The First National Conference on Real Estate Standards was cosponsored by the Orlando Regional Realtor Association, the Houston Association of Realtors, and the Chicago Association of Realtors. And while it had as speakers the current and immediate past presidents of NAR, this conference was by no means a "party line" gathering. Rather, it was about the issues which have for many years plagued organized real estate: the issues of uneven, unarticulated standards of service in the real estate industry and of the resultant poor public esteem.

The issues are complex and the solutions are not simple. By and large, poor and uneven standards of business practice are not ethical issues, and they are not regulatory issues—though all too often the industry looks to enforcement of the Code of Ethics or of license law for solutions to their problems.

The organizers of this conference recognized that the real estate industry is at a crossroads. Brokerages are increasingly less profitable, and consumers are increasingly better educated and more demanding. The Internet, the rise of the "Freedom Shops" (low-budget brokerages which provide few services and even less agent supervision), increasing insurance rates due to increasing liability, and the appearance of third party organizations with performance standards of their own (such as relo services and prepaid legal services)—all of these trends produce an environment where the broker control of quality is becoming increasingly tenuous. In addition, the industry has become increasingly agent-centric, with customer loyalty managed largely by the agents, not the firm.

Against this backdrop, the conference, "Touchstone for Excellence", was organized to discuss the possibility of an initiative that would aggressively establish and promote the real estate industry's best practices as a method by which risk could be lowered and customer expectations more successfully met.

We(Participants) began by studying the problem of articulating standards of excellence in a variety of service industries: hospitality (Roger Dow of the Marriott Corporation was keynote speaker), education (the President of Valencia Community College), food and beverage industry (Darden Restaurants), and public accounting. In each situation, the industry clearly identified the target, and spent considerable resources analyzing consumer demands. Managers within the organizations managed by articulating company goals to staff, and ensuring constant staff awareness in meeting these goals. One of the themes throughout this conference was the importance of good, skilled managers—and the consensus was that this was indeed a weak point in many real estate operations, where managers are promoted for sales skills rather than management expertise.

Dow's advice to managers was three-fold:

1. Set finite standards which are measurable by staff. Say, "You will receive an invoice in seven days," or "No phone should ring more than three rings before it is answered."

2. Manage with short staff meetings daily (the 10-minute meeting reinforces service standards, and a daily service objective should be presented to staff)

3. Keep abreast of best practices in your own field and in related industries. Some of the best ideas come from managers with similar problems in other specialty areas).

A set of presenters on the regulatory aspects of the real estate profession came next. It was clear from the panel that regulation sets minimum standards, not quality service standards, and is weak in the area of regulation. The frustrated public expects regulators to manage quality standards, but this solution is seldom, if ever, a viable one.

Again, the real estate industry must find other more effective answers. License law does not address complaints of rudeness, failure to communicate, and general ineptitude. One new idea is that regulators in the state of Texas are currently considering a minimum number of transactions as a threshold for keeping a license active.

Highlighting the first day of the conference were managing brokers who discussed methods of instilling quality performance standards in their operations. All agreed that the Independent Contractor status was merely an excuse for poor performance: several cited physicians and other professionals who are independent contractors and of whom the public expects high performance standards.

The most dynamic speaker in this area was Larry Romito, formerly the EVP and General Manager of Coldwell Banker Residential Brokerage and now the CEO of Quality Service Certification, Inc. Because Mr. Romito was in many ways the 'hit' of the many speakers, I will summarize his remarks here:

1. Everybody in an office should be involved in serving the customer, from the salesperson to the janitor.

2. You can have quality standards with independent contractors. The secret is in clearly stating the expectations of performance and service, measuring those expectations, and eliminating those who do not meet the expectations.

3. The product and services of real estate companies are perceived as the same, so price becomes the consumer's point of choice between companies. If real estate companies cannot market themselves as worth the price the consumer pays, the consumer will refuse to pay the price.

4. The average broker has no clue about what happens between an agent and customer. As a result, the broker has no quality control.

5. What business are we (Realtors) in? Quality service delivery, service management, and customer satisfaction
   • Industry must transition from dollar/volume standards to standards of meeting consumer needs and quality service.
   • Industry needs service-based education and training, not listing and sales training
   • The industry should introduce written service guarantees
   • Incentives must be for service, more than for volume

6. Managers are the problem: they don't know how to ask the questions and judge the results of those they manage. They should be trained in general management techniques common to business and manufacturing.

What are the "Real Estate Industry Standards of Service?' There aren't any! As an industry we must update the rules. We have to look at our business with new eyes. We are still production-based, with production-sales standards, not quality standards.

Consumers don't want 'the wrong things faster', and they want interpretation, not more information. As consumers, we want free information, we will pay for help in interpreting it.

We have manufacturing quality (ie, number of units sold), but not service quality.

How can associations help?

We can:

1. Impose rules for performance standards. Again, these are not 'ethics' but behavioral criteria for professionals;

2. Offer resources which train managers and inform members in the expectations relative to performance standards

3. Offer leadership and vision. Reward for service, not production. Develop quality certification programs.

4. Define professional service for the members and the public. It is a process which is
   • Consistent
   • Reliable
   • Responsive
   • Accountable
   • Convenient

Both Realtors and the public have a right to know what the expectations are in the professional real estate community.

Perhaps one of the most interesting announcements of the meeting was from Michel Beausejour, the CEO of the Montreal Real Estate Board and the Quebec Federation of Real Estate Boards. These entities are developing a performance-based quality certification program for real estate professionals, and this program is in its final stages of preparation.

On our second day, attendees heard from those industries which do set performance standards for the real estate industry, particularly when the industry has not set these standards for itself. Eric Cunliff, strategic manager of LendingTree, and John Morgan, president of a large Florida law firm, both discussed their concerns about the real estate industry and its uneven performance standards, stressing their roles in defining those standards in the course of doing business in their specialized areas. And finally, three top producers from the Orlando Association discussed their frustrations in doing business in an industry where there is a variety of skill levels and very little performance consistence among peers.

The solutions? The last few moments of the conference were spent in discussing possible solutions such as:

• Certification programs
• Consumer feedback mechanisms (such as travel websites have)
• Performance rating
• Articulation of minimum performance standards

It was clear that there was no panacea, but there was a need for further discussion, and that need was immediate and urgent, given the current consumer-driven business climate. The consensus was clear: the change must come from within, rather than being left to third parties such as consumer groups, legislators, and the law. Those present were asked to sign a letter of intent to pursue this direction further; and a summit meeting will be convened in conjunction with the Washington NAR meetings.

Judith Lindenau, CAE, RCE is the executive vice president of the Traverse Area Association of Realtors.

Published: February 9, 2004

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