It's the Rule - January 2006 by: President & CEO Terese (Terry) Penza, CAE, RCE, e-Pro I The Number One Reason for Arbitration Hearings Let's talk about the number one reason for arbitration hearings lately -- open houses. Here is the basic problem: agents think open houses are to gain new clients/customers/buyers; buyers think they are looking at a house by themselves and are not committing to anything; sellers think agents have open houses to sell their house. The three ways of thinking are not in sync. If the agent would recognize the looker’s and the seller's views, then they would make adjustments to gain action that would be of benefit to everyone in the potential transaction. But the unfortunate reality of what actually happens is as follows: 1. The agent wants the listing and selling side of the commission and puts that first. This is no good, since according to the REALTOR® Code of Ethics: a. Article 1 - As an agent, the best interest of your client must always come before any contemplated interest you or any member of your firm may have in the property b. Article 1 Your clients' interest always take precedence over your personal gain or advantage. c. Article 3 Cooperate in the sale of listed property unless you have a valid reason for believing that cooperation would no further the best interests of your client or the client instructs you to withhold cooperation. Be prepared to justify your refusal to cooperate if you are charged with an arbitrary refusal to cooperate. d. Article 16 at first practical opportunity explain who you are representing e. Article 16 Don't put your interest in a brokerage commission ahead of your responsibilities to your clients, even if the sale is made to a customer to whom you have shown the property but were unable to negotiate a sale 2. The buyers were just trying to get the lay of the land and want to pick their own agent -- not be forced to work with a certain agent. Too often an agent does not give agency notice or even discuss company policy so the buyer can make an INFORMED decision. a. The agency notice is a way to explain to the public how things work in real estate - who will show them houses, who will find them houses, who will represent them and who expects to get paid. b. A good agent would get a buyer agreement AND explain to the buyer not to look at anything without them and if they are going out without the agent then the agent would call the agent holding the open and ask if their buyer could come in without the listing agent trying to steal them away. c. Buyers DO believe they can walk into open houses. They have no idea that the agent thinks that buyer now belongs to them! 3. The seller wants you to sell their home as quickly as possible for the best price possible. a. The seller is not interested in opening their private home for you to gather up other prospects -- they believe you are trying to sell their home. b. "GREED is good" says Michael Douglas in a 1980's movie, “Wall Street” which might have played out in the 1980's for the stock market (and look what happened to them). Why not ask the buyer when they come into the property what the buyer has in mind? Remember, buyers are being told by newspapers, books, magazines and web pages to go to the listing agent to see the property and then try to get the selling commission for themselves. Look over this situation. There is a solution to make all happy!