Recent activities at the mid-year meetings of the National Association of Realtors® made for some fun headlines. But, like so many headlines, they were more skewed towards getting attention than they were towards conveying information.

Contrary to what one might have at first glance thought, the NAR board of directors neither went on record opposing higher standards, nor did it take a position advocating lower ones.

What actually did happen was less dramatic and rather more specific. At the meetings the NAR Risk Management Committee received a presentation from the recently-established Real Estate Standards Institute (RESI). RESI is a self-described grass roots organization that has developed a set of proposed standards of business practice for real estate professionals.

That set of standards -- 86 items, spread over seven categories (e.g. customer care, transaction management, professional relationships) -- has been discussed here before. The recommended practices range from banal admonitions ("...dress in an appropriate professional manner at all times" to the exercise of specific skills (be proficient on "...e-mail, electronic forms, word document processing [and] ...contact management software")

Taken as a whole, it is a praiseworthy compilation. Any broker would be delighted to have agents who conformed to these practices.

Nonetheless, the Risk Management Committee recommended to the board of directors that NAR not "adopt, endorse, or recommend" the set of standards developed by RESI. The reason for making that recommendation is that those standards "do not reflect the standard of care in the real estate industry." The Board of Directors overwhelmingly affirmed the committee's recommendation.

In so doing, NAR did not "reject" the business practices enumerated by RESI. It didn't say that they were not worthwhile. Rather, the director's vote reflected the very real legal concern that, by endorsing the RESI practices, NAR would be seen as adopting them as a "standard of care."

As NAR's general counsel, Laurie Janik, noted, "Failing to meet the standard of care is actionable as negligence." No one wanted a Realtor® to be guilty of negligence because they lacked proficiency in contact management software, or didn't dress in an appropriate professional manner, or, for that matter, didn't return a phone call in a timely manner.

RESI continues to be plagued by a confusion of purpose. Earlier in the year we noted its tendencies to conflate two very different tasks. On the one hand, it set forth a set of practices that were meant to describe what the "very best" practitioners do. On the other hand, it purported to be describing practices that were proposed to be the norm.

The current confusion has to do with whether RESI is proposing service standards for the entire industry or for adoption by particular companies within the industry. Certainly, at NAR and in much of RESI's public pronouncements, it appears to be the former.

Yet, following the NAR vote, Greg Rokeh, one of the founders of RESI, was quoted as saying, "We had not expected that NAR would at this point accept or adopt the standards... Our effort is really for the firms that wish to practice at the highest level -- it has never been about creating a national standard for the entire industry."

The same Greg Rokeh was quoted earlier as writing, "There is a movement underway for the establishment of uniform national standards based on the real estate industry's widely accepted best practices."

It may make eminent good sense for RESI to market its product to individual real estate companies. Those that chose to adopt its recommended practices as required of all their agents would receive something akin to the "Good Housekeeping Seal of Approval," and they would no doubt use that in their efforts at marketing and customer retention. But it would make little sense for NAR to declare those practices as a national norm.

One would expect that the RESI business plan is to market to companies, and not, for example, to individual agents. It would no doubt help RESI's efforts, in that regard, to have some sort of "blessing" from the NAR; but the NAR wisely declined to go down that path. Indeed, given Rokeh's quoted comment, "...I don't know that we ever had any expectation that NAR would [accept or adopt the standards]." One has to wonder why all the bother.

Published: May 25, 2005

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Bob Hunt is a director of the National Association of Realtors and is author of the recently published book, "Real Estate the Ethical Way." A graduate of Princeton with a master's degree from UCLA in philosophy, Hunt has served as a U.S. Marine, Realtor association president in South Orange County, and director of the California Association of Realtors, and is an award-winning Realtor. Contact Bob at .