A recent Inman article — based on a lively thread started by Brad Inman on Inman’s Coast to Coast Facebook page — showed that the industry is torn about whether or not it provides an essential service.
The article stated that “in a bout of soul searching, hundreds of Inman readers posted more than 400 comments weighing in on the matter, and frequently at an emotional pitch.” I’ve been mentally debating this question for over a week.
My state of Pennsylvania is in the backyard of the epicenter of the coronavirus outbreak. My husband spent five days working last week in Duchess County, New York — just a stone’s throw from the heart of the pandemic in Westchester. Then he came home and self-quarantined.
Even though the U.S. Department of Homeland Security issued guidance that identified real estate as an essential business, Pennsylvania is one of the six states that doesn’t consider the industry to be life-sustaining.
Shut it down
I run a highly productive indie brokerage with nine agents. In early March, we had over 70 listings and 47 pending sales. My background is science journalism, and after reading numerous articles written by medical doctors and research scientists, I made a tough decision. I closed the office except by appointment.
Then, after seeing the number of cases double in a few days, I shut the office down and told my agents to go home. I did this prior to any government mandate.
Red Oak Realty’s Vanessa Jones Bergmark also took the same approach. On Monday, she said: “We took it very seriously here and shut our offices before our shelter-in-place was put in place. We’ve been closed for 10 days. We’ve been on lockdown for one week.”
Bergmark also spearheaded a San Francisco Bay Area Broker petition urging real estate professionals to shelter in place and stop business as usual.
While it’s understandable that buyers, sellers, landlords, tenants and agents believe that continuing to conduct real estate business is essential to their lives, not all activities performed by agents can be classified as “essential services.”
Real estate businesses remain in operation to facilitate the closing of pending escrows and to enable sellers, buyers, landlords and tenants to continue to enter into real estate agreements. However, prudent brokerages are taking the position that their agents can continue to work but that they do so remotely from their homes and that they follow all health and safety guidelines when interacting with anyone.
In Pennsylvania, on March 19, Gov. Wolf ordered all “non-life-sustaining businesses” to close their doors to business. This is a legal order to shut down, unless you’re essential to life. The interpretation of the word “essential” is the reason many real estate professionals across the nation are fighting it out online.
Here’s where we see a difference of opinion on what we do as agents and brokers and how important we are to clients. It’s also where we see fear manifesting in our ranks — fear of how we’ll pay our bills if we can’t work. Fear of not knowing if the transactions will close — later or even at all. Fear of how we’ll support ourselves if this situation lasts for months and not just weeks.
Is what we do essential?
In theory, the answer to that question is simple to me. However, it becomes more complex when you look at it case by case. The easy answer is that what we do is important, but it’s not life-sustaining at its root.
We’re not health care providers treating the sick. We’re not pharmacists dispensing necessary medications. We’re not grocery clerks and produce managers who are filling the shelves and feeding the country.
Fact: Housing is necessary to survive. Just ask any homeless person if shelter is essential, and I’m sure the answer will prove that housing has always been necessary.
Now that some states are saying we’re not essential to survival, agents are up in arms and rallying to call housing an essential, right? NAR will assert that the code of ethics was born on that fact (read the preamble to the code).
Certainly some agents volunteer and work with the homeless — but many more do not. So let’s just point out the irony here. Agents’ cry about how “housing is essential” rings false to me when the majority have never seen the inside of a soup kitchen or volunteered at a homeless shelter.
My hope is that after this crisis passes, the same agents who cried for our leaders to petition the government to classify us as “essential” will then use their energies to help the homeless and low-income homebuyers.
Look at the serious risks here
This virus is highly contagious, fast-moving and deadly. It attacks the lungs and leads to suffocation — regardless of your age, social standing or occupation. Rich and poor are dying, along with the old and the young.
True, many of them had underlying health conditions. But data now shows all ages are being infected. Those with few or no symptoms are most likely to pass it on the general population, as they do feel “normal.” Going about business as usual is not an option at this point.
Arguing about the word “essential” is counterproductive. We are important. Yes, we are. Our jobs put people in houses and give them shelter. We help people move on to the next stage in their lives, and we find them their dream homes.
However, many (not all, but most) of our daily transactions are not life-or-death situations.
- If an investor doesn’t close on “one more property” to add to his portfolio this month, nobody is homeless.
- If a middle-aged couple doesn’t move from a four-bedroom house in the suburbs to the condo today, they can still do it in a few weeks or months.
- If a young couple wants to move out of their apartment and into their first home right now, nobody will die if they wait a little longer.
These are the choices we’re being asked to make today, as we stay at home as much as possible to avoid spreading the virus.
Sure, there are extenuating circumstances that pop up: the wife leaving an abusive relationship, a relocating buyer who needs to find a house right now so he can get to his new job, someone whose lease has ended and needs a new place urgently.
My office policy right now is simply: “No, we’re not open for business at this time.” Besides the fact that it’s against the law in Pennsylvania, I refuse to risk my life or the life of one of my agents or clients by showing houses or having any face-to-face contact.
But they’re independent contractors!
There are brokers who are citing employee/independent contractor laws to get around the stay-at-home mandate. They state that they cannot control what their agents do, and they’re telling them to use common sense if they continue to work.
This is an invisible threat. We can’t walk on the other side of the street to avoid it. Common sense can’t necessarily keep our agents (and others) safe.
As brokers, we have policy and procedures manuals. We require our contractors to hand in specific paperwork to get paid on a file, and we set office rules.
If agents violate ethics or the law, we can terminate them. I consider it an unethical practice to risk the health or life of a client to list or show property. Therefore, I can tell my agents to stay home, and if they don’t, they risk parting ways.
We owe bills, too
Many of the posts I’m reading this week cite that we’re essential because we have to pay our bills, too. That logic is flawed. A job — any job — is essential to our financial health.
Our jobs are essential to us to pay our bills. But that does not make us, as Realtors, essential to life-sustaining activities. That argument makes it all about the money, which is an image we work so hard to dispel during normal times.
If my office doesn’t close the 30-odd transactions now pending in the system (some were postponed, and others terminated due to the situation), my office won’t make money. My agents won’t make money. I want as many of our pending sales to close as soon as possible so we all can pay our bills.
But I refuse to put the need for money above the greater good. I need to pay my mortgage and the office bills. But if we push through “one more closing” that results in someone getting sick afterward, was the risk worth the reward?
I understand there are agents and brokers who may be forced to make the difficult choice of whether to pay their mortgage or utilities or buy food in the next few months. This is a roller-coaster business that agents endure — a feast-or-famine mentality.
When times are good, everyone forgets that we’re living off commissions. When the market turns, those who have squirreled away some savings to cushion the down markets will make it through. Agents who live from closing to closing are at greatest risk.
Not all will survive in this business. Some will find it necessary to take a job that provides a regular paycheck. Agents enjoy the nice checks when listings are selling in a weekend.
When we scrape for deals and closings fall through, then the industry will suffer a shakeout, as we saw a decade ago. This may sound cold and uncaring, but it’s a fact.
New agents — who, under a normal market, would be fantastic in this business — may be forced to leave. Established agents who hit a slump prior to the virus, or who just didn’t put away enough reserves to make it through a downturn, may find another career.
Real estate is a commission-based business. Most agents don’t have a safety net to fall back on at their brokerages. If you can’t stomach the down times, this may not be the business for you.
This is no normal dip or dry spell. This will be a prolonged punch — to our country, to our economy and all businesses — that will last longer than a few weeks. More than 3 million Americans have been already cut from their job due to today’s crisis.
Restaurants are empty, and airplanes sit on the tarmac. We’re not alone in this financial struggle. Good people will exit the real estate business during this crisis. People we know and like won’t be here in a year.
Risk versus reward
Sure, we can take precautions. We can try really hard to separate the parties and do everything right. But accidents happen. People will get sick, and in the aftermath, they will be looking for the source of the initial infection. It may not be your or the brokerage’s fault — but you may be blamed anyway.
Unless everything — everything — takes place virtually (showings, signing contracts, inspections, appraisal, walk-through, lending packets, deeds signed electronically), you can’t guarantee everyone’s safety.
Please, just press pause. Even if your state allows you to do business in person, stop. Do it for the greater good. Do it for the safety of your clients, agents and loved ones. And if that isn’t enough to convince you, do it for risk management.
This situation is not likely to disappear quickly. We’re not even close to seeing a peak yet. As an industry, brokers need to weigh the risks of doing business versus the rewards of another closing.
I’m not saying we’re not important. We help people transition through major life changes.
I’m saying that if we don’t slow the spread of the virus — by staying home and slowing the infection rate — we will be hurting the very people we claim to want to help.
Erica Ramus, MRE, is the broker/owner of RAMUS Real Estate. You can follow her on Twitter or LinkedIn.
