Competence and Ethics of Santa Cruz Realtors

Realtor Ethics
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Realtor Ethics

Realtor Ethics in Santa Cruz

A few months back, I got a letter in the mail from the Santa Cruz Association of Realtors. It seems that in order to remain a member in good standing of the Association, I need to complete the Quadrennial Ethics Training Course – it is a course that every Realtor must take and pass every four years. The course material revolves around the vaunted Realtor Code of Ethics. It took me a couple of hours to complete the course, and I passed, with a score of 84% (the minimum score is 75%). Hmm, I hope that doesn’t make you think I’m not 100% ethical!

My perception of the public’s perception of Realtors is that the public does not think too highly of my profession. For example, now that housing prices have crashed in many parts of the country (and Santa Cruz is no exception!), many fingers are pointing at Realtors for behaving unethically – by, perhaps, stating as “fact” things like, “housing prices never go down” or “your house is guaranteed to appreciate” or “if you can’t afford the payments, you can always sell and make some money.”

Is it unethical to make statements like that? Actually, I don’t see anything in the Standards of Practice set out in the Code that would prohibit making such statements. However, the Preamble does says Realtor® members should:

eliminate practices which may damage the public or which might discredit or bring dishonor to the real estate profession

Do you think that maybe, some members of the public were damaged by making unsupportable claims such as the ones I mentioned above? It looks to me like making such claims is not a violation of the Standards of Practice and therefore no action could be taken against Realtors for making such statements, however, telling your client these kinds of things clearly goes against the spirit of the Code of Ethics as set forth in the Preamble.

Aside from the public perception that that some (or many!) Realtors may be unethical, there is also a perception that many Realtors are, simply, incompetent. I’m going to confess to something which I perhaps ought not: I share that perception to some degree. In my own real estate dealings, I have found few agents which I would call unethical – but many, to be honest, have demonstrated frighteningly little competence. That is, perhaps, not surprising given the low barrier of entry into the real estate profession.

However, this creates something of a paradox – the fact that it’s easy to become a Realtor, anyone can join so long as they are a real estate licensee – yet, per the code of Ethics:

The services which REALTORS® provide to their clients and customers shall conform to the standards of practice and competence which are reasonably expected in the specific real estate disciplines in which they engage; specifically, residential real estate brokerage…

I am not quite sure how one becomes competent in the field of real estate short of actually practicing it – and practicing it means, in almost all cases, becoming a Realtor. The truth of the matter is, the training for a California Real Estate license is very basic, and in fact, has little to do with the actual practice of real estate, despite the fact that one of the core courses is Real Estate Practice.

For example, one of the key documents we Realtors use is the California Residential Purchase Agreement (RPA-CA). It’s eight pages long, and it is the document most often used in the purchase of Residential Real Estate in California. It is a bit complicated and somewhat involved – however, understanding how it works is not a requirement to get a real estate license, or to become a Realtor.

Ironically, there is no violation of the Standards of Practice if it is “reasonably expected” that Realtor members are clueless about the various forms and documents they use for their day to day business. Of course, another brutal truth is, most Realtors have no day-to-day business – they have week-to-week, or month-to-month: there just are not enough transactions to go around which can support a Realtor community as large as we have here in Santa Cruz, even considering our recently diminished numbers.

I find it admirable (as I hope you do, too) that the National Association of Realtors requires that members take this training course every four years. I found the course to be a good bit above average compared with other on-line, distance-based educational courses I have taken this year.

However, no Code of Ethics, in my opinion, can take the place of educating yourself about your Realtors’ background, skills, education, and qualifications. After all, buying or selling real estate in California is a transaction that typically involves hundreds of thousands of dollars. I strongly advise that before you write up that listing or purchase agreement, you make sure you know who it is you are dealing with, such that you are sure they know what they are doing.

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