What Is It That The National Association Of Realtors Doesn’t Want You To Know?
We here at Real Estate Radio haven’t been the friendliest of blokes towards the NAR and we have been quite vocal about the puppeteering of Lawrence Yun but now we have even been left scratching our heads.
You see we get so many emails and calls from investors and agents alike and many of the questions that we get surround what a Realtor can and can’t do.
So we decided to find the most credible source we could find that would once and for all explain to our audience just what an agent could do to make more money in a transaction.
So we called the National Association of Realtors and talked to their head legal counsel and arranged an interview. Ralph Holmen agreed to do the interview and so as not to blindside Mr. Holmen and out of respect, we forwarded him the list of questions that we would be asking in the interview.
Now please bear in mind, he accepted the interview early in the Morning, and then, after the tribal council conferred at the NAR, he withdrew his consent and cancelled.
Hmmm…what is the NAR hiding? What is it that they do not want Realtors to know? Are Realtors being treated like mushrooms … you know, kept in the dark and fed a whole heaping pile of bullshit? Well I think so and I’d love to know what you think.
I understand that they are headquartered in Chicago and we all know how the political playbook is accustomed to being run in the Windy City, but is it possible that Blago has nothing on the NAR?
Is it possible that we all should come to expect that backroom dealing and covert ops are the norm in those parts? Heck, one guy has parlayed it all the way to Pennsylvania Avenue…but that’s another story altogether.
Here is the email thread in its entirety so you can see for yourself what the National Association Of Realtors is afraid to discuss:
Initial email from Real Estate Radio USA:
Barry Johnson bjohnson@realestateradiousa.com
03/19/2010 11:41 AM
To: rholmen@realtors.orgSubject: Real Estate Radio Interview
Hi Ralph,
It was a pleasure speaking with you today. If possible, can we do the interview on Tuesday, March 23 anytime after 2:30PM EST. The interview will only last around 20-25 minutes and it will be pre-recorded, so there is no pressure.
Please take a look at the questions. They are the most often asked questions we get asked from agents and homeowners/buyers. Please review and let me know if you would like to make any changes or even add any questions.
1. Is the NAR Code of Ethics designed to be a guidepost or is it a finite document that Realtors must adhere to?
2. The COE seems to be a document that has a lot of disclosure related concerns, why is disclosure so important?
3. The Contracts that most Realtors use seem to be quite advantageous to Realtors, why were they written that way?
4. What is and what isn’t a material fact that should be disclosed to a potential homebuyer?
5. What happens if those material facts, if known, are not disclosed?
6. Is the NAR lobbying at all for any stronger qualifications on someone becoming a Realtor?
7. What’s the difference between a Realtor and a real estate agent?
8. As foreclosures are permeating the industry, we see lots of short sales, is there any restriction on a Realtor buying short sales or foreclosures?
9. Are there any restrictions on a Realtor buying their own listing?
10. Here’s a scenario we get a ton of questions on. Let’s say a Realtor has a short sale listing. They decide that working the short sale for a commission is not as lucrative as buying the property and then flipping houses like an investor. Can an agent do that?
11. Can an agent partner with a prospective buyer to buy a property and later flip it at a profit?
12. There are some investors out there who are looking to partner with Realtors on Short Sales. Wherein the agent gets a listing, and partners with an Investor to buy, renovate and re-sell the property and earns a substantial profit, can they do that?
13. If none of the above scenarios are allowed, is there anytime that an agent can buy their own listing?
14. What constitutes a conflict of interest in a transaction involving an agent?
15. The reason for this interview is because we get so many agents who say this is illegal and that is illegal. There is so much watercooler talk. Where can an agent get correct legal advice in their own market?
I look forward to hearing form you soon,
Barry Johnson
www.RealEstateRadioUSA.com
Here is Mr. Holmen’s reply some 4 hours later:
Ralph Holmen rholmen@realtors.org*
03/19/2010 3:12 PMTo: Barry Johnson bjohnson@realestateradiousa.com
Subject: Real Estate Radio InterviewAfter conferring, we’ve decided that we’d prefer that I not do the interview. Good luck with your show.
Best regards,
Ralph W. Holmen
Associate General Counsel
National Association of REALTORS
430 N. Michigan Ave.
Chicago, IL 60611
Phone: 312.329.8375; Fax: 312.329.8256
RHolmen@Realtors.org
Ok…so notice the time stamps and more importantly notice that Mr. Holmen said “we’ve decided“. So it seems that a meeting was actually called to discuss these questions and someone realized that they may be opening a hornet’s nest if agents were actually told the direct truth and ordered Holmen to cancel his appearance.
I think it’s quite obvious that something is a bit fishy. But hey, I could be wrong so here’s what we’re going to do. We’re going to get some high profile real estate attorneys who actually aren’t afraid of telling it how it really is and we’re going to hear what they say about these questions.
We’ll be posting an update to see if we can get them on the air on Monday in Holmen’s stead. In the interim, we’d love to hear what you have to say about Holmen’s decision to cancel and more importantly what you think they may be hiding up in the NAR offices.
Also, we’d love some dialogue as to what you think about the questions that we were going to ask Mr. Holmen and what you think the answers are.
Stay tuned…this story is just beginning. What say you?
Interesting post Barry. I think nar probably don’t want agents to take their answers to your questions as license to do something that may come back to bite nar later on.
Not to say they would say agents are ‘allowed’ to flip their owns listings or whatever just that if they do say yes and agents do it but cross the line somewhere it could come back to the nar as their fault or something.
I’m pretty sure with proper disclosure you can do any of the above scenerios but that’s just my opinion.
Barry,
I would have to agree with Dustin regarding proper disclosure, which should allow any of your senarios. I have all my listings sign a right of first refusal agreement as part of my listing package, just in case. If I really think one is a steal I buy it up front. I have all my purchase contacts state that I am a real estate broker and investor. My personal opinion as to why people say it is illegal or unethical is that it makes a convenient excuse because they are afraid or unable to do it themselves. A high percentage of Realtors in my area do not even own their own home let alone being an investor.
I read your questions, which are thought provoking and require some pretty intensive analysis. Did you really think that a trade organization which by definition represents the interests of the member could answer those questions in radio sound bites? If you really want useful answers to the questions, you probably can’t really believe that you’ll get them from a NAR legal mouthpiece. I don’t think NAR is ‘hiding’ anything: I thing the association is wisely avoiding an impossible situation.
Hey Wayne,
I knew you had a handle on things and actually “got it”. I love that all of your contracts state that you are an investor as well. Pure genius! And agreed, the “it’s illegal” excuse is just that.
As for disclosure, that was exactly what we wanted to ask him. So many agents are afraid of the unknown and accordingly rely on friends and brokers and my problem is that the NAR won’t say anything. God knows they make statements on everythikng else. How about something that actually will help agents prosper?
Thanks for your comment and please feel free to pen another article sometime.
I understand that Dustin…but how about a modicum of guidance. Silence hurts the pocket books of agents..especially in this market. And I believe you’re right..with proper disclosure all things are possible..but is it wrong for the NAR to offer guidance? How many inane documents, pamphlets and videos have they put out that are absolutely useless? Instead, letting agents know a way to make some serious cash, if done correctly, is a great thing for an agent to know.
Thanks for your comment!
Hi Judith and thanks for your comment.
I wasn’t looking for a “sound bite” from Mr. Holmen. I was looking for detailed answers. It was an interview he was scheduled for…not a passing quip. Mr. Holmen is an accomplished attorney with an extensive background in real estate law. He is extremely qualified to answer the questions we were posing to him.
You are correct, we were actually very surprised when he accepted the interview, we actually thought he was more than just a mouthpiece. Wow were we ever wrong! But luckily we have some other attorneys who are just as accomplished as Mr. Holmen who are not having afraid to discuss this openly. We would have been remiss in not first attempting to go to the source.
If we went to other attorneys first, then agents would have said that we should have talked to the NAR, now they know that the NAR isn’t what it’s cracked up to be. Somehow I feel many agents already know that.
I do have a question regarding your comment though. Why is this an “impossible situation” for the NAR?
I encourage your continued discourse and it is most appreciated.
Barry. NAR is always going to be pro REALTOR(R) that’s their job. I have issues with many parts of the CoE. Especially when it dictates how I conduct my business. For example prohibiting me from contacting someone elses listing.
Their stance on “Range Pricing” is against “Anti Trust” laws in my opinion.
They won’t answer your questions about short sales because those are legal questions. It’s not their area.
I recently heard from a very reliable source that the person in charge of short sale training ion Florida has never done a short sale.
It’s very frustrating at times. But hey I just keep doing my thing.
Barry: a dispassionate, distanced legal analysis isn’t the same thing as speaking on behalf of the best interests of the members of a trade association. Best stick with the independent sources for legal perspective.
The same is true, I think, for economic analysis. Don’t go to the trade association–whatever the trade may be: homebuilders, medical practitioners, Realtors, chambers of commerce all speak for their constituents. They may offer valuable information but, by definition of the function of the organization, it isn’t going to be unbiased.
Hey BB,
“They won’t answer your questions about short sales because those are legal questions” ???? We were interviewing their lead legal counsel, Ralph Holmen. He should know better than anybody what is or isn’t legal and what strategies agents can use to better themselves financially. It would be absolutely “pro Realtor” to encourage their ability to generate significant income.
Is the support and encouragement of its members to generate substantial profits counter-productive to its members best interests? I think not…I was actually more pro-Realtor than they were…that’s just the point. I was actually championing the right of Realtors to make significantly more dollars!
I think the NAR owes you a little more explanation of why they were canceling. The NAR covers all 50 states, as does the CoE, but some laws are different state to state. Could he be afraid of answering questions that may work in some states, but not others? If so, he should have answered them in regards to just the CoE with a disclaimer that state laws may be different. The second paragraph of the CoE states “While the Code of Ethics establishes obligations that may be higher than those mandated by law, in any instance where the Code of Ethics and the law conflict, the obligations of the law must take precedence.” I don’t know if that could be his reasoning, or not. He really should have elaborated a little more on his reasons.
Since we are in Florida, the FAR Senior Attorney, Greg Hass, may be the guy to interview. I’ve talked with him several times and he has always been straight and willing to answer all of my questions (sometimes talking my head off and going deeper than I needed).
Hi Brad,
Thanks for the comment and the heads up. We’ll contact Greg Hass on Monday. Hopefully he’ll agree to go on the record. I really think this is something that could benefit anyone in the industry. We have personally partnered with a number of agents and they could not believe what said partnership afforded them. If more Realtors understood the opportunities available to them I think they would welcome the strategies to substantially increase their income.
We have actually taught the COE in our classes and it always amazes me when we tell agents that the statement you referred to gives them the ability to effect all kinds of strategies, but they simply do not believe it and get beaten down by inexperienced associated and brokers who may know even less.
Like you said, and I’ll repeat…in any instance where the Code of Ethics and the law conflict, the obligations of the law must take precedence… meaning if it’s a legal transaction then you are fine to participate.
What we tried to get the NAR to acknowledge, was the fact that such partnerships are legal. We know they are and many Realtors know they are, but the vast majority of agents haven’t a clue that this is in fact the case.
Great post Barry,
Let’s not forget that NAR is also in the business of trying to keep the 1 million or so realtors as dues paying. If they are on record as saying something is legal or ethical and some idiot agent figures they will give it a try, cuz NAR said it was ok, could backfire on them.
It is one thing to stand behind a CoE that has been around for a hundred years and another to be on record now saying that this or that is legal or ethical. NAR plays safe, better to keep a million sheep paying dues than to really thin the crowd to those that are making a living in this business.
Keep on plugging Barry!
Hi Erik and thanks for stopping by!
How sad is it that an organization exists to milk its members rather than to actually enhance the members ability to make money. It seems they go out of their way to KEEP agents from making money..but then I guess that’s the idea.
Good to hear from you!
I wish I were a Realtor in these circumstances. I would ask him to write his answers if he would’t go on your radio show….OR call a news organization and ask if they could do a story on it. He got scared obviously which tells me he wasn’t sure of himself.
Hi Maryann..thanks for the comment and for stopping by,
It does make one wonder…not sure what his problem is but it’s obvious that they want to keep their membership in the dark…for some reason.