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A while back, I attended a Code of Ethics class where the presenter posed an interesting question: “Which takes precedence — business ethics or personal ethics?” This question stuck with me because the answer seemed to be that if you want to keep your business license, business ethics must take precedence over personal ethics.
As real estate agents, we owe fiduciary duties to our clients, and these duties take priority over everything else. I’m sure most full-time agents have, at some point, missed a ball game, a family event or a personal commitment because our responsibility to the client came first.
A telling ethics example
One of my favorite examples of how business ethics take priority involves an open house scenario. In Arizona, where I am licensed, and in many other states, there’s a “stigmatized property law” (ARS 32-2156) that states no criminal, civil or administrative action can be brought against a seller or licensee for failing to disclose that a property is near a registered sex offender.
Here’s the situation: A seller tells their listing agent that the reason for selling is due to a sex offender moving in next door. The seller then gives the agent written instructions not to disclose this reason or the presence of the sex offender. The listing agent, bound by fiduciary duties of obedience and loyalty, agrees.
A few weeks later, the listing agent holds an open house. A young family with two children tours the home and considers making an offer. The agent’s personal ethics kick in: “I need to tell them about the sex offender next door. I’d want to know if I were in their shoes.”
However, the moment the agent even hints at sharing this information, they risk violating their fiduciary duty to the seller and could lose their license.
In this case, business ethics clearly override personal ethics.
The Clear Cooperation debate
One of the hottest topics in real estate right now is Clear Cooperation — the rule that listings must be placed on the MLS within a day or so of marketing the listing to the public, with some exceptions for office exclusives.
Predominantly large brokerage CEOs, including The Agency’s Mauricio Umansky and Compass’ Robert Reffkin, continue to mount pressure on NAR to eliminate Clear Cooperation and return to the days of pocket listings. What if this issue is a personal ethics versus a professional ethics question?
If your personal ethics are focused on making more money and destroying your competition, Clear Cooperation obviously needs to go away.
Reffkin has been a loud voice against Clear Cooperation, arguing that sellers have risks when their properties are on the MLS — higher days on market can hurt their sale, buyer inquiries don’t go to their agent and the homeowner data is made public.
“Under the Clear Cooperation Policy, anytime a homeowner wants to market their home off-MLS for more than one day publicly, Realtors are forced to compromise both the ethical foundations upon which their profession is built and their obligations under state laws governing privacy and fiduciary duty,” Reffkin wrote in an op-ed on Inman.
I would argue that supporting the removal of Clear Cooperation rules stems from a desire for personal gain rather than from our fiduciary duty to protect and promote our clients. By keeping listings private, agents are violating broader business and industry ethics, as well as our duty to serve the entire community, in favor of personal gain or “market share.”
Reffkin also argues that the Clear Cooperation Policy is “anti-homeowner.” I would argue that primarily an issue for Reffkin’s bottom line, and the policy is pro-homeowner, pro-homebuyer and pro-fair housing.
Doesn’t limiting the general public’s access to the listing also do harm? Doesn’t a seller suffer if their home doesn’t get wide access to the entire pool of buyers searching for homes? If you ask Reffkin, he’ll probably argue the public can access the listing — if they find themselves a Compass agent.
If Reffkin has his way, hiring a real estate agent may look a lot like subscribing to a streaming service to get your list of houses. You’ll need Hulu to watch live TV (plus Disney for the kids); YouTube TV for NFL; Amazon Prime for Thursday games; Peacock for what I can’t get on YouTube or Amazon; Netflix for the movies; and Apple+, Paramount+ and MAX to cure my FOMO. You never know where that perfect show is hiding.
What lengths will buyers have to go to in order to have access to all the listings?
Wendy Forsythe, CMO for eXp Realty, seems to get it. “[If a buyer and I are] working together, I want to be able to go to one source to find all the properties that might fit his … needs,” she said. “Without Clear Cooperation, I’m not going to have that ability to do that. So to me, that doesn’t make me as effective at my job as I would want to be.”
Being effective as a Realtor means promoting and protecting our clients’ interests. Hiding opportunities for homes from our clients in service of our bottom line puts our personal ethics — and our personal pocketbooks — at a higher priority than business ethics.
Fixing without breaking
Clear Cooperation is a rule that protects the public — all of the public — in real estate transactions. When Clear Cooperation was passed, NAR left the rules vague, with implementation left to individual MLSs. We need to treat this as an ethics issue and fix the problem with policies that make sense rather than allowing personal gain to override public protections.
Instead of eliminating Clear Cooperation, perhaps we should revisit MLS rules to allow some level of privacy for sellers’ data that can be withheld, while still ensuring that properties remain available to the entire interested public.
In a related opinion piece in early October, former eXp agent Oscar Mazaba offers some potential solutions, but the conversation has to be grounded in what’s right for the consumer. Similarly, Anywhere Brands President and CEO Sue Yannaccone argues that Clear Cooperation isn’t a binary choice of preserve or repeal; adjustments can be made to existing rules without repeal.
At a time when agent behavior is under incredible scrutiny, looking to change policies to limit access to homes — in service of personal gain — continues the consumer belief that Realtors are all about the bottom line. Year after year, consumer polls show that Realtors are as respected as politicians and used car salespeople.
Is this what we want our industry to continue to be about? Have we learned nothing from Sitzer | Burnett?
Fighting to eliminate Clear Cooperation is a fight for personal gain and NOT consumer protection. It’s a fight to put our interests above our clients’ interests, sometimes under the guise of fiduciary duty and ethics.
Our industry leaders need to begin to focus on true business ethics. We need to ground our policymaking in promoting and protecting the client’s interests first. If we do that right, the bottom line will take care of itself.
Butch Leiber is broker-owner at Rev Residential Brokerage and a former Arizona Realtors president and current board member. Connect with him on Instagram or LinkedIn.
