Real Estate

Should Real Estate Brokerages Police Industry Violations?

Each month Anthony Askowitz explores a hypothetical real estate situation from both sides of the broker/agent dynamic. This time: A rule-abiding agent is frustrated by her local association’s failure to penalize serious wrongdoers appropriately, especially in her own office. Should local brokers act independently and apply meaningful, behavior-altering justice?

In this monthly column, Anthony Askowitz explores a hypothetical real estate situation from both sides of the broker/agent dynamic. 

A rule-abiding agent is frustrated by her local association’s failure to penalize serious wrongdoers appropriately, especially in her own office. Should local brokers act independently and apply meaningful, behavior-altering justice?

Agent perspective

I’ve played by my industry’s regulations and protocols for more than 30 years, and nothing will ever change that. But it sure is tempting to cut corners and bend the rules when you see major violators (even ones in your own office) get off scot-free, with little more than a slap on the wrist from regulatory bodies such as our local association and state professional regulators.

Take this case from my own office as an example: An unscrupulous “colleague” was discovered to be conducting closings for nearly a year without reporting them to our broker — and pocketing the entire commission from each sale.

When he learned about this activity, my broker allowed the agent to resign quietly and return his commissions. He advised our local Realtor association and the state’s professional regulation department.

You can imagine my dismay when both organizations basically gave the agent a pass for this behavior, citing extenuating circumstances and the fact that it was his first (reported) violation. He’s already working at another office, and we have no idea whether they even know about this issue.

If the organizations that oversee licensing refuse to discourage this behavior, isn’t it incumbent on the real estate offices to police themselves?

Wouldn’t it be good for my broker to quietly let his competitors know about this matter (and expect the same type of response from them) so they can protect the industry and rule-abiding agents like me?

Broker perspective

I share my agent’s frustration and disappointment with the dismissed agent’s terrible behavior. Our office culture is one of trust and respect, and it was certainly a shock to discover the betrayal this blatant theft represented.

However, my agent’s perception that this matter was handled too leniently by our Realtor association and state regulators (and me personally) is based on a lack of knowledge of all the facts.

Although I try to be compassionate always and give the benefit of the doubt whenever reasonable, I did, in fact, file a police report in this case, and the dismissed agent was arrested. This was not done as retribution or punishment. I simply felt it was important that this unscrupulous agent face the consequences of his actions. And though I could have demanded jail time, I allowed the matter to be settled when the agent returned the funds.

Our state’s licensing laws also require that illegal activity be reported, so of course, I did, and I let the local and state entities determine what to do regarding licensing. At that point, we must respect the judgment and considerations of these associations and regulators, who deal with matters like this more frequently and might have more information than we do.

These entities have processes for investigation and evidence-gathering that can take months, followed by hearings and other actions. During this time, they cannot disclose anything about the agent’s behavior until they have a final ruling.

This leaves us with my honest agent’s final question regarding the concept of local offices “policing” bad behavior among themselves.

As tempting as this idea might be, warning my fellow brokers by “dropping a dime” on this agent would be a serious professional violation on my end, and I would be exposing myself to accusations of collusion — even if I thought doing so was a genuine act of goodwill.

As such, brokers like myself simply cannot play judge and jury. That’s a slippery slope that could lead to all kinds of wild, wild west-style vigilante justice that is not worth the risk.

How to resolve

So where does that leave this situation’s lightly punished culprit and, more importantly, the upstanding professionals who work with him? It’s flat-out unfair for the dishonest agent to continue to enjoy the same freedoms as the principled one and the vast majority who are like her.

Unfortunately, many agents are hesitant to report bad behavior. Most of us want to be liked more than we want to be respected. However, it’s up to us as a profession to uphold high standards and accept nothing less than the behavior reflected in the National Association of Realtors’ Code of Ethics and Pathway to Professionalism guide.

One deterrent to reporting may be the costs of filing official complaints with local Realtor associations and the involvement of the complaining agent required to see the grievance through. If nothing more were required than an anonymous letter, we would likely see more complaints.

But there is a better, more active solution for well-meaning agents who want to clamp down on bad industry behavior. Most Realtor associations have an ethics committee or professional standards board comprised of well-respected veteran members, and agents with concerns about leniency can volunteer to serve on them.

Similarly, many state licensing boards and commissions are also composed of volunteers who lend their knowledge and experience to regulating agent activity, which presents another service opportunity for honest agents to have a larger say in these matters.

Writer’s note: Anthony is not an attorney and does not give legal advice. Please consult a licensed attorney regarding matters discussed in this column.

Anthony is the broker-owner of RE/MAX Advance Realty, with offices in North Miami, South Miami, Kendall, and the Florida Keys, and where he leads the activities of more than 170 agents. Connect with Anthony on Instagram

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