This article was last updated Feb. 22, 2023.
Whether you’re a brand new agent or an agent who has just signed on with a new brokerage, you’re probably looking to your leadership for a host of benefits, including professional development, additional training, lead generation opportunities and more. However, all brokerages are not created equal — some brokers and leadership teams may be more of a hindrance than a help to your professional growth.
Assuming that there’s no possibility of productive communication, or that the lines of communication have broken down, what can you do besides simply walk away? Much depends on what type of leadership problem is occurring. Is your leadership checked out? Dishonest? Unethical? It’s important to figure out whether the problems are temporary and fixable or long-term and entrenched.
We reached out for some insights on your legal and ethical options when it comes to bad leadership along with common sense solutions for the more everyday challenges you may face. Keep in mind, you may incur liability if you are aware of violations and don’t report them. Make sure that you have a trusted legal adviser so that you can ensure that you’re always on the right side of these issues.
If you’re an independent contractor, what options are available to you?
Independent contractor status may leave many real estate professionals feeling that they have little or no recourse when it comes to speaking up about problems in leadership. In reality, however, depending on the issue, you may have an obligation to do so.
In addition, there are options for anonymity that may make it easier for you to do.
According to real estate compliance consultant Summer Goralik, many agents may be “too fearful to file any kind of complaint against their broker,” fearing retaliation or termination.
Remember, however, that it’s the designated broker’s “statutory mandate,” or, in layman’s terms, legal obligation, to monitor their agents’ activities to ensure regulatory compliance. If the broker is engaging in illegal or unethical activities, it jeopardizes the agents’ businesses and puts the entire company at risk.
In the case of violations of either real estate law or criminal violations, like fraud, said Goralik, “agents are obligated to take action and report this activity immediately.” In most cases, the appropriate venue for such complaints is the state real estate department and perhaps local law enforcement.
In addition, Goralik suggested that Realtors struggling with problems in brokerage leadership look into NAR’s Ombudsman process. Offered as part of member services, it’s “an informal way to resolve issues or address complaints.” Unlike mediation, which often involves monetary damages, the ombudsman helps to settle conflict when there has been a breakdown in communication by providing impartiality, careful listening, and an ability to identify and resolve differences.
5 leadership problems you may encounter
Whether you’re an individual agent dealing with leadership problems at the brokerage level or a team member struggling with a problematic team leader, there are a variety of ways that you can be impacted by breakdowns in leadership. Ranging from absentee leaders to abuses of power, they can create a host of challenges and ethical dilemmas.
Lack of leadership
The same skill set that makes a great agent might not translate to being a great leader. If your team leader or broker is more focused on their own concerns than on providing leadership, you can feel frustrated and at sea.
If lack of leadership is an issue, you’ve got to look at two factors:
- How it’s impacting you and your progress
- How it’s impacting the organization
Lack of leadership can run a brokerage into the ground, but you don’t need to go down with the ship.
🚩 Example: Your broker is more interested in jet-setting than keeping an eye on business, yet has not put anyone in charge of day-to-day operations. That means that you can’t get questions answered and are struggling to serve your clients accurately and effectively.
If the organization is made up of a strong group of agents, it may muscle through, though not at the level of performance it could with proper leadership. In this case, if you decide to stay onboard, look for mentors who can help you grow and develop professionally in a positive direction.
You’ve been recruited into a high-performing brokerage with a brand that’s focused on image, glamour and style. Once in place, you find out that the culture is more about partying than client service and the way to get ahead is to do the best keg stand.
🚩 Example: While you’re trying to build your business and your reputation for professionalism, your broker and fellow agents are tagging you on social media with their antics. (Not a good look.)
Many brokerages have a few agents who are party people, but if the brokerage culture is all about that, you might need to look elsewhere for a place to hang your license. The best time to figure this out? Before you sign on. Be sure and stalk their social media to get a sense of the vibe.
If leadership is not abiding by NAR’s Code of Ethics or if they are encouraging agents to sidestep ethical conduct, you have the option of filing an ethical or grievance complaint against the broker with the real estate board, Goralik said.
To understand the process and steps required, refer to the board of Realtors in your local jurisdiction for more information, including whether anonymous reporting is available. If you are not involved in or party to the unethical conduct, you likely won’t incur liability, said Goralik.
🚩 Example: Your broker lets you know that one of your fellow agents has a client who is unhappy with the quality of their work. The broker tells you to reach out to them and see if you can save the deal, even though they have an exclusive representation agreement with your fellow agent.
If you know that your broker is providing unethical advice, it leaves you with few options when you need to seek out help yourself. In addition, because you’re known by the company you keep, you could end up tarnished by the bad reputation of others in your brokerage, even if you’re doing everything right.
Different states have different rules when it comes to the treatment of independent contractors and employees, according to Nicholas Woodfield, a principal at The Employment Law Group, P.C., located in Washington, D.C.
The line between abusive behavior and actionable, discriminatory behavior comes down to whom it’s aimed at and how it’s targeted.
🚩 Example: Your broker lets you know that you, a female agent, will be getting a few extra leads this month since the men in your office have been closing so many deals lately. After all, the ladies have to stick together, right?
A manager can dislike someone for talking too much about their favorite TV show or talking too much in general. A manager may then be rude to or harass an employee or contractor based on personal dislike.
“If you’re a jerk, it’s bad management, but you have to have a protected class for discrimination or harassment to be illegal,” Woodfield said.
Woodfield suggests a number of recourses for those who believe they are being discriminated against or for those who are seeking to advocate for others in their brokerage who are experiencing discriminatory behavior:
- If your brokerage is part of a larger corporate entity, complain to the corporate head office. That way, limitations within the state won’t impact your ability to report discriminatory behavior.
- If your brokerage company is publicly traded, you can complain to the company’s general counsel and say, “I am an agent and there is systemic discrimination here. I looked at the firm’s public postings that say we are an equal opportunity employer. If shareholders knew about this, they would think they were being defrauded.” Under the Sarbanes-Oxley Act, publicly traded companies must meet certain obligations. This provides added motivation for the corporate office to get a handle on the local brokerage.
- Harness the power of public opinion through Yelp or Glassdoor. “Companies are very sensitive to how they’re perceived and to things blowing up out of control,” Woodfield said.
- Don’t work for a franchise? “An independent brokerage is still subject to EEOC,” Woodfield said. “Just treating you like a jerk is not illegal, but action against a protected class is illegal.”
If you know that there is criminal behavior occurring in your brokerage, you should report the behavior to your state’s real estate department, Goralik said. “Many state regulators who license and regulate real estate activity will allow you to file a complaint anonymously, though there are some that do require a named complainant.”
Remember, however, that filing an anonymous complaint may undermine the state’s ability to take appropriate action. “Depending on the violations alleged, regulators may need witnesses to testify at a hearing in order for the regulator to prove their case,” Goralik said.
🚩 Example: In the course of dealing with EMDs, you realize that illegal commingling of funds is occurring.
As for criminal conduct, Goralik noted that “state regulators often work in concert with local, state and/or federal law enforcement agencies in an effort to prosecute bad actors in the real estate industry who have engaged in criminal activity. Interestingly enough, many violations of the real estate law are actual grounds for criminal penalties.”
Ultimately, your reputation is tied to your brokerage (and your broker’s), so it’s vital for you to guard not only your own behavior but also to pay attention to bad behavior when it’s occurring in your office.
Although it might be easier to simply move along to the next brokerage, creating change in your market and in the industry at large starts with calling out wrongdoing when it occurs.
Please note: It’s important to differentiate between bad or ineffective leadership and criminal or ethical violations. If you believe that your rights have been violated or that there is prohibited conduct occurring at your brokerage, consult an attorney. The information herein should not be construed as legal advice.
Christy Murdock is a Realtor, freelance writer, coach and consultant and the owner of Writing Real Estate. She is also the creator of the online course Crafting the Property Description: The Step-by-Step Formula for Reluctant Real Estate Writers. Follow Writing Real Estate on Twitter, Instagram and YouTube.