Wednesday, 5 October 2016

CONTEMPORARY CHALLENGES TO ETHICAL STANDARDS IN REAL ESTATE TRANSACTIONS ~ ESV. CHUDI UBOSI, FNIVS

ESV. Chudi Ubosi
INTRODUCTION
The title of the paper, I want to say, has been well chosen and is very apt at this point in time in the history of our profession and practice (for those of us in private practice). This is a period when we are faced with incursions and bombardments from all comers from within and without, and there are numerous cases of malpractices and unprofessionalism leveled against practitioners.

We really don’t have to look very far to see that ethical standards in the profession have been more or less thrown to the dogs. From the huge number of cases brought before the Professional Practice Committee (PPC) regularly, the obvious multiple boards on properties by surveyors, to the loud complaints emanating from the nation’s financial institutions about the quality of our valuation reports and values appended to these assets, it is clear to all.

YEAR AND NUMBER OF CASES REPORTED TO PROFESSIONAL PRACTICE COMMITTEE (PPC) 
2008: 18 cases
2009: 21 cases
2010: 11 cases
2011: 17 cases
2012: 10 cases
2013: 8 cases
Source: NIESV

None of us here, in particular the Estate Surveyors and Valuers amongst us can deny knowledge of these issues. The poor ethical standard is felt in every sphere of our profession – from agency to valuation to management etc. Whilst we may ask ourselves how we got to this state of affairs, you will observe from the next paragraph that many of the challenges are a carry-over from the larger society.

CHALLENGES TO ETHICAL STANDARDS.
LACK OF KNOWLEDGE OF ETHICAL STANDARDS
One of the many challenges facing the profession of Estate Surveying and Valuation today is the proliferation of Estate Management courses in the educational institutions of higher learning all over the country. Whilst this is good for the profession it has produced a large number of graduates who understand little about the profession they have found themselves in. Many qualify even professionally with the erroneous misguided belief that Estate Surveying and Valuation is a profession where one sale transaction can make you wealthy for life. They are therefore in a hurry to close that “sale” and in the process every bit of decorum and decency is thrown to the wind.

CUT THROAT COMPETITION.
One of the major factors that has given rise to the poor and low ethical standards amongst Estate Surveyors and Valuers is the cut throat competition amongst professionals. There are many variants to this competition which manifests itself in various ways but invariably it ends up the same way.

Firms compete for limited briefs from clients – private and public – and in the process of securing same, make all manner of compromises. These compromises include huge discounts on professional fees, such that when one sometimes hears of these one is at a loss as to how the firm intended to prosecute the job and make adequate profit to remain in business.

Other forms of poor ethics will include promises that cannot be delivered upon, all in a bid to secure an instruction. Some of our colleagues will readily confirm to a client that rent achievable on his property will be twice the market value all in a bid to secure the brief. Some others will offer to append values to an asset knowing fully well that the values are far in excess of the market value. All these examples are highlighted because they are the most common forms of malpractice and unprofessionalism currently prevalent and the reason why this is so can only be ascribed to poor ethical standards.

INADEQUATE NUMBER OF BRIEFS
Following on (2) above, one of the reasons given for the cutthroat competition amongst surveyors which invariably leads to lowering of our ethical standards is the absence of enough briefs to go round the number of practicing firms. The point must be made that there has been a lot of incursions into our professional duties by other professionals thereby limiting the number of activities that can be undertaken by Estate Surveyors and Valuers. Our members have also not been engaging in business development to develop other areas of the profession which have now been “lost” to other practitioners like project management, appraisals, facility management etc.

POOR KNOWLEDGE AND PERCEPTION OF THE ROLE OF ESTATE SURVEYORS AND VALUERS.
Following from (3) above, one of the reasons why there are fewer and fewer professional briefs for Estate Surveyors and Valuers remains that the public is not fully aware of our role in real estate related transactions besides estate agency. Therefore, jobs that ordinarily should rightfully be that of the Estate Surveyor and Valuer are given to other professionals who more often than not then turn round and employ a real estate firm as professional to assist or oversee the execution of same.

CORRUPTION WITHIN THE LARGER SOCIETY
It is not uncommon these days for surveyors to be given briefs and at the end of the day the firm or the individual from whom the job is originating is demanding as much as 75% of the professional fees as “public relations” or “introductory fee”. This has become so prevalent that more often than not the norm is that the firm or valuer is being subcontracted to execute the professional assignment. The cancer of corruption does not only include concession on fees, but also over charging and loading of professional fees because due diligence and ethics and integrity are compromised.

LIVING BEYOND ONES MEANS.
One of the reasons why Estate Surveyors and Valuers have found it more and more difficult to maintain ethical standards is that many of us have lost track or are unaware of the conservative nature and responsibilities thrust upon us by virtue of the profession we have chosen. What obtains in Nigeria today is a situation where we want to copy the lavish and ostentatious lifestyle of majority of our clients (who invariably because real estate is capital intensive are usually very wealthy) and in the process, forget that it is what we earn from them (a minute percentage of their wealth) that we can spend in running our offices and our lives.

A lot of Estate Surveyors and Valuers are now competing with their clients in the purchase of cars, extravagant lifestyle etc. In the process and to keep up this lifestyle we forget that there are different sets of rules guiding not only our corporate existence but invariably our lifestyles. In the strive to maintain the ostentation, some of our colleagues dip their hands into clients rents, sale proceeds or generally compromise on standards and ethics.

PROLIFERATION OF MUSHROOM PRACTICES
One of the many challenges to ethical standards in real estate transactions today is the proliferation of mushroom one man practices. Whilst this write up is not meant to cast aspersions on any Estate Surveyor and Valuer and free entry and exit in the profession through setting up of practices is actually an indication of free enterprise and capitalism, the problem is that a lot of these practices have been discovered to be just offices where even the proprietors understand little of the responsibilities of professionalism. At the end of the day a lot of ill is done to the profession in these mushroom practices because there are virtually no checks and balances by other partners who have an interest in the practice.

RECOMMENDATIONS
Having examined the various challenges of ethical standards by Estate Surveyors and Valuers in real estate transaction, it is important to make recommendations for the way forward.

FINISHING SCHOOL
It is important and recommended that Estate Surveyors and Valuer should be put through a finishing school before they are confirmed as professionals by the Board and their seal handed over to them. This Finishing School would run a program which curricula would include ethics, ethical standards etc in real estate practice. This Finishing School will be similar in nature to the Law School that exists for the legal profession.

THE HALLMARK OF PROFESSIONALISM IS TRUST
At every fora of Estate Surveyors and Valuer, we all must continue to harp to ourselves that the hallmark of professionalism for the present and the future is trust. And the only way this trust can be maintained is through integrity, accountability and keeping of high ethical standards. This message must be implanted in our consciousness.

EFFECTIVE DISCIPLINARY COMMITTEE.
The Nigerian Institution of Estate Surveyors and Valuers must have an effective disciplinary organ. Today we have the Professional Practice Committee (PPC) that reviews cases of malpractices and complaints against Estate Surveyors and Valuer. Whilst we cannot claim that they have not been effective, it is also important to point out that not many professionals are today afraid of being taken before the Professional Practice Committee. It is almost as if the Professional Practice Committee has become a dog whose bark is worse than its bite. The Institution must strengthen the Committee so that it becomes more effective and efficient such that even the consuming public will know that they can get fair resolution of issues from our hallowed and noble chambers.

INCREASED PUBLICITY
One of the major problems we suffer today as Estate Surveyors and Valuers is the very poor level of public awareness of who we are and the services we offer. This is one of the reasons why many of the jobs which should rightfully be ours are given to other more visible professionals. Whilst the code of ethics allows advertisements to a certain extent, we must urgently review the current parameters and limited with a view to making it easier and increasing flexibility for advertisements by practitioners. This is important because it will not only expose us more and direct numerous more briefs to our firms, but also with the increased number of briefs competition will become a lot healthier with reduced reason for unethical practices and standards.

GREATER INTERFACE WITH GOVERNMENTS AT FEDERAL AND STATE LEVELS
It is also recommended that the Estate Surveyors and Valuers interface with governments at all levels on a more regular and sustained basis. The public sector is not only one of the largest employers of labour in Nigeria today, but also the largest consumer (user) of our professional services (fee wise). We must continue to educate governments on who we are, our role and the implication of not using our professional services, in executing public works etc. In the final analysis we (Estate Surveyors and Valuers) will be better off for it with improved standards and ethics.

BUSINESS DEVELOPMENT BY ESTATE SURVEYORS AND VALUERS
One of the major reasons given for the cut throat competition and therefore lowering of standards and ethics is insufficient jobs for Estate Surveyors and Valuers. Whilst I may agree slightly with this, I would hasten to add that we have brought the current state of affairs upon ourselves. Two decades ago, there were few firms, but just as many briefs. What obtained was that Estate Surveyors and Valuers were involved in every aspect of our profession and were in the driving seat. Firms were involved in feasibility and viability appraisals, project management, property and facility management (though known as the former), developments, valuations, raising project financing, agency etc.

Today, we have all been boxed into a corner, of valuation and agency only and even with these two the next decade portends great danger of loss for us all if we do not tighten our belts and up our game. Many young firms are not even aware that these area mentioned in the preceding paragraph are rightfully ours as professionals. We are however all quick to claim that there are not enough briefs to go round. In the meantime other professionals such as lawyers, accountants, engineers are making huge in roads into what is ours. Will valuations be there at 10 years from now? Will we be relevant?

CONCLUSION
In conclusion, it can be discerned that the challenges to ethical standards in real estate transactions are numerous. One of the major findings is that the Estate Surveyor and Valuer cannot operate in isolation of the larger environment in which we exist. The influence of the larger society (negative and positive) generally sips into our professional consciousness. The impact of the larger society has led to the erosion of standards and ethics. It is not too late to stop the downward slide. We as a body only need to determine to do so. Once the will is visible amongst us all, half the work is done.

In the final analysis, each and every surveyor must realize that each time we interact with the public we carry not only the image of our persons and practices but also the responsibility of the image and perception of the profession into that transaction. We must realize that the future growth and well being of the profession rests with us and what we do today. It is a responsibility which we must never take lightly and in doing so we will uphold the ethics and standards of our profession.