Not too long ago all members of The National Association of Realtors were required to complete a course in ethics. At the time I was skeptical. Since 1978 I have been routinely shocked and appalled by the conduct of many in my profession and I'm a little slap-happy from repeatedly turning the other cheek.

There is, unfortunately, a valid connection between the consumer's less-than-stellar perception of us and the reality of our conduct.

One has to assume that the NAR's effort was far more than window dressing. If we had a reputation for conducting ourselves like professionals, the NAR certainly wouldn't have mandated a course in ethics. After all, they don't attempt to mandate competency. And competency alone would go a long way toward improving the experience for consumers.

Did the NAR succeed in teaching ethics?

Ethics comes from the Greek word ethikos, meaning "arising from habit." Ethics is a habitual way of behaving. Did the NAR course form any habits? Did it even make a difference?

In order to establish habitual behavior, it is necessary to become proactive. Habitual behavior results from doing, not from avoiding. From doing over and over and over. You cannot form a habit by not doing. You cannot do a don't.

Yet most of the Realtor Code of Ethics is about what not to do. And most of it replicates what is the law in many places.

The conduct in Article Sixteen, for example, is already prohibited by state laws. It is illegal to interfere with a contractual relationship involving other parties. It is illegal to engage in interference with economic advantage. If I have a six month listing, I should be able to reasonably expect that I will earn a brokerage fee if it sells within that time.

When a competitor tells the property owner that they know the neighborhood better than I do and to request a cancellation of my listing, she's already broken the law. There's no difference between stealing another's listing through interference and stealing a little old ladies purse. Article Sixteen doesn't add any teeth.

Frankly, I'm not sure you can teach ethics anymore than you can teach common sense.

But more to the root of the problem is that we work in an industry where failure is far more common than success, where there are few barriers to entry, little self-policing, where average performance won't earn enough to buy the product we represent and where big dollars are just thirty days away.

Our very culture is still sales driven, not competency driven. But what happens in that arena when there are no sales to be closed?

By any measure, in virtually every market, there are about five times as many practitioners as the normal baseline of activity can support. And you either participate in the limited number of closings or you are out of luck. There is no partial pay or partial participation; it's either all or nothing. So let's clear this up, 80 percent of licensees are doomed to failure; it's only a question of which four out of five are only passing through.

The NAR reports 1.2 million members nationwide, and last year there were about 6 million resale closings. Do the math if you want.

According to the US Department of Labor, the median annual earnings for a real estate agent in 2004, a record year, was less than three thousand dollars per month. The median!!! Half earned even less.

People are lured into the real estate business with dreams of big money and no idea of the staggering odds against them. The industry keeps right on bringing them in simply to fuel the failure. There ought to be a disclaimer that says, "Results not typical."

That's our dirty little secret. And when you start out with a dirty little secret, you can't claim to be surprised when you find that many of your members are cut-throat and devious.

Reminds me of the scene from Casablanca where the French police captain, Louis Renault declares that he is "shocked, shocked to discover there is gambling going on here," as the croupier hands him his winnings.

Maybe I'm a cynic, or maybe just experienced, but I understand from the front lines that those 80 percent who are doomed to failure are desperate. If you're a single mother with nothing in escrow and a notice of default looming, stealing someone else's client is viewed as a lifeline not an ethical breech.

In this environment, desperation not ethics is likely to prevail. It is the mathematical and philosophical equivalent of five dogs and one bone.

And this is the real challenge to teaching ethics. It's easy to say I won't steal when you really don't need it. The real test is, what are the tools we turn to, the educational outcomes that enable the practitioner to resist when walking away from a bad deal will certainly result in them being foreclosed on?

Ethical mandates tend not to be effective, because they ignore the principal of Maslow's Hierarchy of Needs. Food and shelter first, because they are basic needs. Until then, Meta needs, such as acceptance and justice, aren't very relevant. As a weaselly broker once said to me, "Hey, I gotta do what's best for my family."

How can you argue with that?

Actually, I tried. "What about my family?"

"You don't have a family," he shot back, "you have a cat."

My cat is still ticked about that remark.

Once there was a cultural taboo against wrongdoing, but that has been eroded by the behavior of our leaders, our heroes, and even the lawmakers themselves, who seem to do exactly what they want to do.

The media bombards us with messages of greed and selfishness, while we wonder why our prison population is swelling.

The message seems to be that it's only wrong if you get caught. And against this entire backdrop, isn't there the potential for highly ethical people to feel a bit isolated, naive and maybe a little cheated?

Fortunately, highly ethical people understand something at their core: That ethical behavior is ultimately more rewarding, and that the sense of personal pride that comes from doing the right thing has more value in overcoming a lifetime of obstacles than immediate undeserved reward. This is what we must teach.

We must show a connection between ethical behavior and the pay-off. If good behavior is supposed to be its own reward, what does that look like and feel like? We need to demonstrate that there are tangible benefits to doing the right thing.

Self-esteem is a tangible and valuable attribute that manifests success and provides the strength to meet life's inevitable challenges. Liking that person in the mirror is worth hundreds of thousands of dollars of therapy. As the Bruce Springsteen lyric goes, "It's a sad man my friend who's livin' in his own skin and can't stand the company."

And there are solid business benefits as well. A personal service business is more the result of the principal of attraction than promotion. The more highly regarded you are, the more your opportunities for success will grow.

We must also teach that others are watching. Our children form their values based on what they sense in us. By example we create their reality and by that their future. When our kids' coaches are cheating their business partners, it rubs off. And we leave them vulnerable. If you don't stand for something, you'll fall for anything.

A few years ago, my softball team was about to play in the city championship. On the day of the game, we got a call from a man identifying himself as a maintenance worker for the city. He explained that an irrigation line had broken, flooding our field and that our game had been postponed until the following night.

The next evening we learned there was no flooding problem and that we had forfeited. The other team had their trophies and tee shirts, but they hadn't earned them. They hadn't won anything and in fact put winning ahead of playing.

How crazy is that? But I always wonder what satisfaction there could possibly be in wearing a commemorative shirt with nothing to commemorate because the actual event never took place? Great stories to share with the grandkids about the big game that never was.

We must insist on earning our rewards and be committed to settling for nothing less than the satisfaction of a reward earned through effort, persistence, and sacrifice. Long ago I learned that I don't want something for nothing. I always find out later that I can't afford it.

Pity old Jack Whittaker, for he had good fortune and nothing else. He won $315,000,000 in the lottery in 2003 and today he is in deep debt and deep trouble and everything around him is soiled by the stain of his greedy little soul. What he lacked in character the money only magnified.

If we are serious about teaching ethics we cannot do it by remote. We need discussion, give-and-take, and discovery. If our habits are the result of our thinking, then forming new habits requires new thinking, not a codification of mandatory conduct.

The NAR has codified ethical behavior. But it takes 17 Articles to do it. If it takes that long to explain the Golden Rule, it must have been written by lawyers. And if it was written by lawyers, it was intended to exacerbate bad behavior, not stop it. Who'd need a lawyer if we all did the right thing?

And that brings us back around to the cynic in me. In the end, the mandatory ethics training seemed more like a primer on arbitration. Perhaps that is an acknowledgement by the NAR that teaching the avenues of redress may be more feasible than teaching fairness, discipline, and self-sacrifice, which are the pillars of ethical behavior.

Published: April 5, 2007

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George W. Mantor is known as "The Real Estate Professor" for his wealth building formula, Lx2+(U²)xTFP=$∞. A proponent of educating consumers on using homeownership as an opportunity to build an estate, he has set out on a crusade to educate small real estate investors, fellow practitioners, seniors, and high school and college students about the risk-free benefits of planned real estate ownership. His consumer education efforts include a long-running radio program, Mobile Information Center, monthly workshop series, public appearances, informative website and frequent articles. During a career that has spanned nearly three decades, he has amassed experience in new home and resale residential real estate, resort marketing and commercial and investment property. He is currently the founder and president of The Associates Financial Group, an independent, locally-owned, full service real estate and mortgage brokerage, dedicated to creating long-term relationships with clients. Prior to starting his own firm in 1992, he had been Director of Training and Customer Service for Great Western Real Estate. In addition he has served on virtually every real estate committee, including a term as a Director of the California Association of REALTORS®. He is the creator of the Personal Best System, a business and life planning process and the Red Zone Time Planning System for Business Professionals. In addition to Realty Times, his articles have recently appeared in Real Estate Finance, National Real Estate Investor, The Real Estate Professional, Broker Agent News, and RIS Media Power Broker Network Report. He is available for speaking and customized training. His website is www.myafg.com and he can be reached at GWMantor@aol.com.