Why do real estate agents poll poorly when it comes to professional reputation for honesty and ethics?
Real estate agents were ranked in the 2018 Gallup survey of honesty and ethics for professional occupations and were rated by 25% of poll respondents as having “high” to “very high” standards. Medical professionals (nurses, physicians, pharmacists) were ranked at the top for ethics. For comparison, accountants were rated 42% high/very high and lawyers were rated 19% as high/very high for ethics and honesty.
Conflicts of interest by commission-paid real estate brokers and agents account for the profession’s less than pristine reputation. There are three common conflicts that occur. Although these conflicts can be found in other professional relationships, the fiduciary role of the real estate professional puts them directly in the middle of your finances. Extra costs and monetary losses may be incurred with minimal recourse to recover them.
Agents, typically licensed as salespersons, logically cannot be loyal and honest to both buyer and seller in the same transaction. This dual agency is common practice, however. Disclosure of dual agency status is required by law, but disclosure does NOT eliminate nor diminish the conflict of interest.
A second area of conflict is when the real estate broker, salesperson, or company has ownership in a mortgage company, title company, inspection company, appraisal services, etc. When you are in the middle of a transaction and receiving referrals for service, it is important to be aware of any financial interest held by the party making the referral. An agent referring you to his son’s lawn mowing company might be reasonably innocent with the relationship clearly disclosed; however, referral to a business entity where ownership is not known can have hidden entanglements.
Another source of conflict is entirely about an individual’s moral compass. It is the conflict of an agent placing his own interests above your interests in a real estate transaction. There should never be a question about the motivation behind your agent’s behavior. It is important to mention, though, that every profession has unethical persons that stain the reputation of their profession overall. (Members of Congress and car sales persons were tied for lowest ranked profession in the 2018 Gallup Survey.) The fact that real estate transactions often involve a person’s life-long savings, makes an agent’s violation of trust so serious and profoundly impactful to the profession’s reputation.
Invinci Advisors are fully transparent about fees and the services exchanged for them. Our fiduciary services demand that conflicts of interest be prevented and Invinci prohibits them of our advisors. Remember: Missouri law requires certain disclosures, but disclosure does NOT eliminate nor diminish conflicts of interest.
