15 Dangers to the Industry – From the Trenches
We are privileged to be part of an incredible industry where our job is to help people through some of the happiest or most trying situations imaginable while creating our own success. For years, we have been hearing about the disruptors and read about trends and dangers to the industry. Here are my thoughts as someone who is in the trenches, been involved with the local REALTOR® Association and has also interacted with REALTORS® across the country and worked for both a large national company and a local independent company.
Wall Street Real Estate: Wall Street does not subscribe to the REALTOR® Code of Ethics, Fair Housing laws or any state’s license law. This has led to company cultures based on numbers, short term goals and market share that don’t have interest in, let alone protect, the consumer. New companies with massive funding but no institutional or leadership knowledge of real estate pop up and become supposed disruptors while not playing by the rules, either knowingly or because they are oblivious to them. Massive companies without profit are being run by people who have never experienced working with buyers, sellers, landlords and tenants who are going through stressful times, and they have never sat down with a consumer who has experienced discrimination in housing.
Shiny Penny Syndrome: A new company or old player trying to re-imagine themselves will come along stating some unbelievable new thing. “We are a data company.” “We are going to bring technology to real estate.” Some of these claims are valid and others prove less so. Agents fall for this every day. I have no problem with these companies if they are a real estate brokerage first. How about, “We are a real estate brokerage that abides by The Code of Ethics, license law and Fair Housing in all ways, and we use data/technology/etc. to help us do the right thing by our consumers and agents.” Say that, live by it, and I welcome you to the business.
Marginalization of the Managing Broker Role: Much of our industry treats the managing broker as an expense. Let’s have them manage more than one office. Let’s pay them less and let them sell. Let’s have one manager for a large geographic area. One person can sign the paperwork for hundreds of agents, but the role should be much more than that. A good, knowledgeable managing broker is not a financial liability but rather a reducer of liability for the company, a defender of law, consumer rights and the Code of Ethics and a molder of competent, professional, successful agents. Every day I see managing brokers who either have next to no clue about the Code and license law or are stretched way too thin to be effective, running multiple offices or selling, sometimes both. The majority of the complaints I see are made against agents that have such a managing broker. The quality and success of agents and offices, opinions of consumers about us and the overall industry professionalism is declining as a result. A great managing broker is an investment, not an expense.
Relevancy of Associations: We see articles about the relevancy of REALTOR® Associations published more and more frequently. As someone on the front lines, the thought of not having the associations to handle ethics, arbitration, education, advocacy, disseminating information and other issues is frightening. If at some point in the future this goes away, it will be far beyond the Wild West environment it currently feels like at times and more like an apocalyptic wasteland. Brokerages used to work in partnership with the local associations to keep their agents informed of legal and ethical issues. Now, many brokerages are afraid of telling agents, “No,” on anything, for fear of losing market share and production if they leave. We are a self-policing industry, and if the ability to do that goes away, the consumers will suffer, and our value to them will wither away.
Fair Housing: This is not a solved issue. In fact, in my opinion, it is getting worse. Years ago, most of the issues I saw were with small brokerages with little or no training for their agents; now, I see more and more from the large ones. Discrimination based on religion, race, handicap, sexual preference and more are not only still happening, but it seems to be getting worse in more blatant, emboldened ways, and we are losing much of the gains made since the Fair Housing laws were enacted. We can and must be better.
Agent-Centric Run Amuck – Anything Goes for Top Producers: Companies that are afraid to lose market share and production create an environment where anything goes for agents willing to take advantage of that. A good percentage of top producer personalities will do exactly that. Don’t get me wrong, the agents are the customers of the brokerages; however, we must train them and hold them up to high expectations for ethics and legal compliance. In today’s world, even if one brokerage sends an agent packing, ten more will gladly sign them up and look the other way to gain market share and sales volume. There are plenty of great people out there who are also top producers. We don’t need the out-of-control ones creating toxic environments for others and the consumer.
Laissez-Faire Attitudes Towards Ethics and Legal Compliance: We see companies and individuals building their business on violations and acting as if they have figured out a revolutionary new way of doing business. This attitude is infectious, and I see agents adopt behaviors they see their company or top agents doing. Doing wrong is not success. It is temporary and long-term destructive to that company and the industry as a whole. For years, we have been trying to increase industry professionalism from the ground up. I believe it is time for industry leaders to look in the mirror and realize this needs to come from the top down to have the necessary impact. If the leaders get involved in more than the finances of the business, this will go a long way.
Fear of Reporting Violations: All too often, agents come to me from all companies in our area saying, “You won’t believe what happened…” I always suggest they file a complaint, and rarely will they. They are afraid of a top producer blackballing them, being hassled, being perceived as a tattle tale, etc. I myself have received messages, after filing a complaint about a particularly egregious action, saying I have too much time on my hands. I wish that were true! Someone definitely could make a full-time job reporting violations in our area, especially marketing violations.
Poor Quality of CE in Many Cases: Many of the private CE schools and CE schools associated with large brokerages make it so easy to take and pass courses that the value of CE requirements are diminished. CE as a profit center is not geared to make sure the agents are growing, learning and staying up-to-date on changes to the laws and The Code.
We Are Real Estate Brokerages: If you are in this industry, your company is a real estate brokerage. Brokerages serve the clients and comply with all legal and ethical requirements, using tools such as data and technology to help accomplish this. We are not tech companies, data companies, discount companies, etc. first. If you are not first and foremost a brokerage, you do not understand our business or care about the consumer.
Drinking the Company Kool-Aid: We can all be guilty of this, and I certainly have been in the past. Take a look at what is happening in your marketplace and industry separately from your company affiliation.. The majority of us will be with two or more companies during our real estate career, so look beyond your company for information, CE and training opportunities. If what you see at your company does not match your personal ethics, tell them and demand they make changes. If they won’t, then go find a company that matches your personal integrity.
Short-Term Thinking from Corporations, Offices and Agents: Many companies in our industry are clearly not invested for the long term. Going after the short term, perceived gain at any level is going to damage our industry’s future. “Penny wise and pound foolish” is rampant, as demonstrated in the undervaluing of functions such as managing brokers, providing CE as a profit center, not demanding high levels of ethical behavior from all agents and using buzzwords rather than substance to build companies on. When the bubble of stupid money being invested in our industry bursts, what will be left? Will that be good for the consumer? Good for agents? I think not.
Thinking Technology Can Replace Agents: Buyers and sellers today have access to all sorts of information, data and metrics. They still need a competent human to interpret and advise them. Technology is a facilitator of service, not a business model. This is and has always been a service industry. Great brokerages will figure out how to use this technology to better serve the consumers.
Oversight of Teams: Teams are here and in many cases are run very well by the team leader in conjunction with the managing broker. In other cases, the team can act like an independent company and have many compliance issues often involving marketing and some troublesome dual agency situations. Brokerages need to oversee the teams just as they should individual agents.
Consumers Diminished Opinion of our Value: More and more, we are seeing news about commissions and consumers feeling these are too high. Many business models exist, and they are all valid, from discount to menu of services to full service and everything else. The problem arises when too many of us out there, regardless of our company’s business model, are poorly trained, poorly overseen and poorly informed of the laws and The Code. With the resulting poor customer service that gives the consumers a horrible experience, the consumers feel that we have much less value as an industry.
I applaud and recommend the NAR C2Ex program as an attempt to help with many of the issues I bring up; however, with 1.3 million members and only 2,500 of us completing this free program as of the end of August 2019, the impact is slow moving.
These are my observations, and in my conversations with others in the industry locally and around the country, I hear many of the same concerns. Our future and the future of home ownership and investment property ownership depends on each individual in the trenches demanding compliance and good business ethics over money, today and every day. Demand that of ourselves, our peers and our chosen brokerages.
What gives me hope for the future of our industry and our consumers in the future is the huge amount of good people that are in our business at all levels. Get involved in your local association, report wrongdoing, demand that the office and company you are with holds everyone, regardless of production, to The Code, license law and Fair Housing laws. Let’s not make our industry nothing more than a profit center. Let’s make it an ethics center again. Who is with me?