Part Four of Five — A Way of Life Series
The Last Resort.
Every culture has an edge: the point past which its normal instincts stop being merely aggressive and start being criminal. This piece is my reading of what lies beyond that edge in real estate. I set out what appears to have taken place, and where it did, I say what I make of it. The opinions are mine, and you are free to weigh them differently.
At the top.
It appears that the industry's largest trade body, together with some of its biggest brokerages, ended up on the losing side of a major court case in the United States over how commissions were set, and that very large sums have been paid out since.
If so, my opinion: an industry that rewards whoever wins the exchange has a habit of building rules that protect the winners. Whether that was the intention in this case is a question for the courts, and I am not claiming to know. My point is about the instinct: when the market rewards the side that holds the most information and the most leverage, the temptation is to guard that position rather than earn it again with every client.
Where it gets personal.
It appears that in several countries, a number of agents and agency principals have faced criminal or regulatory consequences after money entrusted to them was taken or lost on their watch. The money seems to have been of different kinds: investor funds, agency trust accounts, rental bonds. Some cases appear to involve the person who took the money. Others appear to involve a principal who did not watch the account closely enough while someone else did the taking. Not every case seems to have ended in a courtroom; some appear to have been dealt with by regulators or tribunals.
If so, my opinion: these are not one story. A person who builds a scheme and a principal who fails to reconcile an account are different people with different failings, and I would be careless to treat them as the same. What they share is access. Each seems to have held other people's money with little day-to-day oversight, and that is where I think the culture matters. A business that celebrates the closing and neglects the checking is leaving a door open, and some people will walk through it.
It also seems that many of these cases were caught, and that in some, the people who lost money were at least partly compensated. If so, my opinion: that is to the credit of the regulators, and it should temper any claim that the industry is rotten from top to bottom. I do not think it is. I think a particular kind of pressure, left unexamined, produces a small number of very serious failures, and the rest of us pay for them in reputation.
What I cannot tell you.
I cannot tell you why any individual did what they appear to have done. Where a motive has been put on record by a court, it has been plain greed, and I take that at face value. I cannot show that the culture of the industry caused any particular case. That is my argument, not a finding.
