Karl Racine, Washington, D.C.’s first elected attorney general, started off his speech at the National Association of Realtors’ new tech conference on Thursday with a joke acknowledging the tension that sometimes arises between business and regulators.
“I feel like I may have just been introduced as the turd in the punchbowl, but I can live with that,” he said, prompting laughter from attendees at NAR’s iOi Summit in San Francisco.
Racine referred to introductory remarks that pointed out the disappearance of briefly ubiquitous Bird scooters on the streets of the Golden City due to a crackdown by regulators.
But Racine sees his job and the job of his attorney general colleagues across the country as facilitating business while also protecting consumers — new technology notwithstanding.
“The old rules — being honest, making full representation of material facts, not defrauding anyone — they still apply,” Racine said in a talk titled “Regulatory Forces and the Impact on Innovation in Real Estate.”
“Just as the introduction made clear, it’s often wiser to get to know the regulator, maybe not ask in advance, but let the regulator know what’s coming and try to get the regulator’s feedback on what is legal and what is not before launching.”
Toward the end of his talk, Racine noted that D.C. had seen a significant increase in fraud related to the internet and real estate transactions.
“Something like 43 percent of consumers of real estate have encountered fraudulent misrepresentations,” Racine said, though he did not provide a citation.
“In the last 30 days we’ve had no fewer than four dozen complaints from would-be buyers that listings were not in fact listings, that listings were stolen and copied from Realtors and then presented by someone who wasn’t a legitimate Realtor and then that individual went about marketing the property as a property that was almost too good to be true, but sure enough collected tens of thousands of dollars. That gives everyone a black eye.”
Recently his office received a call from a successful “30 under 30” Realtor whose listings had been hijacked by scammer intent on bilking people using the Realtor’s good reputation.
“Our office is now helping that Realtor get his personal information back and also serving as a means to get his reputation back. Again, office of the state attorney general – always there to serve,” Racine said.
In contrast to earlier speaker California Attorney General Xavier Becerra, who said he’d never met his agent, Racine noted that he has a “robust relationship” with his own Realtor, Janet Whitman, whom he’s known since buying his first home in 1997. Whitman has keys to his own house, his mother’s house, his sister’s house in Philadelphia, and copies of his most important documents.
“Why is that? You know the simple word: trust, right? I gotta say there’s something about a profession where one can get to know someone, engage in a transaction, and at the end of the day, have that level of trust. And I’m hopeful that in the last 20 years I’ve returned that trust in the form of referrals. I think I have,” Racine said.
Racine is currently in the process of finding a home for his elderly mother and a couple of weeks ago, found a large new-construction house that he thought would be ideal.
“Janet knew I wanted it to work. I was literally dying to sign,” Racine said, but the house had three stories of stucco and Whitman convinced him to spend the additional $2,000 get an inspection with a stucco expert.
“Unfortunately, we found out that the stucco was the wrong kind of stucco and it was mis-installed. And lastly, that it didn’t have a built-in drainage system,” he said. He ended up voiding the contract.
“That trusted adviser saved me God knows how much money from potential water damage. I want you to know how much I respect what you do and how hard you work and I appreciate knowing that my Realtor is always on my side and has my back,” he said.
Racine proceeded to list some of the actions he and other attorneys general have taken in their bid to protect consumers. For instance, he asked attendees to keep an eye on a lawsuit that his office has filed against President Donald Trump alleging violation of the Constitution’s emoluments clause, which prohibits federal office holders from having a side business that makes money from foreign countries.
After some attendees clapped, he said, “I don’t want to be overly partisan here. I think it actually is a nonpartisan principle.”
Trump is the first U.S. president to invoke this clause, Racine said, noting that other presidents who had a business simply divorced themselves from the business when they took office.
Attorneys general also advocate for net neutrality — which NAR has also championed, Racine added.
One of the first lawsuits Racine’s office lodged when he became D.C.’s attorney general in 2015 was a case against a company called Handy, a competitor to TaskRabbit.
“Handy made the same mistake as the Bird scooter company did: they really didn’t check in with the rules. They talked about how all of their service providers were fully vetted, absolutely trustworthy, and there was a 100 percent guarantee on that,” Racine said.
“Unfortunately, in the District of Columbia we had over three dozen reports of robbery from the home as a result of the handyman’s services. As it turned out, the vetting was not very elaborate, the guarantee wasn’t worth the paper it was written on, and sure enough, 20 of the 36 cases of robbery involved individuals who had previously been convicted for what? Robbery.”
Embrace technology and merge it with existing businesses like residential and commercial real estate, he said.
“But also be extremely mindful of the old-line rules of the game: Can’t misrepresent, can’t take advantage of people, etc.”
Racine also reminded attendees that they collect consumers’ personal information and have a responsibility to keep it safe.
“I think it’s extremely important that businesses like yours really identify the right service providers who will maintain that confidential personal information of the customers in a secure way,” he said.
“This is where I think the first conversation with your state attorney generals might occur. We very much care about your safety,” Racine said. “I would urge the room to find a reason, a way to understand what your attorney general is doing around important information like protecting privacy and also protecting your safety.”
He ended by saying that NAR was one of the most respected associations in the country.
“They’re respected because they take positions that are fundamentally pro-consumer and pro-business. In that way, they really demonstrate that when it comes to commerce and business both the consumers and those in business can win,” he said.