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.