2009-2010 AAR Ombudsmen
AAR would like to thank the volunteers who have served as ombudsmen for AAR in the last two years. We appreciate their contribution to our industry and their dedication to professional standards.
Mary Frances Coleman
Mary Lee Greason
When a consumer calls the Arizona Association of REALTORS® with a complaint about a REALTOR®, we encourage them to speak directly with the agent or agent’s broker. If that doesn’t work, the second option we suggest is our ombudsman program.
The idea behind the ombudsman program is to help the parties involved resolve issues quickly and avoid the more serious and lengthy complaint process. An impartial REALTOR® volunteer—called an ombudsman—listens to the complainant’s story to determine what outcome the complainant is seeking. With the complainant’s permission, the ombudsman reaches out to the REALTOR® who is the subject of the complaint and hears their side of the story as well. Through a series of phone calls and careful diplomacy, an ombudsman is often able to resolve situations before they escalate. If no resolution is possible, the parties are free to pursue mediation, arbitration or the filing of an ethics complaint. In the second quarter of 2010, the ombudsman program scored a 70% success rate.
Ombudsman volunteers receive up-close insight into real estate complaints—and what may have been done to avoid any hard feelings. Here, they share five ways to avoid a formal complaint:
1. Communicate. Real estate is a relationship business, so it’s no surprise that communication skills are critical to success—and to avoiding a complaint. Consider this request handled by an ombudsman:
A REALTOR® purchased a property at auction and listed it for a nominal profit. The REALTOR® advised the buyer of the auction price and how he arrived at the list price. The buyer made an offer at the full list price, and the REALTOR® accepted. When the appraisal came through, it showed that the auction price was actually less than the figure mentioned by the REALTOR®. The buyer was angry, stating that he had only agreed to pay the nominal increase over the auction price. However, the purchase contract didn’t say anything about the auction price; it was simply written for the full list price.
After speaking with all parties, the ombudsman found that the REALTOR® paid a fee to an auction service provider that had actually bid on the home at the auction on behalf of the REALTOR®, and that the REALTOR® was, in fact, only netting the nominal profit. The situation was resolved when both parties understood the other’s situation.
If you sense that an issue is brewing with your client or the parties on the other side of the transaction, don’t ignore it. “If the client isn’t happy, this won’t just go away. You can’t push it under the rug,” warns ombudsman Alice DeShane with Independence Realty Professionals Inc. in Tempe. And don’t assume that the issue is minor or that they’re simply being unreasonable. “I’ve never felt like the party complaining had no right to complain,” she says.
Instead, confront the issue. “The whole [ombudsman] process is very often a matter of listening to the complainant, understanding what they’re saying and explaining the process to them,” says ombudsman Kathy Mayus with HomeSmart in Mesa. If feelings are already heated, consider asking your broker to step in.
“REALTORS® should work to ensure perfect clarity of understanding between themselves and the clients they serve,” says ombudsman Gary Fenton with RE/MAX Integrity in Glendale. “Of course, the word ‘work’ is the important part!”
2. Listen. The flip side of good communication is good listening. DeShane appreciates that the ombudsman process allows people to share their story and be heard. “Sometimes that’s all people want,” she says. Cultivate the ability to listen without interrupting, and your client may never feel the need to tell their story to an ombudsman.
Rise in Complaints Related to Article 2 in Code of Ethics
AAR’s 2010 Grievance Committee has seen a rise in the number of complaints relating to Article 2 with lender-owned transactions. Article 2 in the Code of Ethics reads:
REALTORS® shall avoid exaggeration, misrepresentation, or concealment of pertinent facts relating to the property or the transaction. REALTORS® shall not, however, be obligated to discover latent defects in the property, to advise on matters outside the scope of their real estate license, or to disclose facts which are confidential under the scope of agency or non-agency relationships as defined by state law.
In addition, NAR’s Professionalism in Real Estate Practices 2010 states, “Article 2 protects the consumer by ensuring that the REALTOR® provides accurate, factual information without exaggeration; that the REALTOR® communicates truthfully and does not misrepresent the facts; and that the REALTOR® does not remain silent concerning pertinent facts including adverse factors affecting the property.”
Here are three REO-related articles you may find useful:
REOs and the Code of Ethics
REOs and Legal Issues
REOs and Practical Transactions Tips
3. Set expectations. An ombudsman situation can also stem from lack of knowledge on the part of the buyer, says Mayus.
A buyer had an offer on a bank-owned home fall through because of financing. When the financing situation was resolved, the buyer went back and found that there were now multiple offers on the home. The bank asked all buyers for their highest and best offer. The buyer became very frustrated, saying that it seemed like the other agent was just trying to get the highest price. The situation was resolved when the ombudsman explained customary practices for lender-owned transactions.
Lack of client education is a common thread in ombudsman cases. Before taking buyer clients out to view homes, you may want to schedule time to talk over the process, timeline and even documents involved in buying short sale, REO and equity homes. If you can help your client understand the process ahead of time, you may be able to prevent major headaches in the future.
4. Be careful of passing blame. There is rarely an ombudsman situation in which one party is completely wrong and the other party completely right. If you and your client are having trouble with the cooperating agent, take a minute to review your own behavior before considering lodging a complaint or encouraging your client to do so.
- Do you fully understand the situation? For example, if this is one of your first short sale transactions, do you have realistic expectations of the timeline involved or the level of feedback the listing agent can deliver? Have you set appropriate expectations with your client?
- Have you provided the cooperating agent with constructive feedback and the opportunity to make things right? When facing a problem, some folks tend to drop hints and hope that the other party will catch on. Others take an adversarial approach that puts the other party on the defensive. Instead, aim to present your issue clearly and without judgment. Give the cooperating agent the benefit of the doubt and work with them to find a resolution.
- Are you blaming the other agent for a situation that is partially your fault? Perhaps you haven’t communicated with your client as regularly as you would have liked. Because the cooperating agent has been difficult to reach on occasion, you blame the lack of communication on him or her rather than shouldering your share of the problem. “When REALTORS® get defensive, they get on the wrong side of the deal,” says DeShane.
5. Avoid hypothesizing. DeShane warns that agents often guess at the motivations behind the actions of those on the other side of the transaction and share those guesses with their clients. This can lead to significant misunderstandings.
A buyer made an offer on a short sale property, and it was accepted. While the short-sale deal was in escrow, the bank’s foreclosure department sent the home to trustee sale, and it was purchased by a bidder. When the bidder’s name showed up on the deed, the listing agent realized that the property had been sold out from under them and explained the situation to the buyer’s agent. However, the buyer’s agent didn’t believe it and told the buyer that the listing agent sold the property to another party and cut them out of the deal. The situation was resolved when the ombudsman was able to clarify the situation and explained what happened to the buyer.
Don’t assume you know the facts on the other side of the transaction. Take the time to call and find out. Then give the cooperating agent the benefit of the doubt—or at least resist the temptation to speculate about wrongdoing in front of your client.
If You Do Get that Call
If, despite your best efforts, you do get a call from an ombudsman, remember that the person on the other line is an experienced REALTOR® whose only goal is to help you resolve this problem before it gets more serious. “I have found myself saying to an agent, ‘You’re lucky you’re in an ombudsman situation here, buddy!’” says Barrie Herr with Long Realty Company in Tucson. Work with the ombudsman rather than treating him or her like an adversary. Together you can see to it that the situation ends here—not in a hearing room.