A significant opinion handed down recently by the office of the New York Secretary of State has created waves across the real estate community. It regards the use of titles for independent contractors. In the view of the Secretary of State’s office, real estate agents and associate brokers should not have titles. The Secretary’s office believes that a) as agents and associate brokers are independent contractors and not employees, the idea that they could also be corporate officers simply does not make sense, and b) that the public can be deceived into believing that an Executive Vice President, or a Senior Managing Director, actually has a level of internal authority which they, in fact, do not have. According to the Secretary’s office, it has received numerous complaints from consumers who have been confused by the titles of their agents into believing that these agents had a greater level of authority or decision making power than in fact they did. While in my opinion the reasoning of b) does not hold much water (after all, doesn’t every bank and large corporation have Vice Presidents with minimal authority?) I do understand the difficulty of assigning titles to independent contractors, who are associated with but do not directly work for their companies.
This opinion has impact both good and bad for the agencies and the consumer. For the agencies, the use of titles as incentives or a part of recruiting packages will now be a thing of the past. Given that many firms seem to have made practically anyone a Vice President, this change probably levels the playing field with regard to hiring and recruiting. And, to the degree that consumers WERE confused about what sort of decision-making authority came with a title, that confusion will be removed.
That said, I regret not being able to reward highly effective and hard working agents with a title which demonstrates their importance to the firm and achievements in the business. For consumers, they simply have one fewer benchmark by which to judge the agent they hire. At my firm, titles were strictly tied to production over a number of years. So they actually did reflect knowledge, experience and skill. Now we will all have to figure out another way to telegraph those accomplishments. Will they now be members of a “Million Dollar Circle”? A “Platinum Circle”? Will consumers have any idea what such designations mean?
Every decision has consequences, intended and otherwise. This one is driven by a desire for greater transparency, but it has impact on a broad group of people, both commercial and residential agents, who are unhappy about the outcome; no doubt various sorts of appeal will be forthcoming in the weeks and months ahead. For now, compliance is our only alternative. And we will wait to see what happens next.