With 2020 packed in mothballs, I have a tremendous amount to be thankful for when looking past the chaos and surveying the fruits of my hopeless contrarian approach to business. As the world was coming to grips with an eminent change in our day-to-day routines cloaked in uncertainty, I bought an office building, made a full time hire on the management side and added a vehicle to the fleet. On the real estate front, I managed to cobble together just over $21 million in sales in 2020 which worked out to almost an exact split between buyer and seller representation. Certainly not the top of the heap nor the bottom though I’ve never mired myself in statistics but rather results and relationships. As most if not all of my management base may attest, whether they’ve been with me for two months or two decades, I am a hopeless sap for good people. In turn, this sentiment has been a driving force in how I’ve approached my management, services and real estate services from day one. Laser focused on developing and nurturing lasting relationships, giving back in any number of capacities is not only a gesture of gratitude but in my mind its simply a better way to do business rather than a gimmick.
In recent months, I’ve heard some secondhand grumbling from a slight few that do not see my approach through the same sunny lense. When the first used the word unethical, I of course assumed this party was simply unaware of the definition. When the word was floated for a second time, that of course got my attention and as I have no intensions of altering my protocols, policies and principles that I’ve exercised since 1998 over misguided yet ruffled feathers, I did feel compelled clear the air as someone misrepresenting my methods may surely fall into that 50 shades of gray of unethical behavior.
The alleged crime: Offering “inducements” in order to attract business.
It took me years to enter the world of real estate as the stereotypes soured me time and time again. Within hours of apprising my management flock that I had become an official real estate agent, I was run over with every tongue in cheek comment one might imagine. Such as most, real estate business in the early years came from friends and of course management customers as real estate is one of the very rare occupations where virtually zero prior experience, journeyman ship, apprenticeship, degree, etc is required but is rather based on, at least at the onset, trust rather than track record, education or general achievements. Some, such as myself, entered the industry with relative knowledge such as my building and management background but for just about everyone starting out, we are untested.
Sitting in a closing way back when, watching a breathless agent clutching their pearls in one hand and a commission check in the other engaged in a full blow case of the vapors because the attorney forgot to cut the $50 reimbursement check for a smoke inspection was the very moment that I had concluded that the “settlement statement” [list of agent/broker reimbursable expenses] I had just learned of would never see the light of day in my world.
Shortly thereafter, one of my first listings came along and it was for one of my original 5 management customers from 1998. Heartbroken over the circumstances leading her to selling, this “customer,” who had evolved such as most of my base over the years as family, had my undivided attention. Devoid of any premeditated angle, to say nothing of having the signed listing agreement in hand, it never occurred to me that I should begin calling the owner for checks and coordination of inspections, cleaning, pictures and the myriad of fees that would bring us to closing. I simply took it upon myself to spare her the added stress. Months later, having sold their home south of Boston and settling into Florida, she called in a panic concerned that our Cape transaction was not valid in that her Boston area agent “seemed to call daily looking for a check” and proceeded to reel off the list of typical items. I then assured her that all of those issues were filed and paid for. The tears of gratitude to follow cemented my approach to real estate.
While I make no bones about reinvesting in my buyers and sellers, I remain confused over the ethics matter so I did some digging but first it is important to start at the beginning. In order to become a real estate agent, one must find three people that endorse their character then complete a 40-hour course which simply prepares one to pass the multiple-choice exam. To rib my broker at the time, I often referred to this course as The Academy. As real estate seems to be in constant competition with law in terms of who can develop that most convoluted terms such as severalty meaning of course singular, the industry is also ripe with acronyms which again, come in handy during the multiple-choice exam. Among these acronyms is COALD which stands for Confidentiality and/or Care, Obedience, Accounting, Loyalty and Disclosure.
Loyalty: A duty of loyalty is one of the most fundamental fiduciary duties owed by an agent to his principal. This duty obligates a real estate broker to act at all times solely in the best interests of his principal to the exclusion of all other interests, including the broker’s own self-interest. A corollary of this duty of loyalty is a duty to avoid steadfastly any conflicts of interest that might compromise or dilute the broker’s undivided loyalty to his principal’s interests. Thus, a real estate broker’s duty of loyalty prohibits him from accepting employment from any person whose interests compete with, or are adverse to, his principal’s interests.
I would humbly submit that if I restructure my commission to assist my client in a sale and/or coordinate and cover the costs associated with the steps that get us to closing, that may be the very epitome of acting solely in the best interests of [the] principal to the exclusion of all other interest, including the broker’s own self-interest. This expectation for loyalty is further illustrated in Article 1 of the Realtor Code of Ethics.
REALTOR® Code of Ethics
Code of Ethics and Standards of Practice
of the National Association of REALTORS®
Effective January 1, 2019
Duties to Clients and Customers
Article 1 (Case Interpretations for Article 1)
When representing a buyer, seller, landlord, tenant, or other client as an agent, REALTORS® pledge themselves to protect and promote the interests of their client. This obligation to the client is primary, but it does not relieve REALTORS® of their obligation to treat all parties honestly. When serving a buyer, seller, landlord, tenant or other party in a non-agency capacity, REALTORS® remain obligated to treat all parties honestly. (Amended 1/01
I would digress here to confirm that no two transactions are the same. At this very moment, I have a closing pending for $450,000.00 where, on behalf of my buyers, I proactively donated $5,000.00 from my commission in the initial offer in order to thwart an otherwise eminent bid war. Conversely, a closing for $2.6 million that occurred just yesterday left no cause or opportunity to get creative rather I will endeavor to make that up on the impending renovations for my buyers. With that said, Article 3 speaks clearly to how these creative solutions are permissible. Among my sales in 2020, applicable cooperating agents and brokers were openly pleased with my methods, to include one who participated, as they were the very cause for success.
Article 3 (Case Interpretations for Article 3)
Standard of Practice 3-3
Standard of Practice 3-2 does not preclude the listing broker and cooperating broker from entering into an agreement to change cooperative compensation. (Adopted 1/94)
Speaking to advertising, the area in which I was cautioned, I believe or hope that I have successfully satisfied the criteria of exercising care and candor suggested in Article 12.
Article 12 (Case Interpretations for Article 12)
Standard of Practice 12-3
The offering of premiums, prizes, merchandise discounts or other inducements to list, sell, purchase, or lease is not, in itself, unethical even if receipt of the benefit is contingent on listing, selling, purchasing, or leasing through the REALTOR® making the offer. However, REALTORS® must exercise care and candor in any such advertising or other public or private representations so that any party interested in receiving or otherwise benefiting from the REALTOR®’s offer will have clear, thorough, advance understanding of all the terms and conditions of the offer. The offering of any inducements to do business is subject to the limitations and restrictions of state law and the ethical obligations established by any applicable Standard of Practice. (Amended 1/95)
The almighty dollar: The essence of the alleged crime. For better or worse, richer or poorer or whether I genuinely believe in the matter or not, I have always fallen in line and played by the rules evidenced by the four licenses, four bonds, a professional registration, three liability policies, a comp policy and annual MA State Police background check that Nauset Management maintains annually. With that said, it is then my decision as to how that balance of the war chest is allocated and to have this discussion, it is vitally important to review alternate approaches that have been in practice for years.
With just over $21 million in sales for 2020, I reinvested just under $80,000.00 in my buyers and sellers be it bridging gaps in offers and acceptance, general process expenses and the like. As I am but a lone broker, surely other shops are working with similar if not infinitely greater margins so where do those funds go? I do not pay a third party, in some cases out of country and irrelevant to my industry, for naming rights. I am perfectly content to work under my own masthead; a brand that I have created rather than renting that of another. I do not spend money on third party entities so as to intimate that these third parties utilize the services of Nauset Management exclusively. I’ve never been felt compelled to dedicated funds to a European luxury sedan in order to bolster the image of success. I have a 2015 truck that I am as attached to as my dogs and while they could all use a bath, I plan on retiring with it in 20 years. I do my work well but equally important, I do it quietly and free of shiny objects and self-importance. On the seller’s side I will always throw the weight of my management and building experience behind the effort and will continue to absorb the death by a thousand pinprick fees and hoops that get us to closing. On the buyer side, it boils down to like it or love it. My creative ways and the lengths I’ll go to depend on it. If I see the passion and excitement, I’m invested and again, no two sales are the same but however we get there, service after the sale is where we’re just getting started be it a management program, renovation or perhaps a bit of both. I’m by your side for as long as you’ll have me.
So where does the rest of the money go? As mentioned, I just purchased a building, welcomed a full time hire where I absorb the entire cost for the best health plan money can buy. I added a vehicle to the fleet with another on tap and currently chipping away at renovations on the abovementioned building. More importantly, my approach to real estate remains unflappable through good times and bad. As one service supports another, Nauset Management’s watch customers, already realizing the most competitive rates among properly licensed, bonded and insured companies, are rate locked through September 1, 2024. On the services front, the spoke in the wheel that started it all, our customers are covered from that illusive mouse to a brand-new house. Whatever the line-item expense, the investment ultimately focuses on those who invest in us.
It is appreciation and excitement rather than stress of the grind that finds me in the office between 4 and 5 a.m. daily and wondering where the day went when I look up 12 hours later. While most people claim it and perhaps the majority mean it, I genuinely love what I do and how I do it from the diversity of services to the needs from one person to the next, every day is a unique adventure and I’m thrilled to have the honor of being a part of so many of yours.
Very best wishes to you and yours in this New Year,
Jon
As a lifelong resident of the outer Cape I was the third generation to pick up the mantel in the family construction business. In my early twenties, I called the Cape my home on weekends as I spent several years working for a variety of off-Cape commercial construction companies. My site supervision resume includes two supermarkets, two HUD projects, a funeral home and a handful of steel industrial buildings as well as various restaurant and office remodels.