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NAR Counterpunches After 60 Minute Segment on Discount Agents
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It didn't take the National Association of Realtors (NAR)
long to come out swinging at CBS after the network aired a
report on discount real estate brokers. The report, anchored by Leslie Stahl
was aired on 60 Minutes last Sunday and can be seen in its
entirety by visiting our the video link at the bottom of this article.
NAR certainly has some reasons to be aggrieved. Stahl started her segment by
stating that real estate agents pulled in $60 billion in commissions
last year. "They charge," she said, "a 6 percent commission on the price of
every house they sell." She called the 6 percent "sacrosanct" and "sacred" and
said that the rate has remained constant even as the price of houses had quadrupled
over the years.
But, she continued, the internet is beginning to effect real estate agents
and the 6 percent commission is under attack by discount brokers.
Switch to an extremely telegenic young couple who "saved" $26,000 by buying
and selling with Redfin,
an Internet based real estate firm that we have profiled several times on these
pages. What did they have to do that a traditional agent would have done for
them Stahl asked? They had to print out some flyers and hold an open house they
replied.
Their Redfin "e-agent" said she had, as a traditional agent, done
a number of deals where she had never seen the house and worked a total of about
five hours to earn a $12,000 commission. "I decided this couldn't
continue," she said. "I was afraid I was going to get caught."
Her boss, Glenn Kelman, president and CEO of Redfin called the real estate
industry "by far the most screwed up industry in America."
Redfin, he said, was prepared to do what Amazon, eBay, and Yahoo had done for
other industries. The company's agents, he said, can handle more transaction
and charge less. He said that the average traditional agent handles around eight
transactions a year; Redfin e-agents handle that many in a week.
The company charges a seller a flat rate of $3,000 for a listing and, after
collecting a commission for representing a buyer, refunds two-thirds of that
commission to the buyer. Kelman claims that Redfin rebated
over $3 million to consumers last year.
Stahl interviewed a traditional agent who defended her commission by saying
that customers of discount
brokers get the Wal-Mart treatment. Stahl then launched
into a rather damning review of the treatment discounters claim to have received
at the hands of the NAR. This included charges that NAR had blocked discounters
from using MLS and cited the current suit against NAR by the Department of Justice
for anticompetitive activities. Stahl said that eight states have minimum service
laws and that 11 states flatly prohibit rebates to non-agents. In regard to
the latter she said that the brokerage industry has a powerful lobby, suggesting
that was the reason for the Realtor friendly laws.
The founder of eRealty discount brokerage blamed NAR practices for destroying
his business, charging that, once he was banned from using MLS, his investors
abandoned him and his company lost $33 million before folding.
NAR on its website (www.realtor.org) has
posted a response to the 60 Minutes piece saying that the show
had given NAR the "empty chair" treatment. They complained that no one from
NAR had been permitted to speak "even though NAR twice offered and prepared
Association spokespersons for interviews." "It was CBS that made the decision
it would rather interview our opponents and let them make unanswered - and inaccurate
and unfair - accusations about Realtors and NAR policies."
The association, it said supports all business models and favors none. NAR's
1.3 million members include Realtors who work on a full-service basis, those
who consider themselves to be limited service, fee-for-service, minimum service,
and discounters.
NAR posted a lengthy list of what it called misinformation
from the program. Number one was the remark that 6 percent commissions are sacrosanct.
In fact, the Association said, all commissions are negotiable. The average rate
is actually 5.2 percent and declined 16 percent in the period 1991 to 2004.
It criticized CBS's characterization of the NAR as a governing body rather than
a trade association and of MLS as a database that lists virtually every home
for sale in the country rather than as 900 local and regional services.
NAR also objected to being labeled a powerful lobby. That
eleven states flatly prohibit rebates it said was to prevent kickbacks in real
estate transactions not to limit agent's incentives to attract customers and
the industry does not lobby for anti-rebate laws.
NAR stated the real estate business is unique in that competitors must also
cooperate with each other to ensure a successful transaction, and MLS systems
facilitate that cooperation. Without the collaborative incentive of the existing
MLS, brokers would create their own separate systems, fragmenting rather than
consolidating property information.
The folks at Redfin meanwhile are positively giddy. Their corporate blog on
Wednesday was full of stories about the phone calls and emails they had received,
both positive and negative, as they scrambled to keep their servers up and running.
They also made these claims about NAR's response which we have no way
of verifying.
- "The National Association of Realtors distributed to its 1.4 million
members a memo about the piece with a vaguely military ring: "Operation
Tip-Off Publicity Alert." The first media talking point for members was
that the segment, which no one outside of CBS has actually seen, "could
have been much worse." Perhaps this memo is the same one we are reporting
on from the NAR web site.
- "The NAR boasted that it had managed to convince 60 Minutes that
the Department of Justice lawsuit was too complex to explain to consumers; CBS,
it said, was only able to publish a "highly abridged version" of the
story it originally wanted to air."
CBS has already admitted one error in its broadcast. e-Realty did not expire
but was bought out by Prudential Realty. The investors, however, did lose $33
million.
A check of the 60 Minutes blog at 12:15 EST Wednesday showed the segment had
generated enough responses to fill 119 pages. A quick scan
showed that most responses were from real estate agents but a fair number were
from consumers.
Bet anything that within two weeks NAR will have its own segment on 60 Minutes,
and a much more complimentary one at that. The organization is tenacious and
it is instructive to remember the deer-in-the-headlights expression on Al Roker's
face as he tried to wave off consumer reporter Janice Lieberman's blithe
statement that there was no distinction between a real estate agent and a Realtor.
That one cost Today a morning of free advertising for NAR in order to stop the
bleeding. CBS won't be so lucky.
To watch this video in its entirety please visit our video page link below.
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Comments (25)
| If there's anything that's fall down easy these days it's getting loans approved. Take an online application, get a DU or LP, gather the paperwork Fannie or Freddie asks for and it's closed. Not at all what it was like 10 years ago. I've been a lender for 20 years and I laugh at what broker loan officers say they go through then complain they're the only ones who have to disclose income. Realtors who are serious about their business save sellers and buyers money, period. |
|
| Above Posted By:
David Reed
| Tue, 19 Jun 2007 19:12:29 EST |
| All you haters out there just need to stop it! As Real Estate Agents/Broker in a depressed market, we have to front all the money required to market a house today. There are very real expenses that we front, including signs, fliers, ads, Open Houses, and much more. Sometimes we have to pay for repairs (new carpet, paint, landscaping, etc) in order to make a home marketable to buyers who are all fully aware that it is a "Buyer's Market." Even with all said, gouching is never acceptable, however. |
|
| Above Posted By:
Loni
| Fri, 15 Jun 2007 13:51:21 EST |
| Please. as an appraiser with over 25 years in the business, like all things, 10% of the good agents and mtg brokers do 90% of the work! Our problem is all of the incorrect sloppy information in our mls system that agents don't care about. Well, I've got news for you, it is decieving the public. Clean up your act. After attending an ABA symposium, I was astonished to see upper management of large insitutions are just as confused as the rest of us. We'll have to see how this all shakes out. |
|
| Above Posted By:
Ross57
| Wed, 13 Jun 2007 17:47:17 EST |
| TO REALTORS: Keep in mind that you can have a client who wants to sell or buy a million dollar home, but if the loan doesn't go through no one makes $$$. I've had situations where the agent keeps pushing the borrower to go higher and higher when they know that a more expensive house will cut into the borrower's can't really afford it w/ traditional financing. Some "bad apples" won't show a house a better house with a 4% commish! |
|
| Above Posted By:
MktNinja
| Tue, 5 Jun 2007 09:28:17 EST |
| Mortgage Brokers that posted idiotic comments above: Get with the program if you feel Realtors make too much than become one. Mortgage Brokers above who complained that he has to baby sit a loan til time for closing and you "only" make 1.5% while a realtor makes 3% commission on buyers end - get in the car a start pouring money into gas drive around with clients show them 10 sometimes 15 properties and see the business from our perspective. Ignorant! and you get business from Realtors so be thankful. |
|
| Above Posted By:
Anonymous
| Mon, 4 Jun 2007 16:09:20 EST |
| Mortgage Brokers that posted idiotic comments:Get with the program if you feel Realtors make too much than become one.To one Mortgage Broker above who complained that he has to baby sit a loan till time for closing and you "only" make 1.5 % while a realtor makes 3% commission on buyers end - get in the car a start pouring money into gas drive with clients show them 10 sometimes 15 properties and see the business from our perspective. And you do get business from Realtors so be thankful. |
|
| Above Posted By:
Anonymous
| Mon, 4 Jun 2007 16:02:06 EST |
| As a mortgage broker I wish all I had to do was fill out some paperwork, put a listing on a webpage (MLS) (the customer typically does all the searching) then turn a key and say "this is the kitchen..." The customers and the mortgage professionals do many times more work getting to the closing table than any realtor is ever responsible for. We should be getting the 6%. Kudo's to 60 Minutes. Let the buyers/sellers off the hook for these high commissions, I say. |
|
| Above Posted By:
john b
| Wed, 30 May 2007 16:42:09 EST |
| Regulate the Realtors and you get a better product. Do not focus on the 6% focus on the intergrity. I sold my home FSBO. Saved 60k in commissions. The black eye for me was all the calls by Realtors telling me I needed them, 60 k later,did not. Everyone I spoke to, which was 15 at last count all promised the world for the LISTING. They want the listing and let some else bring the borrower. As a licensed mortgage broker in 7 states, I spend more time cleaning up what GREEDY, Realtors and LO's DO |
|
| Above Posted By:
Jesse
| Wed, 30 May 2007 10:04:38 EST |
| Buying a home is typically the most expensive purchase that people make in their lives. With all the information available, online and otherwise, there is NO EXCUSE to remain ignorant. Ask for detailed information where all costs derive from, sample contracts showing these expenses, what recourses are available to you if disputes arise. Successful real estate agents will stick around, but those who aren't tend to muck things up. |
|
| Above Posted By:
Allan
| Tue, 29 May 2007 14:42:21 EST |
| There are way too many unethical Realtors and Loan Officers in the Industry. That is why the foreclosures are so high today. Some Realtors don't want to hear you say they need to wait, they want the deal now. Then they don't send you any new businesss because your not doing what they want. It's the clients responsibilty to be educated. Would be nice if all of us in the Industry would treat each other with repsect and do what is in the best interest of the client. |
|
| Above Posted By:
Sue Olson
| Mon, 28 May 2007 19:43:26 EST |
| Some Realtors are slackers,but work is work nothing comes easy.Service industries are difficult because the product we provide isn't tangible so it's hard to see that it's there at all.We take on a lot of headaches to make the process easier for our buyers and sellers. Some Realtors make a lot of money, but you don't get something for nothing.If you work hard you make money, no matter what industry you work in. |
|
| Above Posted By:
Sarah
| Mon, 28 May 2007 15:35:05 EST |
| As a real estate agent just starting out, if I sell a house sometimes 6% is split 4 ways!! I don't pocket all that money.So, from a 6% commission I would walk away with 1.5%, which is a lot less than 6%.I've been an agent for a few months and I have sold nothing yet.It's not a dependable 9-5 job with a set salary, so there has to be some incentive to work weekends and holidays and late nights and to coordinate the many people it takes to make a deal go through. |
|
| Above Posted By:
Sarah
| Mon, 28 May 2007 15:34:35 EST |
| I'm certain that the 60-minute report on Realtors was too true for comfort with the Realtor community. Hence, Realtors are upset that their reputation is being tarnished. The work that an agent puts into a transaction, clearly doesn't merit a 6% commission from the seller (builder or private seller), but when the mortgage consultant (which I am) puts a 1-1.5% origination fee, hands start flying in the air and we need to justify, or discount our fees. Realtor, stop the drama! |
|
| Above Posted By:
Tom
| Fri, 25 May 2007 18:29:38 EST |
| Oh Please!!! Folks... do yourselves a favor and do your homework! Ask questions, research your chosen area, find out and get in writing what your agent will do for you. Acting out of stupidity and blindly hiring an agent without knowing their practices is your own fault. I have bought and sold numerous homes as an investor. Now I have a Realtors license. Yes there are unscrupulous folks in the trade. But shame on you if you ignore your own responsibilities and blame others for it. |
|
| Above Posted By:
Lene
| Fri, 25 May 2007 07:42:35 EST |
| I totally agree that realtors are probaly the most undeserving, overpaid salespeople out there. I have never had a problem with people making a commission if they work for it but that is hardly the case. I also blame them partially for the sub-prime mess. If realtors did there job properly they would make sure a client could actually afford the house that they are about to put a contract on. They used interest only, 100 percent loans and used stated programs to line there LAZY pockets. |
|
| Above Posted By:
AL
| Wed, 23 May 2007 12:14:29 EST |
| O.K I admit, there are some lazy real estate agents out there. However, most agents are hard working! And being blasted for the commissions we make comes with the territory. But to be judged by Mortgage Brokers is appaling!! The 20% of real estate agents who do most of the business(legally), do well because we run a planned business. We don't have to make up illegal SS#'s, come up with fake buyers, forget to tell buyers about pre-payment penalty and so on.... look who's calling the kettle black! |
|
| Above Posted By:
Frank C
| Tue, 22 May 2007 20:04:56 EST |
| Thank God! I am a mortgage broker that has helped clients at the table a million times. It is time these Realtors earn a living. I Realtors charge people money for basically doing nothing. I am sick of the you owe me attitude. Imagine Mortgage Brokers charging a standard 6%. Realtors use their power to persuade goverments to make rules that fit them and not the client. Most have no respect for the real estate biz or the client. , Hurray 60 mins. Stop Crying and earn your money.I LOVE IT |
|
| Above Posted By:
Horace
| Tue, 22 May 2007 12:22:20 EST |
| I too am a mortgage lender and the biggest complaint I have with realtors is their total lack of knowledge about their contracts. The collect their 3% selling side while someone earning less than 1% has the help them write the contract, baby sit the loan through underwriting, and then if there is a discrepancy in the HUD-1 the agents want the loan officer to take an additional cut in pay. |
|
| Above Posted By:
Gary
| Tue, 22 May 2007 10:17:05 EST |
| Well, Chris and all you nay sayers about real estate agents making too much money....When was the last time you worked FOR FREE?? We spend ALOT of money advertising with no guarantee of a sale or closing, especially now when sellers are being unrealistic about pricing. We also put our license and career on the line every time we write a CONTRACT, yes that is a legal binding agreement and we can get drug into a lawsuit due to our clients. So think about that next time you bash a real estate agent |
|
| Above Posted By:
Dee
| Mon, 21 May 2007 18:02:23 EST |
| As a consumer I feel that you get what you pay for. Having a live Realtor to sell a house is the way to go. You couldn't possibly expect some e-agent to find the ideal buyer and sell a house on the internet. The web provides exposure to a prospective buyer, but having a Realtor will ensure getting the most money out on a real estate sale. |
|
| Above Posted By:
Fred
| Sun, 20 May 2007 15:40:39 EST |
| It's about time that someone exposes the ridiculous commissions earned by real estate agents! I've been in the mortgage business since 1999 and there have been thousands of things said about the fees charged by mortgage brokers and lenders. When I bought my last house, I searched the internet for months looking for the home I wanted. I did all of the legwork and the agent walked away with $14,000 for doing nothing more than unlocking the front door to let me into the property. |
|
| Above Posted By:
Chris
| Thu, 17 May 2007 18:35:16 EST |
| It's sad to see 60 Minutes joining the ranks of those that spin one-sided information or disinformation as the case may be.
I find 90% of agents to be extremely hard-working and will do whatever it takes to take care of their clients. Commissions have always been negotiable. I routinely list for 3.8 to 4.8% depending on the circumstances (never 6%). Yes, the Internet is changing the real estate business and we have to adapt extremely quickly and give consumers what they want to survive. |
|
| Above Posted By:
Leah Kelley
| Thu, 17 May 2007 14:11:30 EST |
| The avg home is currently ownd about 4-5 yrs. If you pay 250k and are able to sell for 300k with a 4% avg increase in value. You make 50k right? Wrong! You may see 4% gains but the commish takes 4-6% of the TOTAL VALUE! So, even at 4% commish you're giving up a full percent plus title and other fees. You take 5 years to make 50k and pay 12k (typical minimum) commish plus a couple grand for other fees. 6% would cost 6k more!
What about when you see no gain? They let you go into foreclosure. |
|
| Above Posted By:
ROB777
| Thu, 17 May 2007 08:20:37 EST |
| Cheers to CBS and Redfin. The real estate industry definately needs a shake up. The commissions are WAY to high. If only more people had the confidence to go For Sale By Owner we could break this monopoly.
I am in the mortgage business and am partnered up with ZERO agents. Don't like 'em and don't need 'em.
6% of today's home prices is GOUGING!
|
|
| Above Posted By:
Tim
| Thu, 17 May 2007 08:17:27 EST |
| It has long been known throughout the mortgage lending community, that the biggest cost in real estate is agent comission and that has fuel the rise in home value. Agent increase the value of home to cover the commission.
C
St Louis |
|
| Above Posted By:
Clarence Davis
| Thu, 17 May 2007 07:11:25 EST |
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