Recently, the New York Times’ Vivian Toy wrote an article Agents of Angst about unethical real estate agents – an article full of hair-raising stories about agents who withheld crucial information, actively misled their clients, didn’t keep their promises, poached other agents’ clients, and generally contributed to the public’s poor opinion of our industry. (According to the article, a recent poll ranking occupations by prestige placed real estate brokers at the very bottom of a list of 23 professions.)

The next week, Steven Spinola, the president of the Real Estate Board of New York, sent a letter to the editor defending the industry’s reputation, saying,

“In 2006, there were only 206 complaints brought to the Department of State by real estate clients in the entire borough of Manhattan. And as noted, the Department has received fewer and fewer complaints statewide each year.�?

But Spinola’s whitewash isn’t helping anyone. Consumers need to know that Ms. Toy’s article didn’t propagate “false stereotypes,�? as he claimed it did. They need to know that the behaviors Ms. Toy wrote about aren’t rare at all – that, in fact, much worse things go on every day. And they need to know that the number of complaints brought to the Department of State (DOS) is meaningless. (There are many reasons people don’t report unethical behavior to DOS, one of which is that DOS doesn’t do anything with the information.)

Why do consumers need to know all of these things? So that they will make an effort to find and hire the responsible, ethical real estate agents, and to avoid the bad apples.

In my last blog post I wrote about bait-and-switch ads by Manhattan rental agents, and pointed out that some of the blame lies with the commission-only system that draws too many agents into the industry, only to set them at each other’s throats.

The industry has other structural problems that encourage duplicitousness. Consider the fact that agents are only paid when a sale goes through. “Window shoppers�? often waste the time of agents they know they’ll never have to pay (there are about fifteen times as many lookers as buyers in the market). And when so many customers aren’t serious, some agents begin to act as if no customers are serious. Again, this whole state of affairs is perpetuated by the large brokerage firms, which have resisted changes to the all-or-nothing payment model.

So what should consumers do to protect themselves? First, they should know that hiring a broker isn’t a “take it or leave it�? proposition – consumers have choices, and they should understand and exercise those choices.

For example, sellers can choose between “exclusive agency�? – where they don’t owe any commission to the agent if they find a buyer on their own – and “exclusive right to sell�? – where the broker earns a fee regardless of who sells the property, including the owner. Many agents don’t bother explaining to their clients that exclusive agency is an option. As another example, a potential apartment renter or buyer may be better off with a “roving�? agent than with an agent who represents landlords or sellers.

Second, consumers should get referrals for agents they’re considering working with. Getting a referral doesn’t just mean asking, “Did you like this agent?�? It requires asking very specific, pointed questions about the agent’s behavior.

Here are some questions you can ask agents you’re considering hiring, or friends who are willing to give referrals for agents:

If you’re a renter or buyer:
- What types of apartments does the agent specialize in?
- Does the agent preview properties before taking clients to them?
- Is the agent showing landlord properties (that is, properties that could have been rented directly) or broker exclusives?
- What is the agent’s commission? Is it negotiable if the renter takes one of the first few properties shown?

If you’re a lessor or seller:
- How many similar apartments has the agent rented or sold?
- How long does he expect the property to be on market?
- What kind of marketing campaign does he mount?

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