Toby Boyce
By Toby Boyce
“Should NAR include a pro bono provision in REALTOR® code of ethics?”
The question was posed to me recently on Twitter by Sellsius publisher Joseph Ferrarra. It is something Ferrara has been kicking around for a while with “Pro Bono Real Estate Broker?” appearing June 2006 and several other articles including “Should NAR include a pro-bono provision in REALTOR® code of ethics?” on Feb. 24.
I am a huge Ferrarra fan and am honored to have had the opportunity to meet him on a couple of occasions. But, on this occasion I just don’t get it.
There are two key pieces of this discussion that bother me. (1) If you can’t afford to pay a commission on the house, can you afford to maintain the new house? (2) Adding this to the code of ethics doesn’t do anything but give it lip-service.
Don’t get me wrong, pro bono work is extremely noble and can be very rewarding. I strongly believe in giving back to our community – either through volunteering or providing pro bono work for some in the market. However, it all comes back to dollars and cents to me. Real estate is not law. People do not require our services, while everyone may need an attorney at some point in their life. If a buyer is purchasing a starter home, but “can’t” pay my 3 percent commission — so I rebate it back to them. They are essentially getting into the home with 0.5 percent down. Isn’t that the kind of stuff that got the housing market in trouble to begin with?
Now, I understand there are extenuating circumstances that may lead an agent to do pro bono work. However, those are situations that are best analyzed and taken into account by the agent and the brokerage.
I’ve not seen a compelling argument for the addition of this to the NAR Real Estate Code of Ethics. Reading through the discussion, there have been some points brought about addressing what adding the pro bono clause to the Code of Ethics would provide.
- It works for attorneys. It does? In a 2007 Jobboom.com article “Top 10 least trusted professions” attorneys come in fourth — just behind used car salesmen, politicians, and mechanics – as the least trusted professionals. So having a pro bono clause in their code of ethics has improved their perception in the general public? (Just for the record, real estate agents are not in the top 10.)
- Personal satisfaction of helping someone. The majority of people I know love to get personal satisfaction from helping people. It is a wonderful feeling. But, do we need to add a provision to the code of ethics to achieve this? No. In fact, I think adding the pro bono clause cheapens it for those of us that truly do it out of the goodness of their own heart.
- Goodwill generated from their actions – word of mouth from the grateful seller and his family/friends. Is it really pro bono if you have a hidden motive to build more business through the promotion of this event? I don’t think it is. The secondary piece is that we usually communicate with people in our own socio-economic circle. So you help Jim and Julie improve their lot pro-bono – what is the difference then in helping Stan and Karla?
- Possible free press (print & TV) for this unusual act. Again, I struggle to see how providing pro bono work is really news worthy. It isn’t curing cancer. It is just one person giving back to their community by doing pro bono work for another in the community. Maybe I’m wrong, but I just don’t see it as a press-worthy event. Having pitched stories like this before to media outlets, I expect the reaction to be something along the lines of “lawyers have been doing that for years.”
- Better image of the real estate broker overall. Would it be a better image of the broker? We are seeing more and more agents realize they are their own brand — but have to work within the brokerage’s model. However, I don’t see a brokerage having a “pro bono day” like you’ll see them have community service project days.
Every real estate practitioner needs to give back. We just don’t need it to be dictated by the REALTOR® Code of Ethics. Those who would do it anyhow will continue doing so, while those who wouldn’t will continue their ways.
Toby Boyce, MBA, is a real estate practitioner with Keller Williams Consultants Realty in Westerville, Ohio. Visit his Web site: www.delawareohrealestate.com.
Comments 6
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I’m not a Real Estate guy, but Toby I’m with you. Sadly, the arguments you noted are weak at best. The difference between attorneys and Real Estate professionals is that most of us will NEED an attorney at some point. Not everyone needs to buy real estates. Many of us WANT to buy it, but if we don’t NEED it.
I’m also confused as to why the buyer is needing pro bono assistance. Isn’t the seller paying the commission for both sides of the transaction??? If we’re talking about the seller not being able to afford to sell their home then perhaps they just shouldn’t sell. I’m trying to sell my home in Dallas right now. I’m going to have to eat all my equity to sell it when I do the math, my 7% in closing costs are built in to my calculations.
Encouraging people to be financially foolish can only make this bad situation we are all in worse.
Getting press coverage on pro bono real estate transactions? Please. Who are these people dreaming this up? I just put on event where children bought toys for kids with HIV/AIDS in a very cool toy store. I had one piece of media coverage (not that I’m complaining), but she also happened to be a judge in the essay contest tied to the event.
Ryan, I too, agree with Toby (as usual!). Firstly, however, I must correct a misinterpretation. The “Seller” doesn’t pay the commission. The listing company pays it as per their agreement with their Client.
I’m not exactly sure why Joseph Ferrara would even suggest that our Code of Ethics should be involved in this kind of discussion. There may be many point, good and bad, but to suggest that this belongs in the COE is inappropriate. Perhaps in a conversation at the national level, but let’s remember, how much is charged or not charged must be negotiable between parties.
Let’s be careful here per federal law. Toby couln’t be more right. The correlation between pro bono and respect. Giving away services, which is what we’re really talking about is, in my opinion no way earn respect.
My two cents. Thanks Ryan for weighing in and for caring about the real estate industry.
I hope this has begun a good discourse!!
Toby,
I do believe that real estate should be able to be provided free as long as the broker and the agent agree (in texas commissions are negotiable). There are tax benefits that come with pro bono services, too. To talk about a code of ethics being introduced with it too, I most definitely agree that it should be. Just like with everything else, there needs to be a minimum standard of service no matter the price, or in this case none.
Some people try to take advantage of a situation. If a person really needs that additional help it should be allowed with stipulations that the agent/broker provide a certain standard of service. As with many things, there are two sides. On the other side, there should be stipulations that the client must be honest in presenting themselves and situation, in the event that they are not, then there should be avenues to seek compensation, etc.. In otherwords, both sides need to meet standards and have options in the event those standards are not met.
Great topic for discussion!
Toby, I think I have a situation that I would agree to work pro bono for as an agent. Before, I would have had to think long and hard, now I don’t. I am working as a volunteer with an oganization that has the goal of helping to end homelessness among military Veterans.
Some Veterans are hard workers who have served their county honorably, then come home with medical and psychological issues beyond their control, or can’t immediately find a job (but have income to make payments). Perhaps they’ve been off work for a while recovering, or rebuilding their lives. Is it a single Mom who wants a long term home for her children (and has income)? If I can help a non profit organization identify/acquire a good home for them (or any homeless Veteran), and not charging a fee will keep more money in their pockets, I can see myself doing that. It took me to be a volunteer to see this clearly.
Maybe at some point in the future a revision to the Code of Ethics may have to address this volunteer component of our business. For example, can you use the client’s name in an ad if you choose to highlight your community service, if you plan to do the work only to get the credit and have your picture plastered around town and on t.v. news segments, etc, must you disclose that to your client? What duties do you owe to a client that is not paying you, and is it different than one who pays you? The Code of Ethics gives us fair, well thought out guidelines for many situartions meant to protect the public and in many cases, ourselves. It is always good to have a roadmap with the “right” roads to take. Thanks for posing the question, Toby!
In 2003 I sold my property, 1025 Sheridan Cir Naperville IL 60563 (Kingspointe of Naperville) to Tracy Spregner.
I continued to live there, while she lived there off and on.
During 2010, she was not living there a lot.
Since, I was paying her rent, I no longer knew about what her affairs was with the association dues.
June 2010, I was informed that she was thinking about selling the property. While I continued to pay my rent.
December 3, 2010, there was a Sheriff’s Notice of eviction, on my front door for unknown occupants. I went and filed a written petition with the Clerk of the Circuit Court, located at the Dupage County Courthouse at 505 N. County Farm Rd. in Wheaton, which a copy of the Petition was immediately delivered to Office of The Sheriff of Dupage County, Civil Division.
I appeared in court on December 16, 2010, with Ms. Sprenger’s Realtor, who showed one of your Attorneys, from Keay & Costello the contract he had for the sell for the home.
Your attorney said he would drop the case and report to the association, that the home would be sold and the proceeds would be forwarded to EPI. Less than three weeks there was another Notice on my door, for February 17, 2011. I went a filed another appearance on February 4, 2011, I was given February 16, 2011, 1:30pm to appear. The Realtor appeared with me again. There was a different attorney from Keay & Costello. Without ever explaining my case the Judge ordered I leave the premises as scheduled for February 17, 2011, 9am. To my surprise I was stung and very confused. Three days after the Big Blizzard I had to moved, with no money and no place to go. I went back into the court room, and ask your Attorney couldI have more time, at least until the weekend. He told me that there was nothing he could do, that I should go to the EPI Office and talk to someone there. By that time it was 2:30pm. I got to the office at 3:45pm, spoke with Gail, crying and pleading to give me at least til the weekend. I went out the office three times, on the second time, Gail asked about the rent I was paying, I told her that I had just paid, and that I was unemployed, and that I had no more money, she said there was nothing she could do. I went to my vehicle and called one of my friends, I told them what had been said, they said, “Go back in there and ask her what did she say about me, having the rent to give her, I told my friend I didn’t have anymore money, the friend said just go back and find out she said? I went back in the office, while my friend was still on the phone and asked Gail about what she had said?
Gail said, ” that if I could give her my rent by 5pm, that she could stop the eviction. My friend wanted to talk to her, my friend told her that she lived in Maywood, IL and that they could give me the money, but it was no way the money could make it there by 5pm. Gail said, ” that I could give the maintance guy who would come with the Sheriff a Cashier Check, that would stop the eviction and that she would talk to your legal department and have some papers written, stating I would continue paying my rent to EPI until the property is sold.” I asked if she could give me something in writing while I was at the office she said no she would have to have the check first.
On February 17, 2011, Thursday, the Sheriff appeared at 8:30am, “he told me that he had to excute the judge’s order and that what ever we agreed on was entirely up to us. The Sheriff left and came back at 9am and waited a few minutes for your maintance guy, who was not aware of the transaction to be made, so we got Gail on the phone. The maintance guy took the check. The following Monday I called the office, Gail told me that the Leagl department would contact me. Wed the same week, I called again, I was told I still had to move and that I would be getting my money back. I moved out on February 29, 2011. I call and sent and email, asking where was my refund, I was told that they never received it .
I had misplaced my copy of the Cashier Check, and just found it last week, so I went to Chase bank to have the check researched. Showing that the transaction was cashed my EPI.