Dear Monty: We accepted an offer on our house. Our agent brought an offer close to asking, and we accepted. Two days later, a buyer called wondering why we hadn't responded to their full-price offer. We told them we were not aware of it. Our agent told us that the offer came in after we had accepted. The second buyer disputed our agent's claim. We then learned our buyer's wife is our agent's sister. We are very disappointed with our agent but happy with the price. We don't want to get caught up in a legal battle. What should we do?

Monty's Answer: Unfortunately, these occurrences are common, not rare. I base this statement on 50-plus years of experience in residential real estate. Many agents abhor such behavior, but poor agents may outnumber good ones. In 2015, the National Association of Realtors (NAR) engaged a consultant to ask agents what they considered the primary threat to them in the coming 10 years. Over 7,000 respondents (out of over 1 million agents) said, "The biggest challenge is the masses of marginal agents are destroying our reputation. The real estate industry is saddled with many part-time, untrained, unethical, and incompetent agents. This knowledge gap threatens the credibility of the industry." Ironically, agents complained about this issue when I joined the industry in 1966.

If you read the NAR Code of Ethics, the message is that the Code binds and disciplines agents for infractions that come to arbitration. The casual reader with little knowledge about the industry could quickly believe all agents are ethical. The Code of Ethics has been with us since 1913. The Code of Ethics is not helping the consumer but improperly symbolizing the agent — NAR's customer base. The Code is a long checklist of how today's agents can take advantage of their customers.

WHY THE CODE OF ETHICS IS INEFFECTIVE

1. NAR has no control over independent contractor agents (ICs).

2. Most rank-and-file ICs are vaguely aware of the ethics rules.

3. Most infractions go unreported by real estate agents and consumers for the following reasons:

a. Agents refrain from reporting their best customers, colleagues and co-broke agents — a fraternity.

b. The Arbitration requires considerable time and effort on the agent's part to assemble evidence.

c. Other agents want to avoid sitting on an Arbitration panel or recusing themselves.

d. Some agents see Arbitration as a high price for time invested and no guarantee of success.

e. Witnesses are not likely to cooperate — as you mentioned in your email.

f. NAR has no incentive to remove bad agents. The masses of marginal agents are paying significant dues to be NAR members. NAR has yet to learn how many marginal agents exist. If NAR expelled them, it would be a considerable revenue loss to NAR. The ethical agents are not organized or strong enough to force action. And this situation has existed for years, so why risk losing revenue?

YOUR NON-LITIGATION OPTIONS

Complain to the local Board of Realtors.

Complain to the state regulators.

Complain to the agent's managing broker.

Walk away.

If buyer No. 2 is correct, you may gain the difference between your sale price and No. 2's offer. The downside is losing on any option. If you go ahead, ask your attorney to review the circumstances before proceeding.

Richard Montgomery is the Founder of PropBox, the first advertising platform to bring home sellers and buyers directly together to negotiate and close the sale online. He offers readers solution choices for their real estate questions. Follow him on Twitter(X) @rmpropbox or DearMonty.com.

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