- Over a century of collective experience with thousands of transactions and none of us personally knew of a single instance of an E&O claim. But, the fear of an E&O claim is oddly ingrained into every single sales agent.
- Economists call real estate a trade. NAR has sold real estate as a profession. At some point, a lot of people need to take a step back away from the Kool-Aid table.
- It's not in the best interest of individuals to go anywhere near these third-rail topics. NAR controls the industry narrative. Agents are being told, as they always have been, to ignore the man behind the curtain.
Other than politics, it’s hard to imagine another industry that relies so heavily on false narratives. If something is said often enough, it must be true. Repeated often enough without rebut, and it becomes fact.
Code of Ethics
Ever stand in a room of Realtors while someone from National Association of Realtors (NAR) speaks of the Code of Ethics like it was some ancient Holy Scripture to be addressed in only hushed and revered tones? My Code of Ethics “class” consisted of: checking in, sitting down at a table and playing with my phone for 30 minutes while someone droned on about being the “best of the best.”
Now, is this representative of the nation? I hope not. But, NAR continually sells their Code of Ethics as the industry’s guiding light. Yet, anyone who has ever attended a Code of Ethics meeting knows it’s hardly that.
Ever read the comment section at the bottom of an online article? If anything in the article strays from the traditional industry norms, the more threatening the language of its comments becomes.
Statements like: “You are playing with people’s lives.” or “It’s not ‘will it happen,’ its ‘when.'” (insert your disaster) and “People will end up bankrupt or in jail.”
The first thing that comes to mind when reading comments like these: holy crap, where do they practice real estate?
Upon further reflection, one realizes there are jobs where lives do hang in the balance, but real estate isn’t one of them.
In our area, much like the national average, there is a core of full-time professionals, but the lion’s share of all real estate transactions are between mostly part-time housewives or househusbands, who are filling out pre-approved legal forms for properties that have been sold dozens of times previously.
We aren’t exactly stepping off Metes and Bounds anymore. So, the trade of real estate isn’t as life threatening as many paint it to be, is it?
Risks or delusions?
Many years ago, I was told by an errors and omissions (E&O) salesman that one in three real estate sales people will be faced with an E&O claim at some point in his or her career. Even then, that figure seemed wildly irresponsible.
Recently, at a luncheon with six other area brokers, I asked the table to discuss their E&O issues. I got crickets.
Over a century of collective experience with thousands of transactions, and none of us personally knew of a single instance of an E&O claim. But the fear of an E&O claim is oddly ingrained into every single sales agent.
We asked two different law firms what a real estate sales agent filling out a pre-approved legal form could do that would cause an E&O litigation? Aside from flat-out illegal activity, which wouldn’t be covered by insurance anyway, neither firm could offer a reasonable scenario wherein an agent would unknowingly stumble into a situation where it would cause someone bankruptcy or jail time. It simply doesn’t happen.
Surely, the industry chartered with selling these insurance policies can cite chapter-and-verse their success rates. Turns out, though, there are no E&O statistics available.
How many claims brought? How many claims defended? Money saved by agents with insurance, money lost by agents without it? No one knows exactly what E&O covers or what good it does, but almost everyone agrees you must have it.
The old chestnut of full-time agents versus part-time agents has literally been debated for decades. Yet today, we have far too many agents still painting part-timers in the same Trump-like broad brush: “They’re lazy losers.”
Making gross overstatements for an entire collective of people is rarely a good idea. But, like our political brethren, spreading falsehoods and negative selling seems to be as important to the real estate industry as it is to politics. We can’t help ourselves.
Ever been in an agent discussion group when a peer bemoans the fact Realtors don’t share the same respect as lawyers, doctors and architects? Yet, has anyone ever stood up and said, “Are you nuts?”
Just because an agent might make six figures, thinking their $300 online course and multiple-choice test is the same as 12 years of higher education is delusional.
Economists call real estate a trade. NAR has sold real estate as a profession. At some point, a lot of people need to take a step back away from the Kool-Aid table.
The man behind the curtain
The purpose of much NAR literature is to sell false narratives. Imagine how difficult it is to justify spending hundreds of millions of dollars on lobbying efforts when you know you have so little, if anything, to show for it.
Are we are an industry built on and maintained by false narratives? Surely everyone can agree that taking a mandatory yearly fee — union dues without representation, if you will — and selling it off as the only requirement for entrance to an elite best-of-the-best group certainly sounds silly at first. The fact people have bought into it for decades makes it nothing short of marketing genius.
But, the sad thing about third rails is they are simply too toxic to touch. It’s not in the best interest of individuals to go anywhere near these third-rail topics. NAR controls the industry narrative. Agents are being told, as they always have been, to ignore the man behind the curtain.