Over 1400 real estate industry leaders, in 58 markets, have participated in the drafting of standards by a grassroots organization recently incorporated as the Real Estate Standards Institute.

The standards the Institute recommended were reviewed by over 100 of the nation's top brokers, who then sent back 40 pages of recommendations that were incorporated into the new standards.

Yet, many in the industry still need convincing that higher standards will restore the real estate industry to profitability.

For that reason, the Institute has issued a white paper entitled "Driving Profitability and Consumer Satisfaction: The Need for Standards In Real Estate," authored by John Ansbach, vice president of RECON Intelligence Services.

Chairman of the Institute Steering Committee, Greg Rokeh writes, "There is a movement underway for the establishment of uniform national standards based on the real estate industry's widely accepted best practices."

"The initiative begun by these concerned professionals is in response to the demands of today's contemporary real estate consumer, the declining profitability of brokerages, and the multiple threats currently facing the industry. While liability exposure is certainly important, the true essence of the debate about standards should center on profitability and customer service, the deciding factors that really count in the marketplace in the long run."

With that section of his introduction to the white paper, Rokeh lays out a significant challenge to adopting standards -- fear of liability in being held accountable to higher standards. This risk is so great, that the industry has been willing to mitigate agency, and suffer decreasing profitability and customer service to avoid the costs of liability.

But current pressures on the industry are far greater than the threat of liability due to accountability from higher standards. Because there are so few uniform standards across the country, competition has opened wide and consumers are complaining about high commissions, creating a race to the bottom, or minimum of what the industry can do for consumers.

According to executives, the National Association of Realtors has expressed "concerns" about the standards and offered to let the Institute have 10 minutes at next week's Risk Management committee meeting at the Mid-year conference. The NAR's main concern is potential legal liability, because higher standards will set a higher bar that some practitioners are unable, or unwilling, to meet. Legal eagle fears could politely discourage more associations from adopting the standards once they are finalized.

Yet, NAR general counsel Laurie Janik has made several "insightful, and valuable, suggestions" regarding the proposed standards, that the Institute board says it is grateful to have and will seriously consider.

"I would much prefer that RESI re-label what it has developed," explained Janik to Realty Times. "I believe they are more in the nature of 'service criteria' than standards. Perhaps it is due to my legal training, but the label "standards" is way too close to "standard of care," especially when the document itself proclaims that 'For the first time, America's real estate consumers will have uniform, national standards against which to judge the performance of those whose services they engage...' These are aspirational goals, perhaps, but certainly not nationwide standards that consumers should expect of all licensees. A "standard" is something that is common to all practitioners in a community or locale. It is the measure of what a reasonable practitioner would do. Failing to meet the standard of care is actionable as negligence. I certainly do not think that practitioners who fail to perform in accordance with the "standards," developed by RESI, should be exposed to claims of negligence."

Says Belton Jennings, CEO of the Orlando Regional Association of Realtors and a loaned executive for the standards project, "We have 26 associations as charter members, representing 117,000 of their members, and their commitment has raised over $350,000. That shows we aren't having a whole lot of problem with liability."

"Anytime a real estate practitioner does business, there is always going to be liability," says Jennings. "Standards will help decrease liability because consumers will understand what the role of the agent is, and what they do, and the agents won't be able to make it up as they go along."

Jennings adds, "No one has ever done this before, so we don't think we did too badly the first time around, and we are proud of the effort that Steve Murray and the associations did to pull it together. We have to turn our attention to the Institute, and we'll look at standards again before we roll out the whole package."

Part II -- Highlights Of The Real Estate Standards Institute White Paper will run tomorrow.

Published: May 12, 2005

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Blanche is a renowned author of five real estate books. Her newest, Bubbles, Booms and Busts: Make Money In Any Real Estate Market, McGraw-Hill, was rave-reviewed by The New York Times. She was also selected from hundreds of real estate experts to contribute to Donald Trump's book, Trump: The Best Real Estate Advice I Ever Received: 100 Top Experts Share Their Strategies, Rutledge Hill Press, and is featured on page 68. Order Now Review - Honors In 2006, Blanche was selected among scores of candidates to author two consumer real estate guidebooks for the National Association of Realtors: The NAR Guide to Home Buying, and The NAR Guide to Home Selling, Wiley & Sons. She is currently planning two new books for the NAR and its members.       Known for her keen insight into real estate industry issues and for her ability to make complex subjects easy to understand, Blanche is a sought-after keynote and continuing education speaker. Real estate organizations from MLSs, to brokerages, to franchisors, to associations hire her to provide up-to-the-minute analysis of real estate industry news and advice on how to improve revenues. Her passionate delivery, peppered with stinging wit, is a huge hit with audiences and fans. Don Klein, CEO Greater Nashville Association of Realtors, Blanche Evans, Richard Courtney, president 2007, GRAR "The GNAR membership meeting last week featured Blanche Evans as the keynote speaker. Her comments and insights resonated extremely well with those in attendance and we have had many requests for copies of her PowerPoint Presentation. She was a terrific part of the membership meeting and convention program!" - Don Klein, CEO Greater Nashville Association of Realtors Coverage from WSMV, Nashville - 8-14-2007 That Interview Guy - Get Inside The Head Of Today's Generation 2007 AE Institute Session - To purchase 2006 AE Institute Session - Parts 1 2 3 4 5 6 7 8 9 HouseValues Mastermind call - Parts 1 2 Blanche's fireside chat with Jeremy Conaway, HAR - Click here. For more articles by Blanche, click here.