Honesty and Real Estate — Who Can You Trust?

honestyThis week’s social media-generated story actually came about as the result of two different stories about honesty we asked readers to react to — one that gave a shockingly low number of those surveyed who felt that Realtors were trustworthy, and another that delved into the depth and scope of MLS manipulation.

Frances Lynn Thorsen, who has been writing about real estate as an advocate for years, wrote about the Jills (Jill Hertzberg and Jill Eber), two luxury Realtors in Miami Beach, and the accusations that they engage in a bit of MLS manipulation.

The whole thing came to a head when fellow Realtor Kevin Tomlinson was convicted of extortion and sentenced to house arrest for two years and 15 years of probation (as well as being banned from being an agent) after the Jills accused him of threatening to publicly accuse them of manipulating MLS data unless they paid him $800,000.

Thorsen gives the bullet points of Tomlinson’s arrest and trial before launching into the meat of her discussion — whether MLS manipulation is a problem, and whether the Jills may have engaged in it.

“Tomlinson filed an ethics complaint with the Miami Association of REALTORS® (MAR) in April 2015, through the Grievance Committee,” Thorsen wrote. “In the whistleblower complaint, he alleged 552 data manipulations over 51 listings ($372 million property value) over four years, resulting in a sum of 23,740 unreported days on market.”

While MAR and Coldwell Banker (with whom the Jills are affiliated) have taken steps to prevent future manipulation, nothing has been done about Tomlinson’s complaint.

Thorsen said that area Realtors had been talking about the manipulation for years (even creating a petition on Change.org asking MAR to intervene and investigate).

So how does the manipulation happen? In short, when a listing with an agent expires, it appears on a “hot sheet” — a compendium of current data that Realtors can then mine for prospects. Expired listings can attract other Realtors (especially with luxury properties) that will be chomping at the bit for their opportunity to gain a new seller and (if they’re successful in selling the property) a big fat commission check.
“Once a listing contract expires, agents are free to call the seller to make an appointment to pitch their services and sign a new listing contract,” Thorsen explained.

The Jills have been on the record about their desire to keep their expired listings from falling in the hands of other Realtors. During Tomlinson’s trial, their assistant, Juan Otoya, explained how they did that.

“According to Otoya’s testimony at the extortion trial, he changed the information in key data fields in the property listings just before they expired, including area code, tax folio number, zip code and other pertinent information,” Thorsen said. “These changes broke the data bridge between MLS property data and county tax records and rendered these properties non-searchable by MLS users.”

The MAR does assess fines for this, but they have to investigate and make a finding that the manipulation actually happened, first.

Rob Hahn at the Notorious R.O.B. also made several key points about who this manipulation hurts the most. Realtors also told The Real Deal that this manipulation impacts pricing and offers.

“You make a different offer if you know a property is on the market for 30 days, not 400,” one Realtor said.

So is this a problem in the Dallas-Fort Worth area?

“Yes it is a problem,” said Realtor David Morgan.”I have seen many instances of fake sold comps over the last 20 years.”

Realtor Darren Dattalo said he felt like MetroTex has been monitoring the situation well enough, and that a lot of what looks like possible manipulation is likely more attributable to typos.

“MetroTex does a fairly decent job of data checking for things like this,” he said. “Though I’ve seen numerous incidents where a zero was added or left off of a sales price and it went unchecked for years.”

“Those data points can hugely skew the results when running market stats for an area if you don’t spot check the raw data,” he added. “Some of our tools do not allow you to spot check the data, rendering it error prone. I’ve also seen cases of a property being left in pending status for months and months after it closed.”

“You have to call in a complaint for either of these things to get fixed,” Dattalo said. “While I don’t see a lot of intentional fake data, I do see a lot of typo errors that go uncorrected.”

“Here’s a shocking idea: if you’re so scared to lose a client at the end of a listing period, do a better job so that they won’t go with someone else,” said Cooper Koch. “It really speaks to a broker’s character if they’re 1) so paranoid about losing business that they’d 2) intentionally alter data (effectively digital lying).”

Which brings us to the second story we asked readers about.

Purplebricks, a flat-fee brokerage, commissioned a survey that revealed, in part, that people feel real estate agents and journalists (ouch) are untrustworthy.

In fact, both professions only merited an 11 percent share of the 1,028 respondents when it comes to trustworthiness.

Only car salespeople (6 percent) and politicians (4 percent) scored lower. Even bankers (who have the whole “Big Short” era recession thing in their recent resume) fared better.

“This topic really interests me as a new-ish (starting my third year) Realtor here in DFW. In any role I’ve ever had I felt it was important to have trust with my clients, leaders and those who look to me for guidance,” Scott Noblett said. “As a Realtor, I make it a priority to be honest, straight-forward and educational with my clients.”

“Educating them using the many avenues of fact-based data and information has been essential,” he added. “Also, being supportive of their decisions even if it meant I had to eat ramen until they decided on a home, in the beginning, meant that they didn’t feel pressured, had time to evaluate their choices, ask the questions they needed to get clarified, etc.”

“I do see, often, that my clients refer me to others because of these things I try to hold true to with each transaction,” Noblett continued. “If we are in the business of fostering lifelong relationships with our clients then trust is key.”

“Maybe getting back to the basics and really putting our clients first is how this is accomplished? I’m still a newbie but this is how I hope to gain and keep the trust of my clients.”

National Association of Realtors CEO Bob Goldberg told Inman in response to Purplebricks’ survey that the organization’s code of ethics should put consumers’ minds at ease.

“Members of the National Association of Realtors subscribe to NAR’s strict Code of Ethics, which governs their dealings with clients and customers, the public and with each other,” Goldberg said. “Consumers can feel confident that the Realtor they choose to work with has taken the voluntary step of agreeing to abide by a code of ethics developed with public protection and trust in mind.”

“Realtors are subject to disciplinary action should a local association of Realtors find him or her in violation of the Code of Ethics.”

Editor’s Note: Every Friday, we’ll post a hot-button question on our Facebook page. Sometimes, they’ll be serious. Sometimes, they’ll be more light-hearted. Want to take part? Like and follow us, and comment on this Friday’s question.