The Terrible, Horrible, No Good, Very Bad Day for REALTORS in the New York Senate

I keep having to write posts like this, about NAR, about REALTORs, and the state of the industry. Some of you think I’m picking on NAR, but some of you who have known me longer, have worked with me on a variety of projects, know that I do this out of love. I genuinely believe the REALTOR movement is worth saving, and I have been enriched over the years by the friendship of good, smart, conscientious REALTORS of all kinds from all walks of life. We all want this industry to be better, we all want NAR to be better, we all want to have more professionalism, more trust from consumers, and get the great REALTORS the recognition they deserve.

So posts like this must get written, because somebody has to alert the industry as to what is going on. Somehow, I get to be that guy, that voice in the wilderness sometimes. So be it. I am not a media company, this labor of love costs me money, and it takes time to put some of this content together. If that’s how I can serve the industry best, then I’m happy to do it… even if the topic and what I actually have to say about it is… unpleasant, and I wish I didn’t have to say them.

Here we go then.

As I wrote in my last post, NAR is currently considering a series of changes that would put a new speech code into place via the Code of Ethics. The proximate cause of proposing the new speech code, as mentioned by the Professional Standards Committee, is Long Island Divided, the Newsday investigation that found massive racial discrimination and racial steering by REALTORS in Long Island. I wrote about that last year, because I grew up in Long Island as an ethnic minority… and that story hit too close to home.

The New York Senate immediately called for an investigation, and began holding hearings.

Unfortunately, the first hearing back in December of 2019 (pre-COVID) had exactly ONE of the 68 brokers and agents who were invited to testify actually show up:

Dozens of real estate agents and executives are facing subpoenas after failing to turn up to a hearing probing accusations of discriminatory practices.

“There’s an easy way and a hard way to do things,” Democratic State Sen. James Skoufis tweeted Thursday. “It’s unfortunate these 67 individuals chose the hard way.”

The hearing, which stemmed from a Newsday investigation revealing widepsread housing discrimination in Long Island, was reportedly attended by just one executive.

“The remaining 67 individuals either neglected to respond or outright refused to provide testimony,” said Skoufis, who also serves as the chairman of the Senate Committee on Investigations and Government Operations.

I think we all have to appreciate Ryan Gorman, President & CEO of Coldwell Banker, for his leadership and his taking the initiative when everybody else just bailed.

So, subpoenas went out. We would have had hearings early this year. But then COVID hit, which put a pause on everything. However, it was merely a pause; the hearings were not canceled. The NY Senate still wanted to get to the bottom of what was apparently rampant racism and fair housing violations in the real estate industry all across Long Island.

The second hearing, under subpoena, was held last month on September 17th… then incredibly, as you’ll see, a follow-up on September 25th. Because media coverage of the event was scant, I didn’t learn about the hearings until a couple of days ago. (Thank you, dear Reader, who alerted me to these videos!)

I watched both hearings, all seven hours of Zoom video. And I am simply flabbergasted. I can’t believe my eyes and ears. September 17th might go down as one of the worst days in recent history for the REALTOR movement for the REALTOR brand.

Here is how Sen. Kevin Thomas, from Long Island himself, opened the hearings:

He was fired up, as was Sen. Skoufis, his co-chair. It seems obvious why: because they had to compel testimony from the witnesses via subpoena. None of them showed up for the first voluntary hearing.

Well, by the end of Day One, after some 5-1/2 hours of interviewing witnesses, Sen. Thomas was clearly exasperated, clearly frustrated, and seemed determined to put the hammer down on the industry.

This is a very big deal for those of us who care about the industry, about our society, and about eliminating the ugliness that is steering and racial discrimination in housing. And that we must do.

At the same time, I can’t help but think that we have some very serious legislation and regulation headed our way, in large part because the REALTORS who showed up for these hearings made it perfectly clear to powerful legislators that the industry cannot police itself.

Let’s dive in.

The Hearings, and General Observations

First, even though I don’t believe many of you will actually watch all seven hours of video, I’ll link them so you can if you want to. I do believe that if you hold any kind of a leadership position in real estate — at a brokerage, a franchise, a REALTOR Association, or a MLS — you owe it to yourself and to your people to watch as much of these two videos as you can. Fast forward through parts of it, skip chunks if you have to, but try to skim them.

Day One: September 17, 2020 – 5.5 hours long

Day Two: September 25, 2020 – 1.5 hours long

Yes, it’s a lot of footage. A lot of it is boring. But you cannot properly grasp what is headed our way, I think, without watching the language, the attitudes, and the behavior of the industry witnesses and the Senators firsthand.

Because I think some of the things that came out of this hearing are so important, I took the step of making some shorter clips for you to watch. I have uploaded them to YouTube and will embed them throughout this post. Those should give you a flavor of the day, but again, if you have time, please watch the whole thing. If you’re a real estate leader, make time to watch the whole thing.

Before we delve into some critical issues, let me make a few observations about the hearings in general.

They All Were Compelled to Testify

The number of brokers and agents saying something like, “Thank you for the opportunity to tell our story” in their prepared opening remarks was amazing. It’s amazing because every single one refused to come to the first hearing in December. Again, only Ryan Gorman showed up to testify voluntarily in December.

The most brazen of them all has to be Bart Cafarela of Realty Connect USA. He was subpoenaed for the 9/17 hearing; he chose to ignore the subpoena, leading Chairman Skoufis to fairly sputter in rage about how the Committee’s counsel was heading to court to start issuing criminal contempt charges. The reason why there is a 9/25 hearing at all is because he and all his people chose to simply ignore the first subpoena.

The very least you could do if testifying under a subpoena is either (a) acknowledge that fact so the Committee knows you’re a hostile witness, or better, (b) apologize for not showing up when you had the chance.

The fact that you did neither, and just pretended as if you were afforded an opportunity to discuss racism and steering, and that you care about reforming things, improving things… the whole thing just stinks. And the senators didn’t buy any of your insincere song and dance.

The agents one and all appeared to take the opportunity to testify as some kind of an invitation to clear their names, as if the Senate were a courtroom where they can somehow justify their words and actions caught on video. Precious few of them came to answer questions to help the legislature craft solutions, or understand the issues.

Which begs the question… if these agents were so eager to clear their names, why in the hell did they not appear voluntarily at the first hearing? Why did they wait until they were subpoenaed and compelled to testify? Then once compelled, they come with sob stories and lame excuses about how they don’t steer, they don’t discriminate, despite the video evidence we all can see?

It was a lot of “Don’t believe your lying eyes; believe me instead.” None of it flew with anybody.

No Remorse; It’s All Misconstrued

There is a point in the first hearing towards the end when Sen. Kevin Thomas thanks the two witnesses, because they were the first people to actually apologize for their behavior. Not a single other broker or agent said, “I’m sorry.” Not one.

No, instead, the common theme that ran throughout the testimonies was that everything was just misconstrued, taken out of context, misunderstood, and mischaracterized. The brokers and agents acted as if they were the victims of a media hit by Newsday.

In a single day, these brokers and agents reversed whatever good will that Ryan Gorman might have earned at the first hearing, when he personally apologized for what had happened:

M. Ryan Gorman, NRT’s president and CEO, told senators the “Long Island Divided” series revealed a “pervasive” discrimination problem in the industry. He said he had offered a personal apology and committed his company to review its training practices.

“I think what was uncovered in the Newsday investigation was severely disappointing,” he said.

Rather than remorse and apologies, the witnesses all offered up excuses — some of the lamest excuses I have ever heard — and said everything was just misconstrued, misunderstood, misinterpreted. In fact, the excuses offered were so uniform that one cannot escape the conclusion that all these brokers must have held a pow-wow, decided on their angle, and made everybody repeat the same unbelievable and ridiculous excuses.

Absolutely Ridiculous, Impolite, Sleazy and Stupid Behavior

At times, I couldn’t believe these were grown men and women who presumably have some idea of civil society and our legal system and our system of government. Did they really not understand that they were appearing before the New York State Senate, at an official hearing? This wasn’t the local REALTOR Board’s Grievance Committee, or some Zoom party for you to debate some issue. The New York Legislature is a body that predates the United States, was instrumental in the Revolutionary War, the founding of the Republic, the Constitution itself, and was and remains one of the most powerful state legislatures of one of the most powerful states in the union.

How do you not have even a modicum of respect for the institution and the Senators?

Here’s an amazing exchange between Sen. Kavanaugh and Stephanie Giordano, a former agent with Charles Rutenberg who has since gone independent:

You tell me if that’s appropriate behavior anywhere in public, never mind at a formal hearing of a state legislature. She is extremely fortunate that she wasn’t charged with Contempt of Legislature, as she continuously refused to answer simple questions and went off on a series of rants instead. You can literally see Sen. Kavanaugh give up trying to get a straight answer to an actual question.

If only I could say that Ms. Giordano was the only one to behave in a ridiculous way… but the biggest problem was sheer stupidity of many of the witnesses. This was just an amazing sequence in the second day of hearings:

“Don’t quote me on that?” You’re giving sworn testimony in front of a legislative committee conducting a formal hearing! OMFG… is it possible for anyone, never mind a broker with supervisory authority over hundreds of agents, to be that clueless?

Speaking of sworn testimony….

Perjury Charges Would be Justified

Every witness testified under oath. They were providing sworn testimony. If you lie while under oath, you can be charged with perjury.

And yet… one unbelievable statement and excuse after another. Some of these witnesses ought to be thanking their lucky stars that they are not being hauled up on perjury charges, which in New York carry these penalties:

Perjury in the first degree is a class D felony. This means that if you are convicted your sentence could include a prison term of up to 7 years, a probation term of 5 years, and payment of a substantial fine. If your sentence includes probation, there will be many restrictions on your life including the requirement that you report to your probation officer on the regularly basis.

A bunch of REALTORS are walking around free today, when they could be in jail. Because they told brazen lies, under oath, with a straight face… and often, not with a straight face, because they knew they were lying. Many of their lies are not even remotely believable; they’re not even good fibs.

It’s as if their attorneys didn’t even warn them not to perjure themselves. I mean… WTAF….

The Impact on Senators

I did not attend the first hearing, and have not seen any video footage of that live and in-person hearing from December of 2019. But my overwhelming feeling is that the senators began day two of hearings with serious questions, wanted to get to the bottom of things, but were inclined to be fair-minded. They ended the day practically grinding their teeth in frustration, absolutely convinced that they have to do something and something dramatic, because the REALTORS they had just spent the day questioning had made it very obvious indeed that there is something very wrong with the real estate industry.

Whoever advised these brokers and agents, whether on the law or on crisis public relations management, needs to be fired and sued for malpractice. I can’t imagine a worse approach to the hearing. It’s as if the industry in Long Island collectively decided to throw as much gasoline on the fire as possible.

But they did, and I suspect we are all about to get burned. So let’s turn to some of the key issues and the amazing exchanges between the witnesses and the senators.

The Brokers and Agents Have Learned Nothing

One of the most amazing themes throughout the hearings is how little the agents who were caught on camera engaging in steering, in disparate treatment, and in racial discrimination have learned about the law, about ethics, or about fair housing even afterwards. Even as each and every broker talked about how they were very disturbed by the Newsday investigation, how they have always trained on fair housing, how they instituted additional training, how they speak to their agents every week, or even every day… and even as each agent talked about how they learned better, took more classes, and so on… it was so patently obvious that many of them learned nothing at all from being caught on camera.

Here is one amazing exchange between Rosemarie Marando and Sen. Kavanaugh:

There is a clip of what she did and said in the video above, and if you’re not shuddering… I can’t help you. Follow the school bus and look at the moms waiting for the school bus? Go to a 7-11 at 10pm? I have to say it without saying it????

Sen. Kavanaugh asks her about each and every one of those.

Her answers are… ridonkulous. I’ve heard better excuses from my dog on why he chewed up one of Sunny’s slippers, and he doesn’t speak English.

What she said in the video is: “Follow the school bus, see the moms that are hanging out on the corners.” When questioned, she claims she said that moms at the school bus stops are a great source of information and the buyer can get out and talk to them. She didn’t say that, of course, not once in the hidden video footage. Then she continued the ridiculous lie about the length of the school bus ride being the important thing for the buyer. Either she’s an idiot, or she thinks we all are idiots to concoct that story to explain those words.

Then when asked about the “go down to the 7-11 at 10 o’clock at night”, she claims that was about college students at a nearby university. Did she seriously say that in open, recorded testimony, under oath? Really? Unfortunately, yes really is the answer.

Apparently the only thing Marando learned is that she should not have used the word “steer.” Apart from that one insignificant detail, she has learned nothing even after being busted by Newsday.

And despite being asked multiple times, Marando simply cannot answer the simple question, “What did you mean by ‘say it without saying it'” and keeps repeating a ludicrous line that some lawyer fed her. She has learned nothing.

And Marando was far from the only one who learned nothing from what has to be one of the most embarrassing episodes of her professional life.

This exchange between Ann Conroy of Douglas Elliman, and Sen. Liz Krueger kind of puts a bow on what most of the senators think about what the industry has learned from this painful episode:

“Our training is specific, written by an attorney, and is intense” is not an answer. Simply saying that the agents know what steering is — despite all of them saying they don’t know what steering is or what it looks like — doesn’t make that true. Saying Douglas Elliman doesn’t tolerate steering means nothing, when not one of the agents busted by Newsday has been disciplined.

So Many Lied Easily, Routinely, Under Oath

Another amazing exchange came between Kevin Geddie, who was with Douglas Elliman when the investigation happened, and is now with Compass, and Sen. Todd Kaminsky:

Either Kevin Geddie is a liar who perjured himself, or he is the dumbest person in the world who doesn’t understand what “taking over” means.

Either way, he probably shouldn’t be helping families make the most important financial decision of their lives. And one wonders how he remains to this day (as of this writing), an agent at Compass, a company with a Black CEO who wrote a heart wrenching letter to his entire company after George Floyd, saying:

Teach your children to love others for who they are, not for what they look like. Embrace non-violence, which history has shown is the surest path to justice. Vote. Speak up. Stand up. Donate. Volunteer. Make calls. Elect leaders who want to heal divisions rather than inflame them, who want to solve problems rather than make them worse. Be constructive, not destructive, and most all of, don’t lose hope.

Voting and speaking up is fine… healing divisions is fine, but Robert, how is Kevin Geddie still walking around with a Compass business card?

I was honestly surprised that Sen. Kaminsky did not ask for perjury charges against Kevin Geddie. But note what he says towards the end:

The lack of people accepting responsibility, or the industry do anything about it, during this hearing is astounding. Any hope that we might have had that the industry would decide that it has reached a critical inflection point and wants to better itself has just completely been eviscerated by this hearing.

Brokers and Managers Need to Wake Up

It’s one thing for individual agents to refuse to accept responsibility; after all, they are salespersons. They are required to work under the supervision of a broker, because supposedly, they don’t really know what’s what when it comes to the legal and ethical responsibilities of helping consumers buy or sell a home.

It’s a whole different story when the broker, who is supposed to be the supervisor, who is supposed to be the expert in the laws and regulations, engages in what can only be called willful blindness and refusal to act. The best (worst?) example of this I saw in the hearing — although every single broker did the exact same thing — came from Allan Eldridge of RE/MAX:

It’s… beyond embarrassing. Eldridge is supposed to be the grownup in the room, the broker in charge, the guy who is supposed to supervise the less-experienced and less-knowledgeable agents.

Instead of being outraged, he keeps repeating “It’s 30 seconds out of 45 minutes, and it’s out of context.” Even when pressed, Eldridge claims that he has no problem with those 30 seconds once he took the rest of the 45 minutes or so into account.

Keep in mind that what the agent Joy Tuxson said is this:

I’m not allowed to steer. But you go on, and I’m not going to send you anything in Wyandanch… unless you don’t want to start your car to buy your crack. Unless you just want to walk up the street.

Like Sen. Skoufis, I am flabbergasted. I am left wondering, what was the 45 minute context that justified that? Had the buyer spent 30 minutes telling Ms. Tuxson how she is just a huge crack fan, just loves to buy her crack around the corner, and she’s only looking for houses within walking distance of crack dealers? What’s the context that justifies those 30 seconds?

And we get this from every broker who appears at the hearing. Despite the most horrendous actions by their agents, apparently it’s all fine once you take things into context. Everything was taken out of context, you see, and misconstrued and misunderstood and mischaracterized… so no disciplinary action is necessary, and certainly, no agent needs to be terminated.

Apparently, to these brokers, context excuses everything. I wonder if an agent dropped the N-word, that also would be excused because you see, if you take the whole conversation into context, then it’s all right! No problems there at all!

Please wake up, brokers and managers. Maybe you think your job is to defend your agents from attack… but it isn’t. Your job is to supervise your agents in order to protect clients and the public. That’s why the state gives you a special license. That’s why you are allowed to make a living by having agents pay you a split, or a fee.

But of course, that willful blindness on the part of the brokers and managers showed up in one of the most consistent themes/problems of the day: no disciplinary action taken.

Not a Single Case of Disciplinary Action

After watching all seven hours, I feel that certain senators had their personal bones to pick. Sen. Thomas was all about lack of supervision. Sen. Kavanaugh was all about trying to see if real estate agents knew they could violate fair housing laws without any racial animus or malicious intent. And Sen. Skoufis was all about lack of disciplinary action.

Here’s the first exchange where you can plainly see Sen. Skoufis unable to contain his astonishment:

“To a person, including yourself, not a single agent has faced disciplinary action by the looks of it, and no one has been fired.”

Her answer is, of course, astonishing. Douglas Elliman “really went through” the videos and found no violation of fair housing.

One of the agents busted, Judi Ross, was telling white buyers to avoid school districts in Freeport, Baldwin and Amityville… but not mentioning that to the black buyer. But Douglas Elliman found no violation of fair housing? Really?

Well, given the willful blindness on the part of brokers and managers, perhaps we ought not to be surprised… and yet, the sheer brazenness of the comment is somehow still shocking.

This lack of action came up over and over and over again. As I mentioned in my post in June after the George Floyd incident put race front and center in the industry, 33 of the 34 agents who were busted on camera engaging in steering or discriminatory behavior remain employed as real estate agents, and are all REALTORS in good standing as of this writing. (Though I am told that they are all being investigated by the local Association… almost a year after the story got published….)

That lack of action by the industry has come back to bite us all in the ass big time during this hearing.

In my first post about Long Island Divided, I strongly recommended that the brokerages take action and engage in some real housecleaning along with some real soul-searching:

It is not enough to just terminate these individual agents. Brokerages need to bring in their managers in for questions: How did this happen on your watch? Franchises must have serious meetings with their franchisee brokerage owners: What kind of shop are you running under our brand over there? Associations need to investigate their fair housing training classes and the people who teach them, as the video from Newsday makes so abundantly and so painfully clear.

Every organization involved in this mess, from the individual brokerage to the franchise brands to the REALTOR Associations must clean house and do it publicly so that rank and file agents as well as the consumers who trust them see that real actions are being taken.

Clean house. Ruthlessly and publicly. It is the only possible way to restore trust in the industry as a whole, so that consumers understand that there may be some bad apples, but the entire barrel is not spoiled.

Obviously, that advice fell on deaf ears. And now, we are all going to pay for it.

Just imagine how differently the day would have gone had the real estate brokerages taken actual corrective action, and had terminate the worst of the worst, and had actually disciplined those who had merely made very bad mistakes. Imagine if Ann Conroy had said, “Of course we disciplined them. We have a zero tolerance policy. We fired three of the five agents, and the branch managers who were supposed to supervise them. Two of the five, we thought were relatively minor offenses, so we disciplined them with fines and put them into a six month intensive fair housing training program, with weekly tests. And they are now accompanied by the manager in the field to correct any mistakes for the next nine months.”

The reception by the lawmakers, and the reaction from the senators, would have been different.

Instead, what Conroy said is, “We found no violation; why would we discipline them?”

Wow….

What that recalcitrance, that arrogance, that refusal to do anything substantive, leads to then is this:

Now you have experts who seem far more trustworthy telling the NY Senate that they saw very little remorse and no discipline, and that this is what you see when an industry is asked to police itself. We then get a recommendation that you can’t trust the industry to solve the problem; the government has to do the regulating.

There goes the entire justification for the Code of Ethics. There goes the justification for self-regulation. The Senate will be looking for a bigger hammer than it was before this hearing, and you can’t blame them for doing that… not after what they saw and heard for seven hours.

Expect Heavy-handed Government Action

We already know what legislation has already been enacted, and what bills are in the pipeline because of Long Island Divided.

New York Legislature has already enacted S6874A which was signed into law by Gov. Cuomo. That new law now allows the Dept. of State to fine, suspend or revoke an agent or broker’s license for discrimination and steering. But that’s not the end, and after this hearing, even the bills in the pipeline will not be the end.

The following are already in the legislative pipeline:

  • S7625 — requiring annual secret paired testing of fair housing, to be funded by the industry (I imagine through taxes or additional fees);
  • S8096 — institutes the Obama-era HUD AFFH rule at the state level;
  • S7581 — increases required training on fair housing, and the State will regulate the content of the training courses; and
  • S7632 — awards compensatory damages, and increased fines to the tune of $25K for first offense, $50K and $75K for subsequent offenses.

Those were already filed and in place before this hearing. After this hearing, I imagine we might see a few more bills filed.

One of them, I am convinced, will be a bill to limit the number of agents that a broker is allowed to supervise under his or her license. Why? Because of this:

You can almost feel Cafarela pissing his pants when Sen. Thomas straight up asks him about limiting the number of agents he can supervise. Seeing as how this issue of too many agents under one broker is a consistent theme for Sen. Thomas, I think we can expect that he will introduce legislation in New York that does just that.

Plus, Sen. Kavanaugh during the closing mentions a wide variety of legislative solutions that are already in the pipeline, and will be considered as the result of these hearings. Yeah, I would think so.

A couple of the ideas floated, particularly by the two academics who study racism in housing, that haven’t been mentioned yet:

  • Require real estate brokers and agents to do data collection, to be shared with the authorities, as the mortgage industry has to do with loan applicants; and
  • Provide consumers with all of the listing information, so that agents cannot steer them by sending different numbers of listings, or listings in different areas.

Some of my friends and colleagues in the industry, who work on MLS-related stuff, think I’m a bit hyperbolic when I talk about government taking over the MLS. Well, this is how we get government takeover of the MLS — by not doing the obvious right things about agents who are engaging in racial discrimination and illegal steering.

Maybe all of these reforms, all of these new laws and regulations are needed. Maybe they will help improve the industry as a whole. I mean, it’s hard to argue that one broker cannot possibly supervise 1,400 agents under her license (as is the case with Douglas Elliman and Ann Conroy) even with assistance from branch managers.

But I can’t help but wish that if such legislation and regulation were needed, that those would have come from the industry itself after something like Newsday.

The Majority Needs to Get Pissed Off

What truly sucks, what really boils my blood and should boil the blood of all sane and non-corrupt industry participants, is that this hearing painted the worst possible picture of the real estate industry.

What gets left out in the narrative, and what definitely got left out in the hearing, is the fact that the majority of the agents tested did not engage in any bad behavior! Newsday itself says that 56 agents in 52 tests complied with fair housing standards. Let me repeat that: more agents passed the paired test than failed them. Yes, 34 out of 90 is bad; it’s far too high a percentage to fail something as important as fair housing. But there are more real estate agents on Long Island who do the right thing day in and day out with nobody watching than there are agents who do the wrong thing.

If I’m one of those 56 agents, I am ready to blow my stack. Despite having done the right thing, I now get lumped in with the 34 agents who did not, and the dozen or so ridiculous agents who showed up at the hearing having learned nothing, admitting nothing, offering the lamest of lame excuses, and oftentimes, flat out telling lies under oath thereby perjuring themselves somehow represent me?

If I am one of those 56 agents, I call my state senator and demand another hearing so I can tell my story… of doing the right thing when no one is videotaping me.

If I am one of those 56 agents, and I work for Douglas Elliman, for Realty Connect USA, for RE/MAX Beyond… I’m calling my broker in a fury. And potentially seeking a different broker, who won’t justify and excuse fair housing violations. Brokerages respond to incentives, like anybody else, and they need to be incentivized to care more about keeping the majority of their agents who do the right thing, rather than about kicking out the few bad apples.

Two of the companies tested — Daniel Gale Sotheby’s and The Corcoran Group — had ZERO agents fail to comply with fair housing standards. If I am an executive at one of those two brands, or with another brand that wasn’t implicated and doesn’t have a “who cares about fair housing?” type of an attitude, I am furious that I and my company are now lumped in with these see-nothing-wrong companies that have embarrassed themselves and us all at the hearing.

The majority of real estate brokers and agents do the right thing. All the time. Given the chance, there was a chance that the industry would have policed its own, done the right thing, and did what was necessary to stomp out racial discrimination and illegal steering.

But now, thanks to the shit show that was the NY State Senate hearings, the entire industry will suffer the wrath of pissed off legislators. Heavy, heavy-handed legislation and regulation are coming, first to New York, then to other states. Unless you think state legislators don’t talk to each other? Or look at legislation other states are passing?

Maybe, maybe it isn’t too late for the sane and non-corrupt parts of the industry to partner with lawmakers to help them pass the right legislation, that would actually help, instead of the normal path of legislation that likes to use chainsaws when a scalpel might be more appropriate. Then again, maybe it is too late, at least in New York, because the industry’s credibility is utterly shot.

It’s not fair, but that’s where we are.

How Do We Move Forward from This Disaster?

I’d like to try to be constructive here, as difficult as that is. So let me make a few suggestions — and that’s all they are, suggestions — for how we as an industry might move forward after this disaster of a hearing.

Brokers and Franchises

One, the responsible companies must take strong disciplinary action. Right now, today. And they must do so in a way that leaves no question as to where they stand on things.

For example, RE/MAX as a brand really needs to ask whether it wants Allan Eldridge who saw no problems with “walk to buy your crack” once those 30 seconds were “put into context” to represent its brand in Long Island. Keller Williams, Coldwell Banker, Century 21, and all of the other franchise brands need to be asking themselves similar questions.

And I’ll repeat myself: Dear Robert Reffkin, how is Kevin Geddie still walking around with a Compass business card?

Sane and non-corrupt brokerages must start disciplining bad actors to show the NY Senate and the world at large that in fact, the good companies in real estate are willing and able to discipline their own.

REALTOR Associations

Two, NAR, NYSAR and LIBOR need to strongly consider taking action to defend the Code of Ethics. Douglas Elliman, a major brand, showed exactly zero remorse, told the NY Senate that it really investigated the Newsday videos, and found no violation of fair housing. You all need to decide whether that is acceptable or not under the Code of Ethics. Don’t just leave it to the government and the licensing authorities, because that makes the whole Code of Ethics irrelevant, and your entire REALTOR brand meaningless. Act now to defend the brand. The speech code won’t matter one bit when you can’t defend the brand from actual racial discrimination and steering.

The MLS

Three, the MLS has some work to do. One thing that came up time and again — particularly with Stephanie Giordano and Bart Cafarela but also with others — was the excuse they offered that if they sent different listings to different people, it’s because of the software they used from the MLS. Their excuse was that the consumer could change the criteria at any time.

That excuse wasn’t good enough for the NY Senate, and it shouldn’t be good enough for us. The MLS and its vendors must get to work on how to improve the drip email system to prevent something like this happening again.

Furthermore, in light of the proposal from one of the experts that the real estate industry be required to collect demographic information and submit it to the authorities, just like the mortgage industry has to do, I would get cracking on putting such features in today.

Portals

Four, I believe third parties have a role to play as well.

Specifically, I’m looking at you Zillow, and you Realtor.com, and you Redfin and you OJO Labs and all you other lead generation portals. You all put brokers and agents in front of consumers. That’s just the reality of real estate practice today. You all might want to take a look at just who you are putting in front of buyers.

Maybe there are other things y’all can do to help bolster fair housing practices; don’t work on such things in secret. Tell the world about such efforts. Because the industry now needs all the help it can get to tell the true story: that most of the people and companies in it do the right thing, all the time, whether cameras are rolling or not.

Uplift the Majority

Five, the 56 agents who did the right thing through Newsday’s tests and the two brands who did the right thing need to be uplifted by the entire industry. Massive PR spends need to happen to highlight the good agents and the good companies, since the bad agents and the bad companies have smeared mud all over the industry. NYSAR should consider requesting a new hearing where only the good agents and brands will testify to try and neutralize the damage from these two hearings.

If that’s going to cost money, NAR, NYSAR, LIBOR, Realogy, RE/MAX, KW, and everyone else chip in for crying out loud and make it happen. Hire good crisis communications people who can actually help you, instead of hurt you.

Everybody

Six, and finally, the entire industry from agents to brokers to franchises to portals to tech companies to Associations and MLSs need to get proactive now about working with the authorities to make sure Long Island never happens again. Do not wait for your state legislature to call for a hearing; go to them with proposals to show them that the industry cares deeply about doing the right thing and getting rid of the bad apples. Don’t wait for a scandal to bust out in your market before you act; use Long Island Divided to start acting proactively.

Do not wait for your state to regulate the content of fair housing training; get on that right now, proactively, then go to the state with your suggestions. And don’t wait for the state to act; upgrade your training on your own proactively. Switch out the trainers if you need to, in consultation with fair housing experts. Do it all before you’re asked to do it by the authorities.

Should there be limits on how many agents a broker can supervise? Start talking about that today, within the industry, and invite the authorities into our conversation on the topic. Should we collect demographic information and share it with regulators? Let’s talk about that now, today, before we are compelled to do so by the government.

My point is that if the entire industry starts being far more proactive with solutions, instead of trying to pretend the problem doesn’t exist, or worse still, making lame ass excuses and talking about context, we have a chance to convince lawmakers, regulators, and the public that the industry as a whole really tries to do the right thing even if there are a few bad apples in it.

I don’t know if any of these will work, but you know… it can’t hurt. And after the disaster of these two hearings… we all could use all the help we can get.

-rsh

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Rob Hahn

Rob Hahn

Managing Partner of 7DS Associates, and the grand poobah of this here blog. Once called "a revolutionary in a really nice suit", people often wonder what I do for a living because I have the temerity to not talk about my clients and my work for clients. Suffice to say that I do strategy work for some of the largest organizations and companies in real estate, as well as some of the smallest startups and agent teams, but usually only on projects that interest me with big implications for reforming this wonderful, crazy, lovable yet frustrating real estate industry of ours.

24 thoughts on “The Terrible, Horrible, No Good, Very Bad Day for REALTORS in the New York Senate”

  1. Many of your thoughts reflect mine, and I did take the time to watch the hearings. Let me add one point; none of this behavior occurred in a vacuum. Discriminatory behavior is not solely the flaw of the real estate community, it is part of a culture where Realtors work and live. They are reflecting the bias of their own neighbors and that brings the reinforcement when they act on it. Big picture is that there are took many bigoted people there.. and everywhere else. I hope this changes faster.

  2. Un-freaking-real.
    And to think, I’m addition to these that “testified,” there are all sorts of agents—all across the country—crying, “fake news!” and “biased testing!” and other sorts of denial and bullshit.

    Thanks for taking the time and effort to put this together, Rob.

    I plan to listen to all of the testimony. I’m going to make an appointment with my doctor though, as I suspect I’ll give myself a concussion from repeatedly banging my head on my desk.

    Good Lord.

  3. Another excellent post… I posted something similar to your post the other day on my news feed after watching 5 hours of testimony, and a received a very low response…. The truth is, agents, especially in NY and outside of Long Island, have no idea that this took place.

    No idea what is going on and how this will impact them and their business.

    But agents can learn from your post and the trial videos.

    Keep showing the truth.

  4. I found myself getting sick to my stomach as I watched your clips. The brazen disrespect and utter lack of contrition is abhorrent! And to see the complete absence of accountability on all levels goes against all we claim to train for, or pledge and aspire to….

  5. One of your best points, that I wholeheartedly agree with, is the idea that supervising brokers do not supervise. I love the idea of a limit on agent ratios. At the end of the day the current system creates an undue burden on agents and consumers via fees charged to agents if the brokers are not actually completing the work that they are responsible for. I don’t know every state’s laws but rarely are they highlighting the broker’s responsibility to provide marketing, technology support, and customer leads – they are only responsible for ensuring their licensees are practicing real estate within the confines of the law.

    Watching this testimony I don’t know if it’s more disheartening that someone actually could believe their statements. Or as you pointed out that they would lie willfully under oath.

  6. Racism is profitable. Of course these agents should be disciplined or removed. What’s their production? I’m guessing if they were low producing agents they would be. And what if the anti racist agents that contend with a racist public? Will brokerages support agents (financially offsetting the loss in commissions that can occur) practicing anti racism? Testers can root out racist practices, how does the industry root out the racism in the public? How many loyal, repeat clients does the behavior ensure? It’s repulsive but racist residents in communities want racist agents to uphold it all. It’s repulsive, but the real estate industry is the perfect reflection of how racism and capitalism work hand in hand.

    • You make some very valid points that I have always thought should be addressed ever since leaving pre-license school.

      I had a very good instructor who went over fair housing for a full 4 hours of a full day class. I think he was so good that he may have saw this whole thing coming 2 years ago.

      I’ve followed Rob’s coverage of the story since it began and I think, up to this point, it’s been too kind and I’m glad to see this outrage peaked.

      I also think he’s somewhat naive in not thinking the 56 agents who passed the A/B testers may have had just “gotten lucky” or may have had their “radar set off” or even may had gotten “tipped off” to this being conducted in some other way.

      If agents are doing things this blatantly I have a hard time believing it’s not discussed openly among themselves.

      As you say, these communities didn’t get to the stage they are overnight and I think a certain amount of past clients will want to protect what they’ve created (even if they don’t consider themselves as ones who overtl participated in the process)

      I personally don’t know many brokers but I have a strong suspicion that not even one of them would even question an agent with a strong presence in a farm or other area about their high percentage of referrals from that neighborhood even if they had gotten them by “preserving its character” as they would frame it.

      That’s the biggest issue I posed to my instructor on that day in class.

      I asked.

      “We live and work in the real world, and even if we want to hold higher standards personally how do we (as new agents needing every possible sale) resist the urge to not reject working with those who try to push us to compromise ethics”

      All he could offer in answer is that

      “you never know what is waiting for you once you do”

      I now think he meant this both ways.

      To hold yourself accountable is the only way AND you may not know who you’re dealing with in any conversation like, perhaps, Newsday.

      I hope me adding this to your comments will also get a reply from Rob.

      What I love about him is he is just not one to raise issues without proposing solutions. I think he’s on the right track on the institutional side.

      But I’d love to hear what he says about your takes as well.

    • Honestly, and I do NOT mean to be snarky in the least bit about this, if you’re an agent working in a community you feel is filled with racist residents, I strongly urge moving or finding a different line of work.

      I can’t imagine having to be a professional trying to help actual racists keep their community white, or free of gays, or Koreans or whatever. Let others take that burden on.

      As for James’s question… I think it’s unfair and unjust to think that residents who want to keep the character of their neighborhood are automatically racist. But the solution to *that* problem lies outside of the industry. That’s up to society and government as a whole. I’ve already suggested two solutions in previous posts; I suspect there are experts in the topic who have better ideas.

      What I can say is that at a minimum, we need to police ourselves and do a better job of working with such experts and with our neighbors and our communities to be the most professional we can be. Even if we don’t quite know what that means in the gray middle, I think we all can agree that “walk to your crack” and “look at the moms hanging out at school bus stops” are not all that gray. I think we all can agree that evasion and excuses do not constitute working with our communities.

  7. In a day and age where the political extortionists/domestic terrorists in blm try to find any reason to say something is ‘racist’… in the vein of “I let my cheerios sit in a bowl of milk for 5 hours, and now they are soggy…. Motherf____ing RACIST’s at the cereal co did this to me’…..

    Your social justice fake narrative side is disgusting Hahn.

    But that’s why were are getting a new SCOTUS Justice.

    Over the next decade, judicially we will be crushing your weak movement.

  8. You know what would solve these issues? Making agents W-2s. The consumer experience would go up dramatically. NAR can write many “code” revisions in their so called “Code-of-Ethics”, but it means crap without any teeth or consequences. Where do I find a list of all the complaints to Realtor boards? You can’t? Arbitration keeps unethical and illegal behavior behind closed doors. Who does NAR think they are? A regulatory agency? All agents need to remember NAR is a trade org., not FINRA or a regulatory agency. The more agents the merrier as long as the money keeps rolling in for brokerages (and dues for Realtor Associations). And when 1099s behave badly, firms will say” “they are independent contractors”.

    As a former manager I can honestly say it doesn’t matter what an agent does “under supervision”. Agents are 1099s. No one “manages” agents. Because a real “manager” would mean I am controlling the job of a 1099. Do people forget agents are *supposed* to be independent contractors? Even lawmakers should be reminded of this, because they can’t have it both ways. I would often say as a manager “I can *tell* an agent how to behave and what they *should* do, but I didn’t raise them”. Do franchises or big firms support their-so called “supervising manager” if the manager wants to let go of an unethical agent? What about a 50 million dollar producing unethical agent? You think a firm would support a “supervising manager” letting go an unethical big producing agent? Or maybe the manager works for the agent? Or maybe the manager is just a cheerleader/coach. In such an *ultra competitive* industry, maybe the manager is the b*tch of the agents?
    Not trying to pick on the Jills but I do wonder what discipline they received after the days on market issue/debacle in FL What if the Jills were two women of color producing only a few million a year. You think they would still be at Coldwell Banker in Fl? I’d be interested to see how much production the 68 agents produced in sales and how (if any) discipline is handled based upon those numbers.

    In order for the consumer experience to go up (including stomping out racism), agents need to become W-2 and/or there needs to be real consequences to some of the bad behavior which happens in the industry. As a previous financial advisor a I know a U4 follows you with a complaint. Maybe the real estate industry needs something more than a slap on the wrist from a pretend arbitration board which knows nothing about the law.
    Complaints need to become public and licenses need to be suspended and/or revoked. It starts at the top.

  9. Thank you for hounding us. I’ve shown the entire Newsday Long Island in 3 CE classes in AZ. I show it in my prelicense classes. I also severed an agent from my brokerage who told a prospective buyer couple that the HOA they were interested in was “a Christian community”(the agent lived in the community) when it was reported to me by the buyer’s agent. Change starts at home.

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