How to Be a More Ethical Title Agent
Are you unethical? Have you witnessed unethical behavior in a real estate transaction – either from the lender, realtor, seller or buyer? Almost nobody answers “yes” to the former, while nearly everyone agrees to the later. In reality, everyone in the title business can be more ethical. However, first you must define ethics in general, understand different types of ethics and learn what tools are available to help you work through ethical problems that arise.
Ethics describe the rules, laws and principles that govern human behavior. There are three different types of ethics: personal, business and legal. These are hierarchal. Legal ethics, for instance, are lowest. The law is universal and immutable; you have no choice but to obey it. Business ethics takes it higher. You have some agency over adhering to a business’s policies or codes of conduct. Personal ethics is the highest form, as they are based solely on the rules that individuals create for themselves.
Title agents must think through these ethical systems and navigate potential conflicts. Perhaps there is a discrepancy on the price of a property where it is listed for a higher price than it was in a recent appraisal. As an agent, would you inform the buyer of this additional information? Many professionals would say that, from a business ethics perspective, a title officer should say nothing. The title officer is a neutral third party, and a price discrepancy should be resolved between the buyer and seller. The listing price differing from the appraisal price is also something that occasionally happens. But what if the buyer is a good friend?
Or consider a theoretical agent who is two closings short of winning an award. Their manager says they will give them two phantom closings and then later delete them from the system. How would you respond? Would you report the maleficence? Take the closings and benefit professionally? Refuse the help on principle?
Both situations require an agent to navigate and balance the different ethical systems that define their life. There are strategies to help with this. In the former, you could receive counsel from an objective third party. An impartial person can help separate personal allegiance to a friend from a professional code of conduct. In the later, the agent can employ critical thinking to determine that, while it is likely unnecessary to report their manager, particularly if this is a rare ethical lapse on their part, they cannot, in good conscience, accept the phantom closings.
Agents can also filter ethical problems through different “tests” to help them decide on a correct course of action. In keeping with the hierarchy of ethics, the most critical test to apply is the “harm test.” Ask yourself if your actions will harm anyone else and violate your personal ethics. The harm test is always applicable and should follow other tests. For example, an agent should put relevant ethical dilemmas through the “law test” followed by a “business ethics test.”
The harm test is the final step. Just because something is technically legal, and just because it does not violate any business ethics, does not mean an agent should do it. If it fails the harm test and violates your personal ethics, you must change course. Agents can gain even greater ethical clarity by using the “newspaper test,” which asks whether you would want to read about yourself taking a specific action in a newspaper, and the “child test,” which ponders whether you would advise your child to take the action you’re considering.
Complex ethical problems occur in real estate transactions. In these moments, it’s important to remember that short-term benefits rarely outweigh long-term costs. It takes a substantial amount of time to establish a trustworthy or honorable reputation, but you can quickly lose it through one unethical decision. As somebody in the title business, you must always be seen as an ethical paragon, as your reputation is critical to being able to perform your job effectively. To meet this high bar, you can apply appropriate scrutiny to ethical questions, utilize critical thinking, and rely on impartial support systems for guidance. By doing so, you will experience long-term professional success and, perhaps most importantly, a blissfully clean conscience.