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I REALTOR® Code and its Preamble
In order to examine and define the REALTORS® obligations to clients, customers, the public, and each other we must first look at the preamble to the REALTORS® Code of Ethics
Effective January 1, 2010
Where the word REALTORS® is used in this Code and Preamble, it shall be deemed to include REALTOR-ASSOCIATE®s.
While the Code of Ethics establishes obligations that may be higher than those mandated by law, in any instance where the Code of Ethics and the law conflict, the obligations of the law must take precedence.
Under all is the land. Upon its wise utilization and widely allocated ownership depend the survival and growth of free institutions and of our civilization. REALTORS® should recognize that the interests of the nation and its citizens require the highest and best use of the land and the widest distribution of land ownership. They require the creation of adequate housing, the building of functioning cities, the development of productive industries and farms, and the preservation of a healthful environment.
Such interests impose obligations beyond those of ordinary commerce. They impose grave social responsibility and a patriotic duty to which REALTORS® should dedicate themselves, and for which they should be diligent in preparing themselves. REALTORS®, therefore, are zealous to maintain and improve the standards of their calling and share with their fellow REALTORS® a common responsibility for its integrity and honor.
In recognition and appreciation of their obligations to clients, customers, the public, and each other, REALTORS® continuously strive to become and remain informed on issues affecting real estate and, as knowledgeable professionals, they willingly share the fruit of their experience and study with others. They identify and take steps, through enforcement of this Code of Ethics and by assisting appropriate regulatory bodies, to eliminate practices which may damage the public or which might discredit or bring dishonor to the real estate profession. REALTORS® having direct personal knowledge of conduct that may violate the Code of Ethics involving misappropriation of client or customer funds or property, willful discrimination, or fraud resulting in substantial economic harm, bring such matters to the attention of the appropriate Board or Association of REALTORS®. (Amended 1/00)
Realizing that cooperation with other real estate professionals promotes the best interests of those who utilize their services, REALTORS® urge exclusive representation of clients; do not attempt to gain any unfair advantage over their competitors; and they refrain from making unsolicited comments about other practitioners. In instances where their opinion is sought, or where REALTORS® believe that comment is necessary, their opinion is offered in an objective, professional manner, uninfluenced by any personal motivation or potential advantage or gain.
The term REALTOR® has come to connote competency, fairness, and high integrity resulting from adherence to a lofty ideal of moral conduct in business relations. No inducement of profit and no instruction from clients ever can justify departure from this ideal.
In the interpretation of this obligation, REALTORS® can take no safer guide than that which has been handed down through the centuries, embodied in the Golden Rule, “Whatsoever ye would that others should do to you, do ye even so to them.”
Accepting this standard as their own, REALTORS® pledge to observe its spirit in all of their activities whether conducted personally, through associates or others, or via technological means, and to conduct their business in accordance with the tenets set forth below. (Amended 1/07)
As you have just read, the preamble sets our obligation and pledge to our clients, customers, the public, and each other. Let us now take it to a whole other level of professionalism.
II A New Level of Professionalism
Not once in the preamble or the REALTOR Code of Ethics doesn’t say anything about selling. What is selling?
- What does ‘SELLING’ mean?
WORKSHOW (Town Hall) – The meaning of selling
- SELL the fourth definition according to dictionary.com is: to persuade or induce (someone) to buy something: The salesman sold me on a more expensive model than I wanted.
- a. Why did the salesman sell them a more expensive model? Especially one more expensive than the person wanted. I suspect it was because the Salesman made a better commission on a larger sale. Or because the manufacture made two models. One less expensive to get buyers to look their product and then when they do they see that there are more benefits in owning the more expensive model. Either way someone was SOLD.
- b. If you closely examine our Code and it’s Preamble you’ll find that Selling might be unacceptable. See paragraph 5 of the preamble: “In instances where their opinion is sought, or where REALTORS® believe that comment is necessary, their opinion is offered in an objective, professional manner, uninfluenced by any personal motivation or potential advantage or gain.”
Example – You are showing a prospective buyer a home for $200,000 (the price the purchaser said they wanted) and you knew of another house that more closely fit their needs but it was $259,000 and you showed that home as well, could your motives be questioned. Probably not, after all it did fit there needs. But if you used some sales techniques, dialog, and closes to convince them to buy, well that’s another question.
It’s because of this that I believe the practice of “Bonus to the Selling Office” is an unacceptable behavior.
- Evolution of a ‘Real Estate Salesman’ – Evolution can be charted through a progression of three phases:
Dependent – Independent – Interdependent
- “Salesmen/women” was once appropriate titles because the consumer was totally dependent on the Real Estate Salesman for information. Sellers needed market information to price and sell their home. Buyers needed information on what’s for sale, what the market is doing; up, down, sideways. Where the best ‘deals’ are and where is the best place to get a mortgage.
- The job of gathering information particular to a certain purchaser or seller needs was what the salesman sold. Many also felt they were selling service. But they were not as service is expected and we pledge to serve the buying and selling public.
- The Evolution of the Real Estate Consumer
In the book, How to Sell Real Estate at a Profit, published in 1910. Unlike the title suggest, it’s not talking about buying and selling real estate at a profit. Instead it speaks on how to own a real estate office or be a salesman for that office and profit by the action of selling properties. Regarding buyers it says, “Keep all collected information on property for sale close and private. Only give pertinent facts such as price, age, and sellers name regarding the property to parties with interest in purchasing the property.” This policy is still in effect in many offices around the US. For over a century what the public is purchasing from real estate salesmen/women is information. Demonstrating for the last 100 years licensed sales men and women may have been in business of selling information they gathered to assist buyers and sellers in acquiring and disposing of real property and not in the business of selling real estate. At least that’s where we’ve evolved.
III YOU CANNOT SELL SOMEONE A HOUSE or SELL A HOUSE FOR SOMEONE – People purchase what they WANT, NEED, DESIRE, and CAN AFFORD! That’s it… end of program.
- The Selling Game – For decade’s sales was taught and portrayed much as ‘a game’.
- In the 1984 Pulitzer Prize Broadway Play and in a 1987 Movie Glengarry Glen Ross, Jack Lemmon plays Sheldon “The Machine” Levine, a veteran real estate salesman who is at the end of his rope talks about the Sales Game… The film was remade in 2006 with the only changes made in dollars of volume sold and income earned, but everything else remained the same.
- Looking farther back the Broadway/Movie musical MUSIC MAN. Robert Preston’s character with his straw hat, cane, and spats standing next to the white picket fence saying, “We got trouble, trouble right here in River City.” A crowd begins to gather and he moves them gently to the town square where he continues, “Yes folks, trouble! And it’s spelled with a capital P double O little L.” As he identified ‘the problem’ pool hall. He was the consummate salesman; tall, good-looking, big smile, firm handshake, look you in the eyes, polite, and, oh, the promises.
By the time he left River City, everyone was sold and behind him marching with imaginary instruments and uniforms. As he then boards a train filled with other salesmen who boast and toast their sales closes and sang… “You gotta know the territory” as the train took takes them to their next sales target Geary, Indiana.
- There are close to 50 board and online games built around the Real Estate Sales Game. Outside of Monopoly most are directed towards improving one’s sales proficiency using technique and dialog.
- Being in sales all my life I studied, learned, memorized, used, then taught all of sales techniques published and not, to a great deal of past success.
- High Pressure Dialog. Sales Pitches and Techniques, along with Manipulative Tactics have gone the way of Gas Guzzlers, Telegrams, and thank heavens Straw Hats and Canes.
- Sales dialog (what to say when the consumer says…) has been the mainstay of books, tapes, videos, trainers, coaches, and keynote presenters forever. Touting, “you got to know the dialog”. Practice, drill, and rehearse dialog. The problem I always found with “dialog”, every time I memorized my lines the buyers and sellers didn’t know theirs!
- High Pressure techniques? Try those with today’s EVOLVED CONSUMER and they will drop you like a bad sitcom.
- And who can’t ID a sales pitch from across the room. Like the 6:30 pm telephone call that opens with, “Mr. Rossi, how are you today.” Or email that states, “You have been selected for our grand prize of …” Or the car salesman that says, “This one is not going to be here tomorrow. I’ve got someone coming in tonight and it’s their second look.” Sales pitches have become cheeky the subject of parody and ridicule.
- Manipulation –
Manipulation PRO | CON Workshop
- Sales techniques used to persuading someone to buy something they don’t want for your own personal gain can be confused with the act of a con-artist or grifter, even if you believe in the product, service, belief, idea, concept, or value. Of course, there are those who sell what they don’t believe in. These people are the unscrupulous and are con artists. Like someone selling an ugly over priced house by saying, “It so beautiful and perfect for you.” It was once said that the only difference between a real estate agent and a con artist is intent. What do you think? Intent can have a whole lot of meanings and not all good.
- But the sales technique class that I teach that is always in demanded from brokers and salespeople alike are sales closing techniques. As the say in Glengarry Glen Ross, “A-B-C’s of selling; Always Be Closing”. Sales Close, is defined as asking someone to buy. We could create a list of over a dozens of closing techniques that sales trainers and coaches have used and or created. Here are just a few, yes they have names:
- The Ben Franklin Close
- The assumptive close
- The affordable close
- The 1 2 3 close
- The alternative choice close
- The wouldn’t your – shouldn’t you – don’t you agree close
- The ‘Are you a Gambler?’ close.
- The engagement close
- The coin toss close
- The mother-in-law close
- The If I could show you a way close
- My personal favorite, The Future Projection Reflective Close
Now I’m not saying that a licensed broker/sales associate should not ask someone to buy or sell as that’s a simple question. What I’m saying is, just ask. No need to be clever, manipulative, or canned.
IV No One Wants To Be Sold! But Everybody Buys.
- The disdain for Salesmen Grows –
- Even though in truth we’re all salesmen. Parents sell their kids on getting their homework done and the need for better grades, kids sell their parents on why they should play one more video game and stay up just ten minutes more, teachers sell their students on the need for algebra and paying attention, preachers sell us on the Devine and the need to give, and on and on. Everyone sells all the time; it’s the way of the world. And still distain of salesmen grows.
- Telephone Sales – We now have laws against it.
- Door-to-Door Sales – Again laws, covenants, or rules that prohibit. If not in your area just don’t answer the door. If you are soliciting door to door now and find that it’s working for you, don’t stop, as you have no competition.
- Baby Boomers (1946 – 1964) hate sales people, according to *SRI International and have passed that trait down to there children and their children’s/children. Especially on the Internet – someone tries to sell you something and ‘bam’ you hit the back key and go where you are not being sold.
*SRI International – Formerly Stanford Research Institute, a fifty-year-old market research organization that combines content-based research programs with consulting expertise, tells us that the Baby Boomer Generation (1946-64) has one of the strongest dislikes for sales pitches, sales practices, and salesmen. SRI’s VALS (VALS stands for nothing, it’s just a term SRI uses) study specifically defines consumer segments on the basis of those personality traits that affect behavior in the marketplace. It was their study that first identified the baby boomers going for the SUV’s, microbreweries, and Starbucks. Baby boomers buy and buy and buy, but they don’t want to be sold.
B. Who do Consumers Trust?
Notice that REALTOR or Real Estate Salesperson is not on this list. Fifth from the bottom is Insurance Salespeople. You can’t even find Life Insurance salespeople any more, it seems that they are all now financial advisors. And the bottom of the list is Car salespeople.
- Competition Selling. “I’m in the Million-dollar Club” he says – “I’m listing agent of the year.” – “I sold the most Girl Scout Cookies!” she said at 9 – and there’s where it starts. The fact that sales are competitive only makes the general public more suspicious of the salesman’sactivities. Many associations and companies have given up titles including Dollars in sales and terms like Producer and Top Money Earner, as they are negative viewed.
- A. If real estate agents/brokers are not paid to sell, what are they paid to do?
- Firstly living up to the pledge of competency, fairness, and high integrity, abide by REALTOR code of ethics, and adhering to the lofty ideal of moral conduct in business relations is the antithesis of what many of us has learned as selling. Why do you think so many State Real Estate Commissions will not give CE credit to selling/marketing/personal promotion courses?
- Again if they don’t sell, what do they do?
- In the case of Listing Agent – you are managing the sale of…
- And as Selling agent you are Advocating the purchase of…
- A. If real estate agents/brokers are not paid to sell, what are they paid to do?
III What The Public Needs
- Real estate information is Available To Everyone
- The world has always been an open book – but not everyone had a library card, let alone a library.
- Now everyone has access to everything about real estate, not just on the Internet but television. At last count, there are over 35 half-hour shows devoted to real estate. HGTV has the 10-year-old house hunters, and others devoted to repair, renew, redecorate, and flipping houses, and this year the new “Real Estate Intervention”. It doesn’t end here – there’s the Scripps Network owner of the Food Network and now their entry into real estate with FLN Fine Living Network.
- If Everyone Has the Information, Who Needs REALTORS?
1. It’s because of this that the general public needs REALTORS more than ever before.
a. All the law books and journals are available to everyone – yet we need Attorneys.
b. All the medical books and journals are available to everyone – and still we need Doctors.
c. Daily, we consult Engineers, Clergy, Chief, Bankers, and hundreds of other professionals, but if we looked, we could find the information we seek.
d. Professionals are the specialists in any given area of expertise.
2. Let’s go back to the third paragraph of the preamble where it says, “Such interests impose obligations beyond those of ordinary commerce.”
3. It doesn’t say ‘instead’ of ordinary commerce. It says ‘beyond’ those of ordinary commerce.
It is the ‘BEYOND’ that generates the need for professionals.
- Professional Responsibility
- Ethics and Morals
IV What The Public Wants
- A 2010 National Association of REALTORS’ Report surveyed 120,000 Consumers who purchased or sold through an agent 77% of the time – between June 2008 and June 2009.
In answer to the question, “What is the reason they use an agent?”
1. To Find the Right Home
2. To Negotiate the Price and Terms
3. To Complete the Paperwork
1. Navigating the Home Buying and Selling Process
a. Finding the right home is a combination of skill and patience. Skill in know how to ask questions to assist purchasers in uncovering exactly what they:
4a. Financially Afford
b. Price/Terms – As determined by Financial Qualification
Negotiation is part of the Agents Due Diligence and Professional responsibility. That is to take what the purchaser is willing to pay to the seller and communicate and justify why the offer was made at these price and terms and seek acceptance
– Price/Terms – Complete the Paperwork
The Professional observes, studies, experiences, and understands what the consumer wants.
- Factors for Agent selection: (by preference)
- Friend or Family Member
- Knowledge of Community
- Listening Skills
- Firm Association
- Service is expected, they want ‘Beyond’ service.