in the business but by the number of transactions we have completed, because that’s our most valuable continuing education program.

I’m also thankful for my colleagues from other brokerages. Real estate is different from many other professions because of the tradition of “cooperation and compensation” embodied in our shared multi-list service, aka “MLS.” Some people compare us to car salesmen, but consider the following scenario: You go to a Ford dealership and describe what you’re looking for. The salesman realizes that the right vehicle for you is not a Ford but another brand, so he shows you other cars on his computer and then takes you to those dealerships for a test drive, knowing that he can write the purchase contract and get paid for selling you another dealer’s car just as he can get paid for selling a car from his own dealership. That’s how real estate works, made possible by the MLS.

You’d be impressed to see how agents share the keys to their success with each other. I recall once when I made a presentation at a Realtor meeting on how to shoot and edit video tours of listings, happy to have others do videos for their listings, even though video tours are a point of differentiation for us at Golden Real Estate.

So I’m thankful for how the real estate business works and for the many Realtors whom I consider friends, not just competitors.  If I or one of my Golden Real Estate broker associates is not the perfect agent for a given buyer or seller, I don’t hesitate to recommend one of them.

Lastly, I’m thankful for the Denver Post and four Jefferson County weekly newspapers which publish this column. Remember, you can also receive it by email, so just send me an email with your request.  Several years of prior columns are online at JimSmithColumns.com.

Our Broker Associates:

Jim Swanson — 303-929-2727

Carrie Lovingier — 303-907-1278

Kristi Brunel — 303-525-2520

Chuck Brown — 303-885-7855

David Dlugasch — 303-908-4835

Andrew Lesko — 720-710-1000

Carol Milan — 720-982-4941

How Do You Know the Real Estate Agent You’re Interviewing Is Telling You the Truth?

This is a difficult topic, but it’s one that deserves discussion. As I’ve pointed out before, there are so many licensed real estate agents that fewer than half of them earn a living solely from brokering real estate transactions. (FYI, all ten Golden Real Estate agents are full-time, earning enough from their real estate careers not to require a second job.)

That means that the agent you are interviewing may feel lucky to have two or more transactions per year, and capturing you as a seller or buyer could be super important to him. This could cause him (or her) to exaggerate their level of success as well as their experience and market knowledge.

I can safely recommend every Golden Real Estate broker associate, not only because they are full-time and successful, but because they adhere to the Realtor Code of Ethics. I have let go previous associates when I observed or learned about ethical lapses. Unfortunately, all of us can recount times when we have observed ethical lapses by agents on the other side of a transaction.

The Pareto principle applies to real estate agents as it does to other occupations, with 20% of us doing 80% of the transactions.  And since the average real estate agent has only four closings per year, the median number of closings is probably closer to two. In other words, half of the licensed agents have two or fewer closings per year. That does not translate into a living wage.

In researching this topic, I googled the phrase “what does the average Realtor make,” and I urge you to do it, too — especially if you are considering real estate as a career.  It’s very discouraging.

A posting on www.TheStreet.com, for example, includes the following: “If you think you can just devote a few hours a week and make a nice income as a real estate agent, you are badly deluded. A national survey of agents and brokers who belong to the National Association of Realtors finds that agents who put in 60 hours or more a week have median earnings of $100,000 a year. By contrast, for those who put in less than 20 hours a week, the median is $8,930 a year.

    At Golden Real Estate we had about 100 transactions in both 2017 and 2018, or an average of 10 transactions per agent. We don’t need to mislead a buyer or seller regarding our level of experience and success. Also, we have weekly office meetings where we discuss all aspects of the business, often with guest speakers. We take the annual commission update class and the biennial Realtor Ethics class together in our office, so we’re all on the same page.

REcolorado.com, the Denver MLS, makes it easy to verify the level of experience of its members, and I have made it even easier by creating a shortcut URL, www.FindDenverRealtors.com, enabling you to search for an agent by name and not only see active and under contract listings but also their sold listings going back several years. Then you could click on a listing to see the quality and thoroughness of it.  That’s the best indicator of how well they’ll serve you.

One common mistruth told by agents is, “I have a buyer for your house.” All too often it’s a ruse to get your listing, after which they tell you that the buyer found another house, “but we’ll find you another buyer after it’s on the MLS.”

Another lie is “Our listing fee is 1%.” If you pause the end of that commercial (as I did), you’ll read that it doesn’t include the commission owed to a buyer’s agent (2.8% in our market), and if a buyer has no agent, the 1% fee is increased to 2%. Below is that freeze frame. The “fine print” is so small that I have transcribed it below the picture:

“Minimum commissions apply. 1% listing fee not available in all locations. Commission is subject to change. Buyer’s agent commission not included. For example, if the buyer’s agent commission is 2.5%, seller will pay a total commission of 3.5%. Listing commission increased by 1% of sales price if buyer is unrepresented.”

The Realtor Code of Ethics Exists to Protect You

You’ve probably seen the advertising, “Make Sure Your Agent Is a Realtor.” That’s because not all licensed real estate agents are members of the National Association of Realtors (NAR) and only members of NAR can call themselves “Realtors.” And only Realtors must swear obedience to the Realtor Code of Ethics and are required to take 4-hour biennial refresher classes about the Code.  (Note: All Golden Real Estate agents are Realtors.) The Realtor Code of Ethics has 17 articles that are divided into three categories. They are as follows.

DUTIES TO CLIENTS AND CUSTOMERS:

Article 1
Realtors protect and promote their clients’ interests while treating all parties honestly.

Article 2
Realtors refrain from exaggeration, misrepresentation, or concealment of pertinent facts related to property or transactions.

Article 3
Realtors cooperate with other real estate professionals to advance their clients’ best interests.

Article 4
When buying or selling on their own account or for their families or firms, Realtors make their true position or interest known.

Article 5
Realtors do not provide professional services where they have any present or contemplated interest in property without disclosing that interest to all affected parties.

Article 6
Realtors disclose any fee or financial benefit they may receive from recommending related real estate products or services.

Article 7
Realtors accept compensation from only one party, except where they make full disclosure to all parties and receive informed consent from their client.

Article 8
Realtors keep the funds of clients and customers in a separate escrow account.

Article 9
Realtors make sure that details of agreements are spelled out in writing whenever possible and that parties receive copies.

DUTIES TO THE PUBLIC:

Article 10
Realtors give equal professional service to all clients and customers irrespective of race, color, religion, sex, handicap, familial status, national origin, sexual orientation, or gender identity. Realtors do not discriminate in their employment practices.

Article 11
Realtors are knowledgeable and competent in the fields of practice in which they engage or they get assistance from a knowledgeable professional, or disclose any lack of expertise to their client.

Article 12
Realtors are honest and truthful in their communications and present a true picture in their advertising, marketing, and in other public representations.

Article 13
Realtors do not engage in the unauthorized practice of law.

Article 14
Realtors willingly participate in ethics investigations and enforcement actions.

DUTIES TO REALTORS:

Article 15
Realtors make only truthful, not misleading, comments about other real estate professionals.

Article 16
Realtors respect the exclusive representation or exclusive brokerage relationship agreements that other Realtors have with their clients.

Article 17
Realtors arbitrate and mediate financial disagreements with other Realtors and with their clients.