Success should not only mean helping a client achieving the goal of selling or buying their home. My belief is that the road to get to that goal should also include quality, merit and ethical standards. The businesses and professionals they hire are responsible for making it so. This could mean transparency in the transaction, providing choices and options for the client, explanation of the process and documentation and not having hidden agendas. However, some business practices in the real estate industry about this standard may be iffy at best or straight out illegal at worst.
For example, I have been asked by a well-known lender that advertises heavily to the Latino community how much would I kick back to them for clients they refer to me. Yeah, that’s a no-no. This is a Real Estate Settlement Procedures Act (RESPA) violation. It’s also a violation of the National Association of Realtors Code of Ethics.
Some agents will basically choose the lender for their buyer instead of recommending a few lenders and allowing the buyer to interview the lenders before selecting one. In many cases, the buyer does not even see the loan officer face to face or they may just communicate with the loan officer’s assistants. I do not suggest getting your home loan this way.
Another one I see is buyers’ agents scaring buyers into closing on a home by telling them there is no way of backing out of the contract without losing their earnest money. The fiduciary obligations of an agent do mean acting in the best interest of the client, not the agent.
Loan officers do not have to attend closings but I think it is a good service to the borrower. Many don’t even know the borrower face to face, much less feel the obligation to be available to answer any questions the borrower may have about the paperwork at closing.
Examples and cases go on and on: translating or explaining documents to non-English speakers, providing phone numbers and links to neighborhood information like schools and crime data, allowing the buyer to select the inspector and home insurance provider, providing payment information and price comps before submitting an offer and so on. It just irks me.
I will also say that the consumer has to raise their level of expectation when it comes to working with industry professionals. Use the resources available and always ask if something doesn’t seem right. I do share in the belief that the law is the lowest standard of ethics. Let’s do better than that.
Here are some links with resources addressing the topic of ethics in real estate:
- NAR Code of Ethics
- Every day dilemmas a Realtor may face
- Agents and lender selection opinions
- Avoiding RESPA Violation
As always, if you are thinking about buying or selling your home, shoot me an email at email@example.com or call/text me at 720-253-8513.