Upholding business ethics in real estate

Expert EyeMohanad Alwadiya

While the term “business ethics” is not something new to us, some people with careers outside of the real estate industry may view the term with a critical eye, with some perhaps joking about the incompatible nature of the words “business” and “ethics.”

But we all know that in real estate, a number of professions emerge including commercial or residential brokerage, appraisal/valuation, property management and real estate counselling. That being said, for a job to be considered a bona fide profession, it would require commitment to a certain standard of conduct that the general public expects from the practitioner. This is where the real estate code of ethics comes in.

However, some might say that anyone can become a realtor, so how does this seemingly “open” industry professionalise current practice and regulate the activities of practitioners? What rules or structures are in place to prevent any form of abuse and/or malpractice in an industry where sometimes morally contradictory relationships or grey areas exist such as in the case of open market listings where one seller lists with various agents, and the big question is where would the realtor’s loyalty be – with the seller or the buyer?

Another dilemma confronting realtors is their reliance on commission-based remuneration which may run counter to the best interests of the client. While a good commission structure would motivate realtors to convert a lead and close a deal, the question of whether or not conditions set are for or against the best interests of their client remains – with “yes” being the answer in some cases, and at other times not so especially in cases of self-dealing in real estate.

Aside from By-law No. 85 “Regulating the Real Estate Brokers Register in the Emirate of Dubai” which expressly states the legal mandate governing the real estate practice, the Real Estate Regulatory Agency (RERA) and the Dubai Real Estate Institute (DREI) established a mandatory certification programme for new and experienced agents who wish to work in a real estate brokerage in Dubai. DREI also organises license renewal courses and exams, and career development programmes to elevate the standards of professionalism of Dubai brokers.

All realtors are, therefore, expected to abide by local laws pertaining to the real estate practice as well as to government regulations.

But even in the face of such regulation, real estate firms must also take it upon themselves to educate and empower their agents to make the best decisions, and maintain individual and corporate integrity, professionalism and success.

Investing in training pays a huge dividend. Extensive and tailor-made training programmes should include education on the industry and pertinent rules/regulations, soft skills and specialised training courses that help employees attain a level of mastery.

The ongoing development of the industry’s regulatory framework and implementation of laws and regulations to safeguard both consumer and investor interests, the overall industry and the economy at large from rampant and irresponsible, speculative, predatory or unethical practices all reveal a mature and balanced approach to shaping an industry which exhibits sustainable growth over the long term.

Taken altogether, the laws of the land serve as the primary push for realtors to act in a way that upholds and reflects the greater good while constant education through training, workshops, seminars and the like help real estate practitioners internalise the values that must inherently pervade the system for the industry to thrive and continue to serve as one of the primary sectors supporting the UAE economy.

More on business ethics: Regulating  the middlemen

Source: Mohanad Alwadiya, Special to Properties
CEO, Harbor Real Estate

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