Ethics in Real Estate Copy
The reputation of a Real Estate Agent is CRITICAL to their career success. Real Estate Agents deal with most people’s most valuable asset. Are they likely to trust this asset to a person they do not see as being trustworthy and ethical?
A good reputation is hard to build, but easy to destroy. In extreme cases, bad publicity can destroy a business or individual almost overnight.
There are thousand of definitions of what is ethics – here is just one of them:
Principles of right or good conduct, or a body of such principles, that affect good and bad business practices
The key to this definition are the words “right or good conduct” –unethical does not mean unlawful. Something can be within the law, but that does not necessarily make it morally right.
It is difficult to determine exactly what conduct is ethical and what conduct is not. At the end of the day it is the agent’s customers or clients who interpret the actions, words and conduct of the agent and determine for themselves whether or not the conduct was ethical.
It is a sad fact that bad publicity can often be caused by untruths.
Given the perceived reputation and the media portrayal of the real estate industry, it can generally be assumed that any statement made, or any action conducted that does not meet the approval of the client or customer could be considered by them to be unethical.
So, what is Ethics?
Ethics is the study of values and customs of a person or group and analyses concepts such as right and wrong, good and evil, and responsibility in a business environment. Moral responsibility is the responsibility related to actions and their consequences in business relationships.
It is sometimes suggested that bad ethical practices drive out good ethical practices. It has been claimed that in a competitive business environment, those companies that survive are the ones that recognise that their only role is to maximize profits, and do not follow ethical practice. On this assumption, competitive markets would appear to encourage a downward ethical spiral.
Ethical issues arise when organisations must comply with multiple and sometimes conflicting legal or cultural standards, the pressure to achieve results, provide value and provide for the stakeholders in the business.
Ethics tends to be more interested in the moral good than natural good, while economics tends to be more interested in the reverse.
The principles of ethics apply to the relationship we have with our vendors and landlords (who, after all pay us our fees, commissions and wages) just as they apply to our relationships with Real Estate buyers and tenants (without whom we would not have the ability to earn our fees, commissions and wages).
Consumer’s Ethical Concerns
There are a number of areas that are repeatedly the subject of negative media exposure for Real Estate Agents. Whether or not the practices are unethical or not is not always the issue – it is the perception that is left in the minds of consumers that result in the activity or conduct being labelled as unethical.
Unfortunately, as always, it is a small minority of agents that create problems for the majority to have to overcome. The following issues represent some of the concerns that have been expressed by consumers as being potentially unethical practices that occur in the real estate industry.
Dummy Bidding at Auctions
Dummy bidding is false bidding, done to fool genuine buyers into thinking real buyers are bidding. It can happen two ways – It could be the auctioneer calls out false bids, pretending someone in the crowd has made the bids, or having dummy bidders in the crowd who bids in order to raise the stakes.
Marketing and Advertising
Vendors frequently do not understand the benefits that an advertising and marketing campaign can add to their eventual sale price, and believe it is all a set up to market the agent not the property. This usually occurs because agents themselves do not appreciate the value of a bespoke marketing campaign, do not explain it to the vendor properly and do not execute the campaign with enthusiasm. It is this that leads to dissatisfaction, and creates an ethical concern for vendors.
Price Estimates
Whatever the marketplace, agents are frequently seen by sellers (once the property has been sold) to have quoted a high price in order to obtain the listing, and to have ‘lost’ money as a result of an offer which was below the asking price. On the other hand, buyers frequently believe that agents have underquoted prices to them in order to get them to inspect or to bid on property.
Overcoming Concerns
There are many more areas of concern, and many of these are aired frequently on current affairs programmes – who invariably take the side of the consumer who believes he has been wronged.
However, many of the issues that are thought to be unethical can be overcome through:
- Having a thorough knowledge and understanding of:
- The Property Stock and Business Agents Act
- The Regulations and Rules of Conduct
- Other legislation that affects the Real Estate Sector
- Standard business practices and operating procedures
And
- Effective communication skills.
If you do not have sufficient knowledge of the rules that surround our industry and the ability to understand and interpret them, you will not be able to advise your clients and customers.
The real skill, though, comes with having the communication skills to be able to share that knowledge in a user-friendly way, in terms that your clients and customers can understand and relate to, taking into account their differences in culture, personality and understanding of the real estate industry.