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September 20, 2014

Recruiting: 5 Ways to Cross the Line

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Recruiting: 5 Ways to Cross the Line

“Unethical recruiting is rampant these days because of desperate brokers,” says Dave Tina, general manager of Realty One Group in Las Vegas. “I’ve seen brokers saying that the company the sales associate works for is going bankrupt when it’s financially solvent or that it’s been bouncing commission checks when it never has.”

The REALTOR® Code of Ethics has no restrictions specific to recruiting salespeople. But that doesn’t mean that anything goes when it comes to recruiting. Here are five tactics that cross legal or ethical lines.

1. Recruiting on others' turf. Personally recruiting at other brokers’ offices or sending recruitment mailings to their offices can be tacky and confrontational. You may argue that’s fair game, but there’s little upside. It’s going to make sales associates uncomfortable and alert their broker to the risk of their leaving.

2. Lying about your company. “It is unethical to be dishonest with agents you’re recruiting to get them to your company,” says Carolann Newton, associate broker and vice president of training at Jackson Stanley, REALTORS®, in Greenville, S.C. Tina says he’s seen brokers claiming to offer strong leads when, in fact, they’re just recycling old ones. Likewise, Jo Mangum, CRS, GRI, president of Jamm Coaching in Raleigh, N.C., warns against making your company’s strength or market share appear better than it is. Lies can come back to haunt you, especially if an agent you recruited thinks that he or she was led to a decision that caused financial harm.

3. Badmouthing or lying about your competitors. “Brokers sometimes make statements or claims about other brokers’ business practices—like fee splits—that aren’t entirely accurate or are sometimes outright wrong,” says Dax Watson, a lawyer at Mack, Drucker & Watson in Phoenix who advises and defends real estate brokers. “While you need to recruit, you should do it with accurate information.” Rob Hatchett, president of Crye-Leike Franchises in Chattanooga, Tenn., goes further. “I’ve run across too many recruits who’ve been told things about our company that are nowhere close to the truth,” he argues. “We need to simply talk about what our own company is doing.”

4. Interfering with current independent contractor agreements. “I’d be concerned about interference with the salesperson’s contract with the current broker,” says Bruce H. Aydt, ABR, CRB, senior vice president and general counsel for Prudential Alliance, REALTORS®, in St. Louis. “It’s rare, but there might be a non-compete clause in the salesperson’s independent contractor agreement. Check that by asking, ‘Is there any restriction with your current broker related to moving companies?’ There’s a wide range of what non-compete clauses can cover. So if the answer is yes, ask for a copy of the contract and have your attorney review it.”

5. Offering inducements that harm your own company. “Brokers often offer incentives like ‘no fees for a year’ to salespeople,” says Watson. “That type of inducement might not cross the line in terms of fair dealing with competitors—there’s nothing really wrong with it. But you need to consider how doing so might affect your existing operation. “It could alienate your current salespeople who don’t have the same deal,” Watson adds.

Sources: Bruce H. Aydt, ABR, CRB, senior vice president and general counsel, Prudential Alliance, REALTORS®, St. Louis; Karyn Anjali Glubis, broker-owner, The Real Estate Expert LLC, Tampa Bay, Fla.; Rob Hatchett, president, Crye-Leike Franchises, Chattanooga, Tenn.; Jo Mangum, CRS, GRI, president, Jamm Coaching, Raleigh, N.C.; Carolann Newton, associate broker and vice president of training, Jackson Stanley, REALTORS®, Greenville, S.C.; Dave Tina, general manager, Realty One Group, Las Vegas; Dax Watson, Mack, Drucker & Watson, Phoenix.

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