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Agents with Attitude: Self-Regulation in Real Estate

Blog by Amanda Blake | April 23rd, 2012

"Such a pitty you conduct yourself this way such an embarrassment to our industry." I decided I would start this blog with a comment that was made by an agent in an email which just might peak your interest as I can imagine you are wondering how boring a blog on self-regulation in real estate might be. I think you might be pleasantly surprised at what this blog can teach you about the inside workings of my experiences in the real estate industry.

When I first started in the business in 2006, I didn't really understand how I could contribute to self-regulation in the real estate industry nor did I really understand why we needed regulation. Going into my 6th year of business, I understand this at a whole different level. My views and understanding have changed because of two factors; one is being an owner of an independent real estate brokerage as opposed to just an agent who belongs to a large franchised office and the other is the volume increase we have had in the number of deals we complete each year. I have found that the more deals I complete in a year, the more situations and experiences I am exposed to and the deeper I understand this business.

Real estate is an industry that is governed by law and the law is in place to protect the consumer. In Alberta, the government has privileged (key word is privileged) the real estate industry to operate as a self-regulated industry and has designated the Real Estate Council of Alberta (aka RECA) to ensure that practitioners (real estate agents, mortgage brokers, etc.) are following the law. To keep it simple, sometimes I refer to them as the real estate police.

At a high level, I understood self-regulation to mean that the government had removed the regulating from the ministry into the hands of an appointed council named RECA and there were rules that I had to follow in order to ensure that the best interests of consumers were protected. This standard creates accountability and credibility in our industry.

Throughout the last six years, I have never had a problem following the rules because my entire business model is based on programs designed by consumers for consumers. I also take great pride to ensure that my clients are always protected in the transactions they complete with me because I feel the value in my services comes from minimizing the risk my clients are exposed to with real estate transactions. So my goal for my client who is the consumer is no different than the goal of RECA.

RECA has become even more relevant in the day to day aspect of my business now that I own my own brokerage, especially because Lime Green Realty is innovative in our concepts and ideas. I want to continue to be creative but I also want to ensure we are following the rules because the rules are in place to ensure the consumer is protected.

Let's be honest, real estate agents are not highly regarded by many consumers even with self-regulation. When problems occur in the real estate industry because of the poor actions of practitioners, our industry begins to lose credibility. It is exactly for this reason that I feel the standards of self-regulation have to be set higher and us as practitioners have to step up our game. This might sound all hunky dory but trying to implement higher standards of self-regulation on a day to day basis is a huge under taking. And it is not something that RECA can control as it is a commitment that every practitioner has to make on a day to day basis in their everyday activities with their colleagues. And here is where the challenge lies. Why? Because of ego, pride, jealousy and not having the consumer's best interest made a priority.

I was recently speaking with a consultant that I know who happened to be doing some consultation with two different real estate agents over a two week period. The consultant asked each real estate agent to tell him which agent, team or real estate company that they liked so they could use that as role model for their own business. The consultant was extremely surprised that not one, but both agents basically said the same thing to him:

"I love Lime Green Realty because they are awesome and I hate Lime Green Realty because they are awesome."

Issue Number One:

The number one issue that inhibits self-regulation on a day to day basis is the jealousy that exists in the business. This industry is a breeding ground for negativity such as jealousy because there are too many agents doing so few deals every year. In Central Alberta, there are over 500 members in our local board. In Red Deer, there were approx. 250 primary listing agents that represented approx. 1,500 listing sales in 2011. That is an average of 6 deals per agent for the entire year. So when there are so many agents vying for such a small piece of the pie, you are bound to create a negative environment. Add an agent like myself into that mix who completed 89 listings sales in Red Deer last year, compared to the average of 6 deals per agent, and voila, the jealousy is sure to unfold. In fact, there were only 2 of us agents in Red Deer last year, out of approx. 250, that completed more than 50 listing sales in the year, myself and another agent that has been selling real estate for 25 years. So trying to reduce the amount of jealousy in a highly competitive environment is going to be a task for any industry, never mind one that is self-regulated.

Issue Number Two:

The second issue that inhibits implementing self-regulation on a day to day basis is pride. I recently had a listing for sale that a veteran agent brought me an offer on that was accepted by the sellers after some minor negotiation. It is standard practice in our industry, when a buyer meets all of their conditions, a condition removal form is submitted to the listing agent (in this case, myself). A condition removal form says (in short form):

"I am the buyer of the property. The condition(s) in the contract that I now unilaterally waive or
have satisfied is (are):"

And then depending on the condition, it will say:

"8.1b) property inspection condition on or before "

The condition removal form that I received from this veteran agent was written like this:

"To Delete: 8.1b) property inspection condition on or before "

I had never seen someone write "to delete" on a condition removal form and I have seen hundreds of condition removal forms over the last six years. In my opinion, it was not a proper use of the form as the buyers were not deleting the condition, they were waiving their condition. If there is one thing I have learned about contracts and law (even prior to getting into the real estate industry) it's that the words that are used in a contract are critical. Altering just one word can change the entire context of a contract. Given that I am not a lawyer and do not have the legal training to determine what the implications of "to delete" would do to the contract, I didn't want to put my client at risk by allowing it to stay on the form.

I do know that when something is added or deleted on a contract, you need both parties to sign or initial the change. Typically a form called an amendment is used to execute this change. The difference with a condition removal form is that only the party who is waiving the condition signs the form. So I didn't feel comfortable having the word "to delete" on the condition removal form.

I called the veteran agent and indicated that I noticed what I thought was just an oversight on his part and asked him to remove the words "to delete" from the condition removal form and have his client initial the change and re-send me the document.

I was surprised at the response I received. It went something like this, "The words, to delete, are on the form because that is what we are doing, we are deleting the condition. I have been completing the condition removal form that way for 20 years and I have never had a lawyer or a broker ever call me out on it or tell me that it was wrong."

Well I definitely wasn't expecting that response and frankly, it really doesn't matter to me how long you have been doing something it doesn't mean you have been doing it right. So without creating a huge issue over a minor detail, I politely replied "I am not looking to debate the issue of whether this is right or wrong, I am just not comfortable having those words on the condition removal form and would like them removed and initialed by your client before we process the document. I am not willing to undertake any amount of risk on my clients behalf with this transaction."

I was expecting/hoping for a moment of self-reflection or realization from the veteran agent that maybe I had a point and thought maybe I would hear "well of course Susan, I understand, you are a small brokerage and if you are not comfortable with how I have completed the form, I will get that changed" but instead, the veteran agent hung up on me without even saying goodbye. So rude!

Not all was lost on deaf ears though because the second condition removal form I received from the veteran agent did not have the words "to delete" on the form. The form was filled out the way I would expect a condition removal form to be filled out. The sad part about this situation is that I am sure if you asked the veteran agent, his perspective on the situation would be that I was just being difficult or arrogant. When my purest of intentions is to ensure the consumer was protected which included both my client and his client.

Issue Number Three:

The third issue that inhibits implementing self-regulation is a lack of understanding of what professionalism really means. On another one of my listings that was for sale, I had an agent (let's call her Mary) bring me an offer which had some minor negotiation and was quickly accepted by the seller. The executed offer to purchase that Mary drafted was sloppy. It had errors and missing information in the offer as follows:
  • Mary spelled the seller's last name incorrectly on the first page of the contract.
  • Mary had included a property inspection schedule with the documentation and had a property inspection condition there was no checkmark under section 8.1 where it says "A property inspection schedule is attached to and forms part of the contract – yes or no checkbox"
  • Under section 12.2 the contract stipulates in bold print "The representative information must be completed in full by the Buyers Agent at the offer stage PRIOR to the contract being signed in order to permit communication on the representatives." There is a section just below this that has the place for the listing brokerage's name, address, phone number and fax number which is the section that 12.2 is referring to. Mary failed to enter in our brokerage address, phone number and fax number.
  • On the property inspection schedule, Mary only put the last names of both parties on the schedule, instead of their full names and then spelled the seller's name wrong again.
But rather than make a stink with Mary, I decided to make all of the corrections myself and then had my client initial each of the errors or the blanks that I filled in to ensure the contract was legally binding.

Before I returned the signed counter back to Mary, I stamped circles at each change that required the buyer's initials (as I do with every offer). I do this for two reasons, one is so that no initials are missed when the other party does final signing and the other reason is because if the agent is emailing the document to her client, she doesn't have to print the contract, put her own circles and then re-scan and email the document, she can just forward the same document I sent. This process minimizes the number of errors and makes things more efficient for both parties.

I should note that the negotiation with Mary involved just one counter which was executed via text message so I had no other prior interactions with Mary on the phone or in person. Once I had the signed counter offer, I emailed the following to Mary:

Hi Mary,

Attached is the counter offer forwhich is signed by my client. There were several
errors and blanks in the offer which I have filled in and put circles beside all of these changes.
Please make sure both of your clients initial in each circle and complete final signing


And this is what Mary wrote back to me:

Can you not do one deal without being rude and arrogant. Such a pitty you conduct yourself
this way such an embarrassment to our industry.

No word of a lie, this is exactly what she wrote to me via email, word for word. I was completely stunned so I quickly went back and read my email to see what on earth I had wrote that would warrant such a response and I came back with nothing but an agent that needs a lesson or two in what professionalism really means.

What is even more puzzling is the fact that Mary felt we had done a deal together before. The honest to goodness truth is that Mary and I have NEVER done a completed deal together. The closest we ever came to doing a deal was in 2011, when she brought me a low offer on one of my listings. We were doing some verbal negotiations via text message over a period of a few hours and my seller wasn't overly thrilled with the offer so he was going to sleep on it. It just so happened that at 9pm that same evening, another agent sent me an email with a second offer. I contacted my client with the information of the second offer and he decided to drop the offer that Mary had brought and accept the second offer because it was so much better than Mary's offer. As a courtesy to Mary, I sent her a text message and let her know we had received a second offer even though my seller did not want to entertain Mary's offer any longer. What my seller loved about the second offer is that the father was co-signing so the financing was very solid. The offer Mary brought was a first time home buyer putting 5% down and when I asked for details on the buyers pre-approval, Mary gave me no information except to tell me that her client was pre-approved. This made my seller really nervous because he had experienced a collapsed deal on financing a few months earlier and didn't want to have to go through that again. So around 11pm, with still no response from Mary, my seller instructed me that he wanted to accept the second offer regardless of what price the first offer was willing to make. So just after 11pm, I sent a second text message to Mary indicating that my client had accepted the second offer and the property was conditional. The next morning, Mary was extremely upset with me (although she had no reason to be as I don't make the decisions about offers, my clients do) and I recall her being rude and ignorant in the text messages she sent to me, it wasn't me.

The troubling issue with Mary is that she is actually what I would consider, a high volume producer in representing buyers and therefore is doing a lot of deals each year which means she must be completing a lot of sloppy paperwork. I feel bad for her clients as this can create a higher risk situation for them.

So the moral of these stories is that in the real estate industry, I have found that when you try to raise the bar of self-regulation and have higher expectations of your colleagues, they label you as difficult or in Mary's words "arrogant" when really, you just have a desire to increase the credibility of the industry with consumers which is the essence of what self-regulation is.