16 Code of Ethics Lessons

L E S S O N

Culture clash, and how to avoid getting caught in the confl ictAmerica has always been a melting pot of cultures; that has never been truer than it is today. If your career is to last, it’s in your best interest to understand how to work with clients who may well come from vastly different traditions. It’s imperative to understand that the laws in every country are different. It’s up to you to understand our laws and be able to explain them to clients who are accustomed to doing business in other ways.

You can also develop a competitive advantage in your market by becoming a resource for related services. If people see that you provide answers, as well as close deals, they are far more likely to turn to you with all real estate related issues. In short, you earn their trust. (And that applies to both clients and other agents!)

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T I P S

1: Take the time to identify culturally diverse real estate related service providers in your market: lenders, real estate attorneys, insurance agents, etc. The more diverse your resources, the more vital you become to both clients and other agents.

2: Know what local or telephone-based translation services are available to you. Language will always be a barrier, especially with clients new to the United States.

3: Know when it is in your client’s best interest to refer them to someone more capable.

This is critical to earning trust for your business. No one will think less of you if you turn to an expert, even if it means giving up a sale. In fact, the reverse is true—people will be far more likely to work with you in the future.

4: Strive to understand how cultural differences can affect your relationship with these clients. Your client’s expectations may be different than you think. It’s essential that you communicate clearly and help them understand how our laws affect their interests.

A REALTOR® listed a property in a new subdivision. At the instruction of his client, the REALTOR® did not list the property on the MLS, did not place a “For Sale” sign on the property and did not advertise the property in the local newspaper. The seller told his REALTOR® that he wanted the sale handled quietly, with the new purchasers being people who would “fi t into the neighborhood—people with the same socioeconomic background” as the other residents of the subdivision.

The listing agent’s only marketing effort was to send a letter to other residents in the subdivision inviting them to...”play a part in selecting your neighbor.” The letter encouraged residents of the neighborhood to forward prospects to the listing agent.

Say your mother lives in the neighborhood and she forwards this marketing letter to you. Appalled, you fi le a complaint charging the listing agent with violating Article 10 of the Code of Ethics, as the listing agent’s approach can only be an act of deliberate discrimination against home seekers.

The listing agent defends his actions, saying he was only acting on the wishes of the seller. The seller testifi ed for the listing agent and confi rmed this fact, adding that the entire block around his house had agreed on this approach if anyone ever decided to sell.

Was the listing agent guilty of violating the Code of Ethics?

Yes, the Hearing Panel

concluded. In their decision,

the panel decided that no

instruction from the seller

could absolve the listing

agent from his obligation to

market properties without

regard to race, color, religion,

sex, handicap, familial status,

or country of national origin,

as expressed in Article 10.

thecodeisgoodbusiness.com

C A S E S T U D Y

Case Study #10-4: Use of “Choose Your Neighbor” Marketing Letters

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I n s t r u c t o r ’ s N o t e s

•Try to create conversation; lectures are less interesting. Try to talk about personal experiences. Encourage newer agentsto talk about situations that might be confusing. In the long run, dialogue is good for your business.

•The point of these lessons is to encourage conversation. Encourage your team to talk and to share personal experiences.

•Begin the lesson by asking in how many languages your team can say hello. Next, compile a list of foreign countries your clients have come from in the recent past.

•Share a personal experience; try to demonstrate how preparing in advance (having ready resources, etc.) to work with people of different cultures can help you close a transaction.

•Be sure to point out that clients from different countries may have different expectations (as regards the law) than your agents are used to. Talk about how to correctly handle those expectations.

•For agents that miss your meetings, these lessons are also available online at thecodeisgoodbusiness.com/va/lessons.

Culture clash, and how to avoid getting caught in the confl ict

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L E S S O NYou are managing an apartment building for your client. In your capacity as property manager, you receive a written offer to purchase the building from a local buyer. You tell the prospective buyer the building is not for sale. A few days later the prospective buyer meets your client and tells her that he thought he had made an attractive offer for the building through you, and indicates that he would be interested in knowing what price your client would take for the building. Your client answers that she had received no offer from you and asks the buyer for the details. Later, your client fi les a complaint against you with the local Board of REALTORS®, charging failure to represent and promote her interests. Her complaint specifi es that you had been engaged as a property manager, she had at no time told you not to submit any offers to buy, and that in the absence of any discussion whatever on this point, she felt that you should have recognized a professional obligation to acquaint her with the buyer’s offer which, she stated in the complaint, was defi nitely attractive to her. At the hear-ing, you explained that, as the building was not for sale, when you told the buyer this fact you were protecting your client’s interests.

T I P S

2

The Limited Service Conundrum The nature of our industry is changing. If you aren’t already running into situations where the other side of the transaction is represented by a non-traditional service provider (e.g. limited service), you soon will. It’s important that you are aware of your responsibilities to your client, and equally important that your client understands what the agent on the other side can be expected to do or not do.

In situations like this, clear communication is critical. Be sure your client understands your responsibilities and his/her obligations, too. It might even help to produce a concise document detailing the different types of agents and what can be expected from each. Remember, an educated client is the best client.

1: Understand the services that other non-traditional service providers offer in your marketplace.

2: As you begin working with your buyer or seller client, explain to them the potential impact of a cooperating broker’s type of brokerage service. Explain this again at the time of an offer. If they don’t understand

how it affects them personally, keep explaining until they do. Confusion leads to confl ict and confl ict is bad for business.

3: Watch what you say about your fellow agents, even limited service agents. Speaking poorly of other people only refl ects badly on you.

Did your actions violate the Code of Ethics?

In this case, your actions

would violate Article 1.

Unless your client gives you

specifi c instructions not to

present offers for the building,

you have an obligation to

your client to make the

offer known.


C A S E S T U D Y

Case Study #1-6: “If you are not limited, you are full. Know what the client expects.”

The Limited Service Conundrum


•Try to create conversation; lectures are less interesting. Try to talk about personal experiences. Encourage newer agents to talk about situations that might be confusing. In the long run, dialogue is good for your business.

•Open the lesson by discussing the growing presence of limited services brokers.

•Have your agents compile a list of advantages over limited services brokers your fi rm offers clients; talk about the disadvantages, too, and how to overcome them.

•Ask your agents to describe a few personal experiences competing with limited services brokers; talk through the right and wrong way to manage such competition.


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People won’t remember what you say; they never forget how you make them feelThis is one of the most important and least understood rules of business. Actually, it’s a rule of human relationships. People don’t always remember what you say; they’ll be hazy on the details, they’ll forget facts and dates and times. But they remember how you make them feel as if it were engraved on their brains.

When you work with a client—or another agent—be conscious of not just what you say, but what effect your words and tone will have on the other person. More importantly, be aware of how your actions will make the other person feel. If you get this principle of relationships right, people will constantly return to do business with you. Get it wrong—even if everything you say is technically correct—and your business will be built on one-time deals and short-term relationships.

1: Your actions matter more than your words. As someone we know often says, “You can’t talk your way out of situations you’ve acted your way into.” Keep that in mind at all times and your actions will refl ect well on you.

2: Act before your clients ask you to. Understand what they expect and deliver. When you act fi rst, and exceed the expectations of your client, you will delight them. And delighted clients come back again and again. They also refer you to other people.

3: Do simple things like write thank you notes, always keep your appointments and be early. These things work precisely because so few people do them consistently. More than one contractor has said he gets business simply because he returns phone calls when others won’t.

4: You are an expert on the real estate transaction; your client probably is not. Take the time to make sure your client understands exactly what’s going on and you’ll relieve some of their fear. They’ll remember you for that alone.

E x e r c i s e

Our capacity to remember details is rather limited. Facts, fi gures, sequences; these things can’t hold real estate in our minds for very long. But emotions, that’s a different story. People remember the smallest slights or the least compliments for long periods because we are wired to remember how things make us feel.

Take out an index card.

On one side, write down the worst transaction you’ve ever experienced. List the property, your role in the transaction, the names of the buyer, seller and any other agents involved. Now write down the specifi cs of what was said.

On the opposite side, write down how you felt while it was going down. Write down how you felt in the days after the deal was completed or fell apart. Be specifi c.

Which description is clearer? Which description is stronger?


L E S S O N

T I P S

People won’t remember what you say; they never forget how you make them feel

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•Bring index cards to your meeting. After everyone fi nishes writing about their transaction, have a few people share their experiences with the group.

•Have people name companies that, through their actions, created a strong emotional reaction in themselves. These could be good or bad experiences. Most likely, the bad experiences will create the stronger memory.


L E S S O N

14Understanding your client’s expectations is one of the most important aspects of any business. Unmet expectations, especially expectations that haven’t been discussed, can kill your business. Signing an exclusive agreement is a great way to ensure that you meet your clients’ expectations day in and day out, year after year.

Too often people are afraid to ask for the commitment from their clients. The reality is, your clients will respect you and your professionalism. Remember, the unwritten rules for creating an exclusive agreement are similar to writing a formal contract. Be clear. Be concise. Spell out everything and make sure your client understands it all. And above all else, make sure you live up to your end of the agreement. That’s the fastest way to earn trust and your customers’ repeat business.

1: Requiring exclusive agreements from your buyers can quickly help you determine how serious your customers are; this allows you to spend your time more productively.

2: By signing an exclusive agreement, your client is demonstrating his/her loyalty to you. Reward that loyalty by doing just what you say (and then some) and you will be the one to reap the benefi ts.

3: Help your clients understand that an exclusive agreement is simply a written expression of the commitment that you share; it’s confi rma-tion of your dedication to your clients’ goals.

4: Become familiar with what you are promising via this exclusive agreement and live up to your end of the agreement. Managing expectations is critical to keeping your clients happy.

Exclusive agreements – strengthening your relationships

E x e r c i s e

Make a drawing using the following directions. Draw exactly what is asked and only what is asked:1. Draw a square. 2. Draw a short line. 3. Draw a rectangle. 4. Draw fi ve circles. 5. And fi nally, draw a long line. That’s it. Share your drawings with the group.

Everyone heard the same instructions, so why were the results not the same? How often do we leave instructions for other people by email or voicemail and think that the other person knows exactly what we mean? How often do we write contingencies and think the other agent reads it the same way as we do? Do we really spell it all out? Could we perhaps rephrase things to make it clearer?

A written agreement makes for a stronger relationship

4L E S S O N

T I P S


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A written agreement makes for a stronger relationship



•Tell people to draw only what you ask.

•Do not answer questions.

•Have team members share their drawings. Share the drawing below.

•Connect the lack of clarity in the instructions with the wide variety of drawings this exercise will produce.

•Make the point that being unclear in your instructions or your contracts can produce results that you neither expect nor want.


L E S S O N

5

Facing up to buyers that can’t: Practical tips for helping people make decisions

Is there anything so frustrating as a client who won’t make up his/her mind? You can literally waste hours and days trying to satisfy the changing whims of an unserious client. Face it, some people prefer shopping to buying.

The faster you can identify serious clients, the more productively (and profi tably) you can spend your time working with them. But remember this, be careful how you manage your less than serious clients. They, too, may reach a time when they actually make a buy; you don’t want to be left out in the cold when that day comes.

T I P S

1: Consider spending time doing a needs/wants analysis with your buyer clients before starting to show them property.

2: If you keep showing your buyer clients properties that seem to match their needs/wants, ask if you misunderstood what they are looking for, or if you are misjudging how the properties apply to their needs/wants. Don’t be afraid to ask, but be mindful how you phrase the question.

3: When showing properties, ask if the buyers could see themselves living in that particular house, and why or why not. Some people are poor decision makers because they need to think aloud, and appreciate someone leading them through that process.

4: Stay in touch with indecisive buyers through periodic emails or phone calls; if you publish regular newsletters, keep these buyers on your list. These simple touches can keep your name at the top of their minds when the day comes that they turn serious.

You are the listing agent for a house that has just sold. A woman contacts you after reading an ad you’ve run in the local newspaper, and you tell her that the house has already sold. The woman asks if you would help her fi nd a house in the $80,000 to $90,000 price range with three bedrooms and located near schools and playgrounds. Over the next few weeks, you show your client a number of homes, all of which meet her stated criteria for price range, size, and loca-tion, but she’s interested in none of them.

Shortly thereafter, your client fi les a complaint with the Board of REALTORS® against you, complaining that you had violated Article 10 of the Code of Ethics by failing to offer equal professional service to her because she was a woman. Your client contends that she did not receive the same professional service from you that would have been afforded to a male head of household and home seeker with the same criteria for price range, size, and location.

At the hearing, the woman expressed her complaint and concluded by saying, “It was obvious to me that he discriminated against me because I am a woman. In my opinion, he showed little interest in helping me to fi nd a home.” In your defense, you say that you are sorry that your now former client had that opinion, but that certainly you held no such attitude as charged. You tell the Hearing Panel that you use a contact report on each prospect that includes identifi cation information on the client, provides data on the price range, type of house and location preferred by the prospect, and records the homes shown to the prospect with information on the price, type, and location of each home shown. You present several such reports from your fi les, including the report pertaining to this particular client.

Did you violate the Code of Ethics?

Based on the evidence, the

Hearing Panel concludes

that your documented

evidence did, in fact,

establish a clear position in

which equal professional

service had been offered

and that no violation of

Article 10 has occurred.


C A S E S T U D Y

Case Study #10-3: Equal Professional Services by the REALTOR®

Facing up to buyers that can’t: Practical tips for helping people make decisions

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•Ask the group for any tips they use to identify potentially diffi cult clients.

•Ask them to discuss techniques for prompting action from a client.


L E S S O N

6

Back to school: A smart client is the best client

Buying a house can be a terrifying process, particularly when you don’t understand the process. It’s complicated. It’s a long-term legal obligation. And, for the client, it may well involve all the money he or she has and then a whole lot more. So what does that mean to you as a REALTOR®? Mostly it means you have an opportunity to help someone be happy with what is likely the biggest purchase they’ll ever make—if you help them understand the process and ease their fear.

The most effective thing you can do is talk to your clients about the process. Ask them how comfortable they are with what will happen. Treat your client with respect and help them understand each step along the way (without ever sounding condescending, of course). In the long run, the easier you make buying or selling a house, the more delighted your client will be. And, as we’ve said before, a delighted client comes back and refers you to others.

You are the exclusive listing agent for a small commercial property. When you reach an agreement with a buyer, you use a standard purchase contract form, fi lling in all of the required information. At the time you present the contract to the buyer, you explain that the contract was prepared by attorneys and is commonly used in the area. You suggest that that the buyer allow his attorney to review it. The buyer tells you he will read it over carefully, and if he has any questions he will consult an attorney. He subsequently signs the contract, saying it is clear and satisfactory to him. At the closing, the buyer professes to have been under some misunderstanding as to language in the contract regarding the date of possession of the property, and following the closing he complains to the Board of REALTORS® that he had been greatly embarrassed by this circumstance at the closing and felt that you were at fault by preparing a contract without having an attorney participate in the drafting. At the hearing, you reiterate the points you made in your written response to the complaint: that the contract you used was the standard form, prepared by an attorney; that in keeping with Article 13 you had recommended that the buyer have the contract reviewed by his own attorney; and that no other parties present at the closing had found any lack of clarity in the clause in question.

Did you conform to the Code of Ethics?

The Hearing Panel

concludes that, yes, you

acted in conformance with

the Code; that you had not

undertaken to practice law;

and that you were not in

violation of Article 13.

1: Explain early on how buying/selling simultaneously could and should work. Make sure your client understands what to expect and what they will be required to do.

2: When you begin writing a contract, make sure your client understands the range of possible responses it might receive. Make sure they understand their options.

3: Consider giving your clients forms to review in advance—for example, when you start showing them properties, give them a contract to review. This is a good time to talk through all the different stages of the process.

4: Give a copy of a blank purchase agreement to the seller when you list their property so that they can be familiar with the terms that may exist within offers they receive.

T I P S


C A S E S T U D Y

Case Study #13-2: Use of Standard Purchase Contract Form

Back to school: A smart client is the best client

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The perfectly wretched client

•Have your agents put together a list of characteristics to build the worst client imaginable.

•Talk about how working with your clients, and educating them about each step in the process, can alleviate many of these characteristics.


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7

Disclosing Latent Defects: Always tell the truth about the property or the transaction

To earn the respect, and trust, of your clients, it’s imperative that you always tell the truth; even hard truths if the situation demands it. For the long-term health of your business, you don’t want to earn the reputation that you selectively deal with the truth, or that you will do anything to close a deal.

Yes, you have to protect the interests of your clients, and disclosing latent defects may seem counter to their interests. But in the long run, full disclosure will save you and your clients far more headaches and legal worries than failing to disclose. It’s simply good for your business to deal with your clients, other agents and their clients honestly. That said, you are not expected to act as an expert in any fi eld other than real estate; no one expects you to be a civil engineer or a lawyer. If you have any doubts at all about a property, refer your client to someone who is qualifi ed to render an opinion.

A seller comes to your offi ce, explaining that his company is transferring him and he wants you to sell his house. In the listing contract, the seller specifi es that the house has “hardwood fl oors throughout.” You show the house and consequently reach an agreement with a buyer. After the transaction closes and the seller moves out, the buyer receives a bit of a shock.

On the day the buyer moves in, he sees the house unfurnished for the fi rst time. It turns out the hardwood fl oors exist only on the outer rim of each room, with subfl ooring material in the middle, which had been covered by rugs. The seller, when confronted, says that he had built the fl oors that way 10 years before to save money and had forgotten about it. He refuses to make any amends for the situation.

The buyer then fi les a complaint against you, saying you should have told him about the state of the fl oors.

So are you guilty of navigating disclosure and violating the Code?

At a hearing before a Hearing Panel, during which all of the facts were brought out, the Panel found that you had acted in good faith in accepting the seller’s description of the property. While Article 2 will bust you for concealing, exaggerating or misrepresenting facts, you’d been upfront with your buyer by truthfully passing on what the seller had told you. There was no reason you should suspect the seller had taken such a miserly and unusual course when building his house and you are not in violation of Article 2. Good job.

T I P S

1: When you are new to the business, disclosure can be an overwhelming issue. If you have any doubts, talk to your broker or sales manager. They can give you guidance.

2: Because disclosure affects everyone, your fellow agents have valuable experience you can draw on, too. Share examples among yourselves.

3: Under the Code, you are not obligated to discover latent defects that are not reason-ably apparent. If you know of latent defects, though, you are obligated to disclose them. If you represent the seller, make sure your client understands the obligations spelled out in Article 2 of the Code.

4: When in doubt, talk to the seller about disclosing. There is no substitute for good communication.


C A S E S T U D Y

Case Study #2-3: Obligation to Disclose Defects

Disclosing Latent Defects: Always tell the truth about the property or the transaction

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•Have your agents write down the most unusual defect they’ve ever seen in a house.

•Share a few stories with the group. Use the time to point out your responsibilities as a REALTOR® to both your clients and your profession.

•Be sure and stress the line between representing your client and being truthful throughout the process.


L E S S O N

8

When you create an agreement, be clear; be specifi cThe process of creating a contract is dicey on a good day; there is simply no excuse for confl ict that arises because no one could read the writing or understand what the contract says. A contract is not literature. Use short sentences and say exactly what you mean. It can’t be said enough: be clear, be clear, be clear. You will save yourself and your client untold grief simply by being clear.

The added bonus of writing simple, clear contracts is that everyone involved in the transaction will be happier. They’ll understand their responsibilities and obligations better. And you will be protected in the event a dispute does arise. But to protect yourself, to protect your client, it’s critical that you be clear, be concise and be thorough.

1: If a contract has been faxed back and forth multiple times, and all or part of it is no longer legible, consider redrafting the entire contract with the agreed- upon terms and obtaining signatures from all parties.

2: Keep a paper trail of all written offers and counteroffers, and be sure to check carefully for any changes in terms with each new contract—“the lat-est faxed counteroffer was so blurry, I couldn’t tell your client had proposed a new price” won’t hold much water.

3: If writing your own addendum, consider asking your sales manager or managing broker to read the language to ensure that the content is clearly written from a third party’s perspective.

4: Providing more rather than fewer details in writing will always serve your client well, and will assure a smooth process to closing. Don’t rely on assumptions—spell out all of your client’s expectations in the contract.

5: Consider putting dates next to initials so everyone can follow the contract chronologically.

T I P S

“Luckily our contract is crystal clear!”


When you create an agreement, be clear; be specifi c



•Ask your agents to sketch out the details of their most convoluted contracts/transactions.

•Share with the group whatever confusion these contracts caused and how to avoid it.


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L E S S O N

T I P S

9

Advertising your services: The truth is worth its weight in gold

Advertising can be a powerful tool for developing awareness of your name and your services. But in any market there is plenty of competition and everyone seems to be talking at once. So how do you create advertising that distinguishes you from the rest?

First, be simple. Don’t try to say everything at once. In your ad make one point that you know your clients care about. Don’t try to be all things to all people. Be consistent in the claim that you make. All great brands stand for one idea: Volvo = safetyFedEx = speed. Pick an important idea and try to own it.

Above all, tell the truth. People are experts in advertising and they will know in .03 seconds when you are exaggerating or stretching the truth.

.

1: Collect ads from your market and put them on a wall. Make a list of claims made by your competition. You’ll likely fi nd that everyone is saying the same thing. Say something different about yourself.

2: Use visuals to distinguish your ads. Again, study the ads in your market. Most likely they are showing the same kind of

image. Do something different. People are programmed to ignore words and images that are expected. Show and tell them something different!

3: Simplicity is key. Say one thing. Show one thing. Crowded ads that try to dotoo much are simply ignored.

So you get a newsletter from another REALTOR® in your community. In the newsletter is a section with photos of ten houses “recently sold” in an exclusive area of town. Problem is, you were the listing agent on several of these houses and the way the newsletter is designed it gives the impression that this other REALTOR® made the sale. You scream like a banshee and immediately fi le a complaint with your local Board. The REALTOR® comes to the hearing prepared to defend himself, proudly showing his newsletter. His point is that the newsletter is news, not advertising, so Article 12 of the Code doesn’t apply. He was simply making homeowners aware of current market values, besides, all of the information in his newsletter is public record. He promises he wasn’t “selling.”

Is he guilty?

The Hearing Panel fi nds

that he is, indeed, guilty

of violating the Code of

Ethics. It comes down to

intent; you can’t disguise

marketing messages as

“news,” if the intent is to

promote your business. If

you do, you are likely to

violate Article 12.


C A S E S T U D Y

Case Study #12-12: Advertising in Guise of News

Advertising your services: The truth is worth its weight in gold

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•The week before you present Lesson 9, ask your agents to collect ads from competing real estate fi rms. Discuss which ads you like and don’t like.

•Have your agents list unusual marketing tools that are appearing in your market.

•From experience, yours and theirs, talk about which tools are most effective. Do any push the boundaries of ethical conduct?


L E S S O N

10

Need an ad that drives traffi c to your property?An ad for a specifi c property is naturally different than an ad for your services. Most of the people reading your ad are warm or hot prospects, so they are looking for specifi cs, not generalities, in your ad. Give them specifi cs and your ad will drive more traffi c.

Think about the questions that typically come up when you begin talking with a client about a specifi c property. Answer those questions in your ad, but don’t worry about saying everything. It’s perfectly ok to raise as many questions as you answer, as long as you answer the really big ones. (How much, how many bedrooms, etc.) Unanswered questions give a prospect a reason to call you if they are interested.

Your brother-in-law clips an ad from a REALTOR® out of the paper describing a home with fi ve acres “about 20 miles from the city.” The ad says it’s a modern 3-bedroom home, well maintained and set in a charmingly landscaped site.

Your brother-in-law makes a trip out to see this charming property. The reality is a wee bit disappointing. The property is actually 36 miles out of town. It lacks indoor plumbing. Its wood lathe support for plaster, which is visible in many large breaks in the walls, indicates that the home is modern—when compared to a Scottish castle from the 1400s. There is no evidence of paint in recent years. There are several broken windows and half of the back steps are missing. Located at the end of a crude dirt road, it sits in a small cleared area long overtaken by the undergrowth. Your brother-in-law returns a bit peeved at the REALTOR®. You advise him to forward the ad to the local Board with a complaint.

The REALTOR® is asked to respond to the charge of misleading advertising. At the hearing, fi rst he criticizes you and your brother-in-law for bringing the matter to the Board, pointing out that the two of you had failed to mention that the property was priced at only $30,000; and at such a price it was an exceptionally good buy to anyone looking for a small place with a few acres. He notes that to get attention to this kind of property it was necessary to do a bit of “puffi ng” in his ads. In all, he says, the house was more rustic than neglected.

Is a bit of “puffi ng” in your ads allowed by the Code?

The answer is no, naturally.

And no amount of reasoning

by this slimy REALTOR® can

justify anything but absolute

truth in your advertising.

In the next ad you write be

creative, be inventive and

interesting. But above all be

honest or like this particular

REALTOR®, you’ll be found in

violation of Article 12.1: Buyers want all of the basic property details, and don’t appreciate having to call a listing agent to get them—often they won’t make the call.

2: Is your ad running online or in print? Know your audience and write your ad according to the audience and the medium. In either case though, be specifi c.

3: There is an old saying among writers: “If I’d had more time I would have made it shorter.” It’s good advice for writing ads, too. Shorter is

better. Use nouns and verbs and kill with gusto most of the adjectives and adverbs in your copy. That advice alone will help you create more ads that people remember.

4: Make the call to action clear. If people are interested, tell them what to do next. Don’t make them work to fi nd your number or the address or an online listing. Be clear.

T I P S


C A S E S T U D Y

Case Study #12-2: Exaggeration in Advertising

Need an ad that drives traffi c to your property?

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The Wall of Shame

•Collect three truly bad ads from local publications. Share them with your group; talk about what makes them bad.

•Encourage your agents to collect bad ads from your competitors. Good ones, too.

•Build a wall of shame to remind people what not to do when creating ads in the future.

•This exercise will also help you find a position in your advertising distinct from your competition.


L E S S O N

11

Magnetic car signs and the traffi c stopAs a REALTOR®, you are always “on” as it were. The way you behave in public is a 24/7 advertisement for your services. It’s important to remember this because the effects of that advertising can be both good and bad.

Like a celebrity, you live your public life in a fi shbowl. You spend your working hours and marketing dollars ensuring that people have a good impression of you; but you will also be constantly judged on your behavior in public. (Getting pulled over for speeding on a busy street with a magnetic sign for your business on the door is far more than inconvenient; it will also make a statement about your business.) And that can be a bitter pill to swallow.

Respect for the Public

1: Follow the “Golden Rule”: Do unto others as you would have them do unto you. 2: Call if you are delayed or must cancel an appointment or showing. 3: Communicate clearly; don’t use jargon or slang that may not be readily understood.

4: Be aware of and respect cultural differences.

5: Promise only what you can deliver—and keep your promises. 6: Do not tell people what you think—tell them what you know.

The National Association of REALTORS® Pathways to Professionalism

NAR created the Pathways to Professionalism, a list of professional courtesies to help REALTORS® deal with both clients and other REALTORS®. It‘s an exceptional list that can help you develop the kind of relationships that will last throughout your career.

Respect for the Property

1: Be responsible for everyone you allow to enter a listed property. 2: 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. 3: 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.

Respect for the Peers

1: Respond to other agents’ calls, faxes, and e-mails promptly and courteously.2: Share important information about a property, including the presence of pets, security systems, and whether sellers will be present during the showing.3: Avoid the inappropriate use of endearments or other denigrating language.4: Do not prospect at other REALTOR®open houses or similar events.5: Real estate is a reputation business. What you do today may affect your reputation—and business—for yearsto come.


Magnetic car signs and the traffi c stop

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•Common sense is a powerful tool when it comes to working with other people. Pathways to Professionalism contains a number of simple, common-sense behaviors that everyone should know.

•Ask your team to list as many of the points in Pathways to Professionalism as they can (before you pass the lesson out).

•Use the time to create conversation about how treating people well leads to more business.


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12

Incentives to do businessMarketing is an important function of any business. And to be successful you’ll want to market your services aggressively. This may eventually include offering prospects an incentive for using your services. There is nothing necessarily wrong with incentives, even if the prospect has to work with you in order to take advantage of the offer. But, as with everything else, be clear.

Make sure you are clear in your offer; make sure the people who might benefi t from your promotion have a clear and thorough understanding of the terms and conditions of the offer in advance. Certainly, make sure you understand and follow any limitations set by state law or the Code.

A REALTOR® in your market is running an ad offering a “Free Market Analysis, with no obligation.” One of your former clients takes the REALTOR® up on his offer, noting that at the time, the agent told him, “I presume you understand that when we provide this service, we also expect that if you list your property, you will permit us to serve you.”

For the next three weeks, though, the REALTOR® hounds your former client, calling every day to solicit the listing of his home. He reminds your client he had provided a “valuable free service and we feel that you owe us” the listing of the property. You urge your former client to fi le a complaint, which he does.

At the hearing, the REALTOR® says he had provided the “free market analysis” as represented in his advertising, and had provided it “… with no obligation.” He stated that he had neither asked for nor received a fee for the market analysis. He could not understand why he was required to appear before a hearing panel in connection with allegations of a violation of Article 12 of the Code of Ethics.

The hearing panel noted that offering premiums or prizes as inducements, or the advertising of anything described as “free” is not prohibited by the Code of Ethics nor can such advertising be prohibited by a Board of REALTORS® unless it presents other than a “true picture” as required by Article 12.

1: Could your incentive be in violation of RESPA? How about Regulation Z?

2: It’s perfectly OK to offer gifts or concessions to attract sellers. If you are trying to attract buyers, there are some limitations. If a loan is involved, make certain your inducement will not cause a problem with the mortgage company. Inducements to

buy are considered part of the seller’s concessions and there are limits on the amount depending on the percentage of the loan.

3: You can only offer incentives to people who wish to do business with you or to another licensee. Offering to contribute to your church or other group for any buyers they send your way is not acceptable.

T I P S

So, did the agent violate Article 12?

The Hearing Panel concluded that although the agent was free to advertise his free market analysis, such a repre-sentation was not a “true picture“ if all of the terms governing availability were not clearly disclosed in the ad or representa-tion. The Hearing Panel noted that the statement by the agent that it was “presumed” the property owner would list with him made the representation less than a “true picture.” The panel concluded that the REALTOR® was in violation of Article 12.


C A S E S T U D Y

Case Study #12-7: REALTOR® Advertising Free Market Analysis

Incentives to do business

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•Ask your agents to list promotions they’ve heard about that pushed the ethical boundary.

•Ask them about promotions that have been successful in the past.

•Talk about where the lines are drawn and how to know when you’ve crossed one.


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13

I’ll see you again: Increasing your referral business

As a REALTOR®, you will spend your career walking a delicate balance. Of course, you have to protect the interests of your clients but you also must fi nd a way to work well with other agents. The simple truth is, your relationships with other agents will last far longer than your relationships with your clients.

Experienced agents will tell you that they often make a sale over multiple other offers simply because the selling agent preferred to do business with them. You develop that kind of business by the way you treat other people. If cooperating agents know they can trust you, know that you will look after your client while also making the process of closing a deal easy, they are far more likely to give you their business.

E x e r c i s e

The alligator is a ferocious predator. It routinely grows more than 15 feet long and can weigh more than 1,000 pounds. It’s patient, merciless and frighteningly powerful. The grizzly bear has no peers in the American wilderness. Standing up to 9 feet tall and weighing in at 1/2 a ton, its massive size and towering strength, paired with its fearsome nature, set it alone atop the food chain. So who wins if these two awesome creatures were to fi ght one another?

The alligator? The grizzly? Explain your choice.

Closing a real estate transaction often feels like you are caught in just such a confrontation. The key to your long-term future in the industry is to change the context of the transaction. A sale should not be a win/lose proposition. It’s always your job to fi rst represent your client’s interests, but also to fi nd an agreement that leaves everyone happy.

And as for the age-old alligator/grizzly debate, the answer is, it depends. Are they fi ghting in the swamp or the mountains? In sales it’s always best to operate in your own turf where you have all the advantages. In real estate, if a transaction turns confrontational no one wins. To paraphrase the line from the old movie War Games, “the only winning move is not to fi ght.”

1: Understand that in every deal, you have two people you are trying to please: your client and the other agent. While it is mandatory to keep your client’s interests at the forefront, remember that you may well depend on the other agent to close your next deal.

2: Particularly after a stressful transaction, be sure to follow up with the cooperating agent and thank them for their part in closing the transaction.

3: Remember that just as you are representing your client, the cooperating agent is represent-ing his/hers. Don’t let emotion

or disagreements affect your relationship with that agent.

4: Above all don’t let it get personal. Remember the line from ‘The Godfather,’ “It’s busi-ness, it’s not personal.” Don’t take the transaction personally; you don’t get paid for that.

5: Don’t give up other people’s money. When you are the buyer‘s agent, don’t have your buyer negotiate the commission the seller has agreed to pay the listing agent. In fact, the Code prohibits us-ing an offer to buy as leverage to negotiate the compensation the selling agent will receive. thecodeisgoodbusiness.com

I’ll see you again: Increasing your referral business

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•Ask your agents who have closed multiple transactions with the same cooperating agent. How many transactions have they closed together?

•Ask why they work so often together. Discuss.


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T I P S

Solving problems face to face–be part of the solution, not the problem

You hold an exclusive listing with your client. You invite another REALTOR® to cooperate on the sale with you. Soon after, the other agent brings you an offer to buy your client’s house. You take the other REALTOR® with you to present the offer to your client. And then the negotiations begin.

The next day, the cooperating REALTOR® calls on your client without you, recommends that he (your client) accept his client’s offer, which is less than the asking price. Your client agrees, signs the contract and the sale is closed.

After the sale, you complain to the Board of REALTORS®, charging the cooperating agent with unethical conduct for violating Article 16 of the Code of Ethics, having made second contact with your client without your consent. The other agent argued that since you brought her to the fi rst meeting with your client, it implied your consent for additional meetings with or without you. She also argued that she needed to go alone because you presented her offer without understanding it and made a mess of it. When the Board questions you, it turns out that you had misunderstood some important considerations of the offer.

Was the cooperating agent guilty of unethical conduct?

The answer is yes, she was.

No one can assume they

ever have the consent of the

listing agent to meet with

the seller; consent must be

expressed every time.

1: Overly communicate with your fellow agents to avoid unnecessary confl icts or confu-sion. If amidst a transaction you receive a call from the cooperating agent’s client, you can certainly answer their questions (making sure they know who you are and are not representing), but afterwards be sure to follow up with the cooperating agent to make them aware of the situation.

2: Be clear with cooperatingagents that you share a common goal: You both want buyers and sellers excited about the transaction. Don’t let the stress of negotiations ruin either party’s excitement about their pending life transition.

3: Remember, no one gets paid if the transaction doesn’t close. It’s not about winning; it’s about fi nding a place where everyone is happy.

If you want to build your business to last for years, this is an absolute. Take a look at your market. Invariably, there are agents with a reputation for being diffi cult to work with. Everyone knows who they are. You don’t want to be that person.

In our business, confl ict is inevitable. How you handle it will determine how successful your business ultimately is. Because anyone can close a transaction when everyone agrees and all the details fall into place. Those transactions rarely occur. But every time you manage confl ict effectively, you give people a reason to want to work with you again; you establish your reputation as a professional. Ultimately, people choose to work with you over other agents, which leads to more sales and more profi tability.


C A S E S T U D Y

Case Study #16-18: Assumed Consent for Direct Contact

Solving problems face to face–be part of the solution, not the problem



•The ability to listen is critical if you want to effectively manage confl ict. Offer these tips for effective listening:

How to Listen:

•Prepare yourself•Consciously transition to role of mediator•Quiet your mind

Engage in Active Listening:•Stop talking•Focus on the speaker•Take your time•Maintain eye contact/attentive posture•Acknowledge what is being said/suggested•Acknowledge emotions•Look for non-verbal cues•Empathize•Clarify•Avoid assumptions•Summarize


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15

Knowing when to “bump something upstairs”As an agent, your broker is one of your most valuable assets. Don’t be afraid to lean on your broker’s experience, their knowledge and their willingness to help. But you don’t want a reputation for needing help through every transaction, so how do you know when to take a problem to your broker?

The simple answer is to talk to your broker fi rst about how he or she prefers to work. Most would rather hear about small problems before they become big problems. If you feel a transaction slipping away, and you aren’t sure what to do to bring it back on course—ask your broker. Certainly if you are unsure how a law or a particular article from the Code of Ethics applies to your situation, ask. Don’t run the risk of violating either because you were afraid to ask.

1: Go early, go often. Most brokers would rather hear about potential situations that never develop rather than fi nd out about a major problem when it’s too late to avoid.

2: If you have a question about the law or the Code of Ethics, ask. If you encounter an ethical dilemma, even if you know the right thing to do, tell your broker so he or she is aware of the situation.

3: Become familiar with and comfortable with the management hierarchy in your offi ce—sales managers, managing brokers, principal brokers. If you don’t know who to go to when a problem arises, ask.

4: Have your facts straight. Before you start your, “I need some help with this deal...” conversation, let your broker know which side of the transaction you are on and who is on the other side—your broker may just be a dual agent.

E x e r c i s e

Step One

Get a group of agents (5-7) in a circle. Everyone reach into the middle with both hands and randomly grab a wrist or hand. Now everyone close your eyes and without letting go of anyone, try to untangle the group to form a circle. You have two minutes. At the end of two minutes, everyone open your eyes, but don’t let go!

Step Two

For the next two minutes allow your broker or sales manager to direct the group and help you untangle the knot.

The simple truth is that your broker has insight and wisdom you may not be aware of that can help you avoid or untangle knotty situations. Don’t be afraid to draw on their valuable experience.

T I P S


Knowing when to “bump something upstairs”

I n s t r u c t o r ‘ s N o t e s


•Make this exercise fun. Encourage the laughter to contrast the serious point you are trying to make.

•As you help your agents untangle, it’s ok to help them separate into smaller groups. You don’t have to have one big circle at the end.

•In the second stage, as you help them untangle, make the point that there is a collective foundation of knowledge in the offi ce. The broker/sales manager has access to the experiences of everyone in the company; if an agent doesn’t know how to handle a situation, chances are others in the offi ce do.


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L E S S O N

16

Stay “In Front Of the Sign” What to do when a represented seller calls you

It’s a tricky situation when a represented seller calls you directly. It’s easy to fi nd yourself caught in an ethical dilemma because there are circumstances when the call is perfectly ok and others where it’s in violation of the Code of Ethics. It all depends on how you handle the call and what actions result from it.

The most important thing is to be upfront and honest. Make sure they understand that it violates the Code if you interfere in the relationship with their current agent. Explain how you can and cannot serve them. But, as always, be polite and offer to help where you can. You aren’t obligated to tell the listing agent about the call, but it can be a good idea that helps avoid the perception that you initiated the conversation. Talk with your broker about the best way to handle this kind of contact that won’t jeopardize your relationship with either the client or the other agent.

T I P S

1: Listen politely but don’t offer affi rmation or comment on any remarks that they might make about their current listing agent.

2: Explain that you understand they are currently in a bind-ing listing contract, and that you don’t want to interfere with that, but that if it is their desire, you can certainly discuss with them how you could be of service to them after that current agreement is no longer in place.

3: Remember that an exclusive listing agreement with a different agent doesn’t prohibit you from providing that seller with a different type of real estate service on the same property, or any type of service on a different property that they own. But be careful about using the MLS to fi nd prospects. The Code is clear on this and it is expressly unethical to use the MLS to identify clients, even if you are soliciting listing agreements on a property separate from anything listed on MLS.

A REALTOR® in your city is asked to list a neglected house that obviously needs a wide range of repairs. He strongly advised the owner that it would be to his advantage to put the house in good repair before offering it for sale, but the owner wants it sold at once “as is.” The listing agent writes a novel advertisement offering a “clunker” in poor condition as a challenge to an ambitious do-it-yourself hobbyist.

A few days later, a sales associate in the listing agent’s offi ce, who was not a Board member, shows the house to a retired couple that had been attracted by the ad because the husband was looking forward to applying his “fi xer-upper” skills. The sale is made. Shortly thereafter, the buyer charges the listing agent with having misrepresented the condition of the property.

At the hearing, the buyer admits that he understood the house was in poor condition. It turns out, though, that while showing the house, the sales associate had commented that since the house was made of stucco and concrete, it would have little worry of termites. Turns out he was wrong, and the house was full of termites. There had been no evidence of termite infestation prior to the sale, and the sales associate had made his statements thinking they were well grounded.

The listing agent offered to pay the cost of exterminating the termites, as well as the cost of lumber to repair the damage, in view of the sales associate’s failure to recommend a termite inspection.


Was the listing agent guilty of violating Article 2 of the Code of Ethics?

The Hearing Panel said

that, yes, the listing agent

is in violation of the Code,

though they commended

him on his resolution of

the situation.

Final thought: Earning

the good will of other

agents is important to

your long-term business.

Being straight up with

people, treating their

client relationships with

the same respect you

demand from other

agents is a sure way to

earn the trust and respect

of other REALTORS®.

C A S E S T U D Y

Case Study #2-2: Responsibility for a Sales Associate’s Error

16

Stay “In Front Of the Sign” What to do when a represented seller calls you



•Ask for a show of hands from people who’ve had represented sellers call them directly. It’s a common problem.

•Ask for people to share how they’ve handled the situation.

•Be prepared to discuss how you prefer your agents handle these situations.


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16 Code of Ethics Lessons

Documents

Transcript of 16 Code of Ethics Lessons