Looking Out From the Garage

Welcome to the home stretch... and I do mean streeeetch. 

If you've been following along, you know that I have been running a series of posts going from A-Z.  I am almost done, even though I don't know what Z is going to be yet...

It's Y time!

Youth... and real estate... how am I going to tie them together?

OK, I got it.  

Again, anyone that has followed along knows that I am a car guy.  Well, here's a shocker, I'm a NASCAR fan as well.  While I'm not really a Michael Waltrip fan, he did something back during the week leading up to the Daytona 500 that gave me a lot of respect for him.  (I can hear you asking yourself where youth and real estate are going to work their way into this little story)

As any race fan knows, teams look at rules differently that the rest of us.  We see rules, and we look for ways to comply.  They see rules, and they look for loopholes.  The object isn't to cheat, but rather to exploit the weaknesses in the rules.  I have a little bit of racer in me, too.  However, I don't have the same type of risk that the racers have.  If I really stretch out here, I might point out that any lawyer with a contract in front of him is thinking the same way a crew chief is with a rule book... but I digress.

Back during the 2007 Daytona 500, Michael Waltrip's crew chief pushed several rules too far.  He lost points, he lost money, and he lost competitiveness.  But, he lost something else.  At a news conference, he was asked about his infraction, and how it would impact the future of his team for the season, as well as how it impacted him.  Keep in mind that all of the teams view the holes they find in the rules to be where competitive advantage lives.  

Michael Waltrip explained that when he got home, he had to explain to his young daughter what happened.  She looked at him point blank (and he said she had tears in her eyes) and asked him, "Daddy, are you a cheater?"  He started to tear up a little as he related the story.  (maybe I'm a sucker, but I bought it)  Keep in mind that MW isn't just a driver that shows up and drives the car, he owns the team.  If the team is cheating, he's a cheater.  He had to tell his little girl that he was a cheater, that he got caught, and that it was wrong.  

I don't know about anyone else, but I think that might be a harsher punishment than a $50,000 fine.  

So, I'm almost to the part where I tie this up in a neat little package.  

In the eyes of a child, there is right and there is wrong.   Kids don't deal in gray.  If you break the rules, you're a cheater. 

What about in real estate?  Can we stand up to the scrutiny of a kid?  When we deal with our clients, our customers, our vendors, do we deal as honestly as we can?  Do we disclose the problems we find?  Do we tell our clients that they need to stop looking for a way to game the system, and take the lumps?  Do we deal with all parties honestly?  

Forget about agency rules.  Forget about the NAR Code of Ethics.  Forget about HUD law.  Think about your kids.  Are your's the actions that you expect from your kids?  More importantly, are they the actions of which your kids would be proud?  

I know that my dad did things in his life of which he would not approve had I done them.  However, I also know that on balance he led a life that he would approve of had it been mine.  I hope that I am able to offer as good of an example for my son.   

As if it is an oddity, I'm going to step out on a limb, and make a couple of strong statements... then we'll see if I can back then up.  The first statement is:

At the core, ethics are a fixed behavior.

I do believe that ethics are learned, but I think that they are learned young.  We could have a whole Nature vs. Nurture argument here, but the main point isn't much different.  By the time someone is old enough to get their real estate license, their ethics are fairly fixed.  Of course, I do think that people can change, but... they aren't going to go to a 4 hours NAR ethics class and "see the light" and leave as an ethical REALTOR(R), unless they were an ethical person when they walked in the door.  If they were likely to lie or cheat before the class, they are likely to lie or cheat after the class.  If they were a Boy Scout or Girl Scout and adhered to their Oath before the class, they will still do that after the class.

Stupidity, Laziness and Ethics aren't mutually exclusive.

A very ethical REALTOR(R) can be a terrible agent to hire.  Not because of the NAR Code of Ethics, but just because they aren't very bright.  They might also be lazy.  Personally, when I am looking for a person to represent me, I want someone that is honest, smart, and hard working.  And, I mean all three.  Think about it for a moment... ok, do you want someone that is unethical, but smart and hardworking?  They will find creative ways to take your money.  Do you want someone that is ethical, stupid, and hardworking?  All burnout, and no launch (drag racing metaphor, they can spin the tires, but never get anywhere).  What about someone that is honest, smart and lazy?  This one might be able to do the trick, but only if they have a great system, and people in place to fix their weaknesses... but probably not.  Intelligence, ethics and ability to get the work done are the three legs of the stool.  

Ethics, Honesty and Political Correctness sometimes clash.

OK, here is where I will try not to get myself in trouble.  Raise your hand if you know what steering is.  The problem is that it is unethical, according to the NAR as well as the state real estate commission to steer, but one can be guilty of steering if one shows properties to a client that they ask for.  Let's say you are working with a client that has a couple of small children.  This client asks to see properties that are in neighborhoods where the majority of residents are also families with children.  As a REALTOR(R), you know of a couple of subdivisions that are just loaded with kids... and there are four homes for sale that fit their needs.  You take your buyers there, and they buy a house.  By a strict interpretation of ethics guidelines, you have committed the sin of steering.  The properties you were showing were picked based on familial status.  In order to avoid steering, you'd have to show homes ONLY based on features of the home, so you'd have to offer a selection of properties that might fall outside of the "family friendly" guideline set about by your client.  The reason I picked the familial status is that it is the one we don't ever think about.  We have race and nationality and religion at the forefront of our minds, but that familial status can creep in and catch us unaware.  Especially when we are looking at it from the family friendly side of the equation.  Whats worse is that we really aren't supposed to answer any questions about those subjects unless we are referencing statistical data... and even then we are on shaky ground.   That means that if I answer a direct question from my buyer, I might be considered unethical... not to mention politically incorrect (and I don't mean in the Bill Mahr, totally PC politically incorrect way).

So, you might find that your ethical, honest and hardworking real estate agent is dodging questions... 

I was talking with a lawyer friend of mine, and the previous blog came up.  He relayed an experience to me that he was involved with. 

In another state (thankfully) there was a case with a Broker that sold a house he owned.  It seems that he lied on the property disclosure, wrote both sides of the sale, fought against the buyers having their own representation... and even against an inspection, and had plenty to hide.  

The buyers are not blameless, but this should never have happened.  

It seems there was a wonderful pond on the rear of the property.  It was totally on the subject property, and had only been created a couple of years before.  The broker had owned this property for a number of years.  So, time passes after the sale and there is an issue with the pond.  There is also an issue with the foundation of the house... and the roof... and the driveway.  The buyers have to have the pond drained for an aeration system.  They have to bring in a structural company to look at the foundation (part of the house is having a major settlement issue), and a portion of the recent roof has a severe problem.  

This isn't good.  This $300,000 property needs another $200,000 worth of work to be livable.  When the pond is drained, there are barrels.  Barrels of used motor oil and other hazardous materials have been dumped.  The pond was created (without the required liner) to cover the problem.  There were also chunks of concrete from the previous driveway, and other construction materials.  The contaminants were seeping into the groundwater... that feeds the well.

The roof was found to not be as new as the disclosure stated.  It had actually been painted to look like a new roof.  It was smooth, but the wood beneath had serious issues, andin order to actually fix it, the roof and the deck needed to be replaced. 

The structural company comes out and (shocker) it wasn't their first visit.  Our hero had actually ordered an inspection a couple of years prior, and received a report about the problem.  It was the same problem that the driveway was having.  My source didn't have all of the details, but it appeared to have been buried materials from the construction of the house, combined with poor grading.

Nothing had been disclosed.  Actually, there were items that the seller/broker knew about that were specifically falsified.  

He lost his license, his business, and the lawsuit.   

If you are an agent or a broker, I know that you are disgusted by the actions of this individual.  I know that all of us, and especially REALTORS stand for better conduct. 

If you are a buyer or seller, please take heart that people like this lose, and leave the business.  Also, NEVER go into the sale unrepresented, and ALWAYS get independent inspections.  And disclose what is required.  Dealing honestly protects everyone.

I had an interesting experience yesterday, and I'll get to it in just a moment. 

On TV, or in the movies, I often see derogatory stereotypes of real estate agents.  I see us portrayed as less than intelligent, greedy, and not very scrupled.  We aren't portrayed as dangerous, but rather ineffectual.  It has always bothered me, since in most of my dealings I have dealt with agents that were honest and hard-working.  Of course there have been a few that weren't the brightest bulb on the tree, but they weren't actively working against theirclients or customers.  That changed yesterday. 

I went to an open house to preview a property for a client that had mild interest in it.  His time is short, so I try to make sure that when we get a chance to look at property, it is very close to what he is looking for.  So, I walk into this open house and start looking around.  There were a couple of people looking around, so the agent on duty didn't approach me right away.  I picked up one of his cards from the dining room table.  

After a few minutes, the agent approached me.  She asked if I was working with an agent, and as I was getting ready to tell her that I am an agent, she interrupted to tell me that she'll give me a better deal if I work with her.   I reached in my pocket and pulled out one of my cards (they have my picture on them).  I said, "this is my agent."  She didn't even glance at it.  She told me that I could fire my current agent and then she would help me make an offer on the house.  She would cut her commission some so that I would save money.  Then it went down hill. 

She said that the buyer's agent commission was 2% for this property.  She would cut that from the price.  That would save me $8000 on the property.  Of course, she hadn't bothered to look at the card I handed her, so she was a little put back when I told her that the buyer's agent commission was 3.5% on this property.  She said that wasn't correct.  I pulled out a copy of the agent listing.  Then she told me that I really needed to dump my agent.  "It is unethical, and against federal law for them to reveal that information to you."  Oh, really?  Federal Law?  And she is talking about unethical?  I told her (as politely as I could) that there was no law preventing my agent from sharing the commission information with me, and that she should really think about ethics a little more.  Trying to steal a client from another agent is not ethical,

This morning I emailed her broker.  I'm checking to see if she is a member of one of the several REALTOR associations here locally.   

I was shocked at the brazen lack of ethics, and the blatant lies she was willing to say.  I wonder what she might have said to others there.