Ethics and Real Estate

As a junior sales agent many years ago, I lost a listing to a competitor. The seller’s rationale surprised, telling me, “We really like you, Hayden, and the other guy makes my skin crawl, but we reckon he can get us the best price.” The idea there was a disconnect between being a good person and achieving the best market price was difficult to comprehend then as it is today.

The Governance Institute of Australia undertakes an annual survey of Australian society’s perceptions of ethics across the major occupational sectors. Unsurprisingly, nurses, veterinarians, doctors, teachers, ambulance and fire services all rank in the top ten of ethical occupations. The bottom ten are made up of lawyers, politicians, senior executives and fund managers. Real estate agents appear third last with 46 percent of those surveyed suggesting we were ‘somewhat unethical or very unethical’.

Real estate agents appear third last

Surprisingly, the Construction Forestry Maritime Mining Energy Union ranked higher in ethical behaviour than real estate professional associations. Clearly, the community judge us and those that represent our interests relatively harshly.

With such a poor ethical reputation, it is surprising that many real estate agencies survive as long-standing small businesses. It’s hard to imagine a local restaurant, retail shop or other cottage business that suffered such a poor reputation surviving very long.

As a local real estate practitioner and employer, reputation is everything. Damage your reputation through misconduct in the market and word quickly spreads that you’re untrustworthy. Most local agents enjoy a solid reputation, attract repeat business and have serviced their communities for years. For example, a quick Google search of Fremantle’s top three real estate agencies boast 558 reviews at an average of 4.6 stars. And ask random folk about real estate agents and the reply is often, “they’re terrible, but mine’s great!”.

So, why the disconnect between community perception and most users of real estate services? Its noteworthy that during peak COVID in 2020, the ethical standing of agents improved, a result of our sector’s management of rental moratoriums and tricky selling environment. Current market conditions where buyers and tenants are disadvantaged can lead to a perception that agents are acting unethically.

I think it is our fiduciary responsibility to work in our client’s best interest that impacts community perceptions of agents’ ethical conduct. Being duty bound to achieve the highest possible rent or market price for a property in times where supply is tight and demand is high, impacts those on the buying and renting side. It follows that a buyer or tenant can feel ‘forced by the agent’ to pay more and that is perceived as unethical behaviour.

Perception or reality, the work of real estate agents requires greater transparency. The community clearly expects more from us in how we conduct our business. Agents can find reasons and get defensive about it, but the reality is we need to do more in this space to win the hearts and minds of the communities we serve.