Medial professionals and real estate professionals -- both as firms and individuals -- routinely receive gifts and benefits from representatives of companies that seek referral business. In the medical environment, pharmaceutical companies and the makers of medical devices hope that doctors will prescribe or refer their products to patients. Similarly, title, escrow, mortgage, and a variety of other firms hope that Realtors® will either refer them or simply choose their services for their clients.

These practices, of course, create conflicts of interest. In making the referral or choosing the service, is the practitioner putting the patient/client interest first, or is the primary motivation one of obligation and/or anticipation of future benefits? This is of special importance because both the doctor-patient relationship and that of the real estate agent-principal are fiduciary relationships. The practitioner has a duty to place the patient/client interest first.

The medical profession has taken these conflict-of-interest issues far more seriously than has the real estate establishment. As a result of increasing concern during the 1980s, the American Medical Association conducted a study of the issues that resulted in adoption of a set of ethical guidelines relative to gift-giving practices. Subsequent studies have resulted in even more stringent recommendations.

In September of 2006, Stanford University Medical Hospital and Clinics joined Yale and the University of Pennsylvania in adopting a zero-tolerance policy regarding gifts from pharmaceutical and other industry representatives. The policy is in conformance with recommendations set forth in a January 2006, article that appeared in the Journal of the American Medical Association (JAMA).

Co-authored by a group of highly-respected medical professionals, the article abstract asserts, "Although physician groups, the manufacturers, and the federal government have instituted self-regulation of marketing, research in the psychology and social science of gift receipt and giving indicates that current controls will not satisfactorily protect the interests of patients." The authors went on to write that more stringent regulation was necessary, "including the elimination or modification of common practices related to small gifts … ." Thus, the Stanford policy prohibits physicians from accepting industry gifts of any size.

With the exception of the acts of some individuals and a few atypical firms, there are no corresponding activities in the real estate industry. There is no group like the American Medical Student Association with its "PharmFree" campaign, designed to educate its members about the problems of undue, inappropriate influence. Nor have the various real estate establishment organizations given any indication of being very concerned about similar conflict-of interest issues. Why not?

Perhaps the real estate industry's sanguine attitude regarding these matters stems from a belief that there really isn't a problem. Many would say that, maybe, large (i.e. expensive) gifts will influence an agent's judgments about the selection of service providers, but certainly small gifts have no influence. Many doctors think that about themselves. A majority interviewed said that they would not be influenced by small gifts. But then, a majority interviewed also believes that most of their medical colleagues are influenced by small gifts. Both beliefs can't be true.

Perhaps the answer is that real estate people are stronger of will, less susceptible to subtle influence, than are doctors. That really won't wash; and it conflicts with the occupation-neutral findings of social science.

Maybe the lack of concern about real estate conflicts of interest can be attributed to the fact that they, generally, only have to do with the client's money; whereas, in the medical situation, a person's health may be at stake. While these are, no doubt, important differences, one doubts that a real estate client would find it sufficient reason to dismiss the concern.

A more plausible explanation is that the culture of gift-giving is so ingrained in the real estate industry that most practitioners simply don't want to touch it. That would, in part, be because so many have become dependent on it. Curiously, this was, and to a significant extent, still is, true within the medical profession. In particular is the concern raised by the prospect of everyone having to pay full freight for continuing education. Nonetheless, the medical community is moving forward on these matters.

Realtors® should take a long, hard look -- with an eye toward emulation -- at what the medical profession is doing to deal with the conflict-of-interest problems that arise out of inappropriate gift-giving practices.

Published: March 19, 2007

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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 .