Trapped in Code of Ethics Training

by Jay Thompson on July 9, 2008 · Comments

in Real Estate

At this very moment, my poor wife is in a class, completing her quadrennial Realtor’s Code of Ethics (COE) training.

Now in and of itself, there is clearly nothing wrong with getting a refresher on the COE. Though really, it’s not like you can teach someone to be ethical. They either are or aren’t, and the real ethics “training” starts shortly after birth.

What is making this particular course difficult for my lovely bride is Mr. “Ethics” Instructor is providing opinion on some things that to Francy push, if not over-step, the bounds of her ethics. 

Little nuggets like this:

“It is unethical for a Broker to say his agents can not practice dual agency”

Excuse me?

For those that don’t know, “dual agency” is the practice of one agent representing both the buyer and seller in the same transaction. While it is technically legal in the state of Arizona, Francy and I abhor the practice.

I won’t go on a long-winded rant about why, in my opinion, dual agency is evil — I’ll save that for another day.

Suffice it to say it is our belief that there is no way one person can truly and fully represent both sides in a real estate transaction. It’s not fair to the buyer, the seller, or our agent to get in that position.

And if I want to make a rule in my brokerage that we don’t practice single-agent dual agency, well, then that’s the rule I will make (and I have). There may be exceptions, but they will be few and far between.

Who is this guy to spout that such a rule is unethical? Not to sound snotty, but it is my brokerage, and agents can agree to my terms, or they can hang their license somewhere else.

Someone may be saying, “But agents are independent contractors! They can do whatever they want as long as it’s legal!”

Not so fast Sparky. The whole “Independent Contractor” thing often becomes a crutch. Being an IC does not give one free reign to work however they see fit, rules be damned. I will, do and have let my agents have almost complete control over how they run their business. The rules we set in place are few and far between. But there are places where we go over-and-above what the Realtor Code of Ethics or the law requires. There is a higher Code, that being the Human Being Code of Ethics. THAT is the “code” we live by.  


 

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  • If an unethical realtor teaches ethics, what does that say about NAR? That is why the entire foundation for the association is unsound. I bet if you gave a test to every member of NAR regarding ethics, more than 50% would fail, including your wife's teacher.
  • imho, the teacher simply doesn't understand an ethical dilemna vs. a business decision. Can he at least spell fiduciary if he doesn't understand the concept :)
  • Jay, I did the requirement on line. The NAR has made such a mess out of continued education - it has become a breading ground for unethical has beens (instructors) stealing money out of my pockets because they can no longer earn their own commssion dollars. Hey, wait a second - I think I'm going to get certified to teach classes. Nice post, but I gotta go!
  • Testing retaggr... pardon the intrusion...
  • I am amazed that dual agency is allowed in Arizona and wonder how many other states allow the practice. Kudos to you for staying away from that nightmare.

    Our local board provided a 3-hour DVD that members of my office will be sitting through this month. The canned presentation should eliminate presenters adding their own color commentary.
  • I agree with Charleston. This doesn't sound like an ethics questions to me and it certainly seems reasonable that a broker should have the right to decide how clients of his or her brokerage will be represented.

    Jay, I'm curious how you guys deal with inquiries on your listings which come directly to the listing agent. Do you tell the buyer that you're happy to show but won't work as a dual agent?
  • Norm - great question. And you pretty much answered it... we'll show the listing, explain dual agency and if the person really wants to submit an offer we discuss a couple of options -- we can refer it out to another brokerage, or another agent within our brokerage.

    Technically, if an agent in our brokerage handles the other side, that is still dual agency. But that is a far more agreeable scenario than one agent handling both sides. Buyer's and sellers seem to realize the inherent risks in single-agent dual agency.

    And the truth of the matter is, it doesn't happen very often that a buyer makes a call from a sign, ad or whatever and winds up actually buying that home.
  • Hi Jay - I just took the ethics class last week, and I must say, it was better than I expected. Of course, our instructor, Bill Gallagher, was not as confused about dual agency as Francy's.
  • That's a new one. While I have heard people make the argument that Dual Agency is unethical, I haven't heard someone say that NOT practicing Dual Agency is unethical.

    It's all about disclosure and informed consent - one way or the other.

    After explaining the process and allowing the client to make an informed decision about how THEY want to be represented, isn't it their choice? I think so.

    If my buyer is OK with Dual agency and it's limitations, fine.It works both ways, and the same for the seller. If my firm wasn't was against it:: "Mr. Seller, this is what Dual Agency is. Our firm does not believe in it because _______, so we do not practice it. We will market your property, represent you, and make sure any buyers have an agent to represent them exclusively. It won't be me as the listing agent. Sound good? Sign here."

    An ethics trainer saying it's unethical not to practice dual agency? Please.
  • First of all, a NAR ethics course is oxymoronic on its face.

    Second, you're free to define dual agency as evil. It's also incumbent upon you to ensure readers understand the statement is merely your personal opinion.

    Third, the 30+ years I've literally had clients IMPLORE me to represent both sides, and it happens multiple times yearly.

    Finally, if it's evil, I'd love to hear the reasoning for the exceptions, allowing the agent to commit 'evil' purposefully. I think cheating on one's spouse is evil, but I don't allow for exceptions that are few and far between.

    Would love to be dual agent for you and I with drinks at BarCamp. :)
  • BawldGuy - as usual, you make excellent points. (for those reading, I'm not sure if Jeff is ever wrong...)

    I'll amend the post to make sure it's clear that the "evilness" of dual agency is my opinion.

    And look for a likely lengthy tome soon on my opinions of dual agency.

    "Would love to be dual agent for you and I with drinks at BarCamp."

    Count on it my friend!
  • Jay -- Can't wait to read about your dual agency thoughts. Mine can be found in very first few posts on BHG in dual agency shootout with Darkside Boy, uh, I mean Greg. :)

    See you soon.
  • Almost forgot -- I usually entertain The Boss with funny snippets from RE blogs upon her arrival from work at night. So far your comment -- I’m not sure if Jeff is ever wrong…) is the slam dunk winner, guaranteed to make her cry through her laughter. :)
  • I met a lot of sellers and buyers who think dual agency is a good idea. The sellers are happy their home is getting sold by whoever:) The buyers sometimes think there could be some financial gain to them, if both sides of the transaction are handled by one agent, or by two agents with the same broker. IMO, they do not fully understand what dual representations means. My thoughts on this subject would make for a very long comment:) Looking forward to reading more of yours.
  • Dual agency is very tricky... It is challenging to remain impartial to both sides since at the end of the day, you want to provide the best service to your clients at all times. When I am in a potential dual agency situation, I make it very clear to my clients as to what I will or will not be able to do on their behalf if we move forward. I look forward to your thoughts on the matter!
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