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5.82% |
0.04% |
| 30 Yr Tres |
4.47% |
-0.05% |
| Fed Prime |
5.00% |
-0.25% |
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NAR Takes A Lickin From Competitors At Oxley Hearings
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Back to the Oxley hearings.
In addition to the three witnesses from government agencies, Department of
Justice, Government Accountability Office, and Federal Trade Commission who
testified in general that real estate lacks real competitiveness,
there were four other witnesses who testified against the industry. All four
definitely have a dog in this fight.
Kimberly Gorsuch-Bradbury, Senior Vice President, Real Estate Networks, LendingTree,
LLC described how her company had evolved since its founding in the late 1990s
from a referral mechanism for people seeking mortgages to employing the same
techniques to provide consumers access to a network of real estate agents, allowing
them the opportunity to comparison shop.
Ms. Gorsuch-Bradbury reiterated many of the statistics about consumer preference
for Internet services when they purchase properties and particularly
focused on limitations on access to MLS aimed at agents providing unbundled
services and on state regulations restricting commission rebates to consumers.
In the former instance she quoted studies that reported that only 7 percent
of sellers said they wanted their agent to help with paperwork, inspections,
and preparing for settlement and only 10 percent of buyers said that they wanted
help with price negotiations and paperwork.
"Many home sellers," she said, "might want to purchase only
listing services, a yard sign, and maybe one open house from the broker. The
seller might opt to perform other sales functions him or herself." She
reported that 59 percent of all buyers and 74 percent of first-time buyers said
that their agents helped them to understand the process, making this the highest
ranked benefit to buyers.
"However, at least ten states now require real estate brokers to provide
a pre-determined bundle of services to their clients...(and prohibit consumers
from choosing only the real estate brokerage services they want.) Obviously
this impedes consumer choice and prevents lower-cost alternatives."
Eleven states, she said, prohibit or limit a real estate broker from passing
on savings in the form of a real
estate rebate.
Mr. Aaron Farmer is a broker for a discount realty firm in Austin, Texas. He
said that Texas is one of those10 states that have passed laws restricting less
than full service real estate brokerage. Since passage of that law he said most
of his agents have decided to offer limited menus only to experienced homebuyers
and investors and one has discontinued offering limited services entirely. He
has also encountered resistance from real estate publications when seeking to
place ads.
Glenn Kelman, President and CEO of Redfin Corporation in Seattle was the third
private sector witness. You may remember that we profiled Redfin
in February. Redfin is a virtual real estate firm which will refer a buyer to
a traditional broker or provide them with an unbundled list of services which
includes composing, submitting, and negotiating an offer and subsequent counteroffers
and handling some of the details leading to closing but does not show properties.
For that the buyer is referred to the listing agent (or a random agent) who
will not be compensated for this service. The Redfin buyer receives a rebate
on two-thirds of the commission share that is typically paid to the agent presenting
the successful offer.
Kelman claimed that his firm's innovative methods have "engendered
resistance on what seems to be a new scale."
"Competing agents have threatened us with violence, intimidated our customers
and tried to block their offers. Sixty-three percent of our customers report
meddling from other agents, who in the absence of clear consumer law make up
grade-school legal mumbo-jumbo to scare our clients. Many agents have told our
clients that the sellers would never see their offer because it came from Redfin."
In spite of this, Kelman said that a Redfin agent completes twice the number
of transactions each month than the average traditional agent completes in a
year and that the corporation's sales have been doubling month over month.
The Redfin executive asked that Congress act to empower the consumer, not the
realtor by giving brokerages of all types fair and equal access to multiple
listing services, and empowering the Federal Trade Commission to regulate
states' minimum-service and anti-rebate laws.
But no one declared war on the NAR and on Realtors the way the Consumer Federation
of America did. Stephen Brobeck, the Federation's Executive Director in his
testimony and in an associated press release called real estate brokerage "a
cockamamie system," for a number of reasons that went well beyond the
"they won't let me play in their sandbox" testimony of the other three non-government
witnesses. Brobeck addressed issues of actual commission levels, training and
other requirements for entry into the brokerage community, and the role that
the National Association of Realtors® plays in this system. For that reason,
I am going to put that testimony aside (he had little more to say about the
central issues of the hearings than the other private sector witnesses) as it
is worthy of a separate discussion at an early date.
Finally two witnesses were allowed to fire back; a representative of the NAR
and an executive with the RE/Max Realty franchise. We will give a summary of
their testimonies later as well as some comments from Blanche Evans of Realty
Times who, it appears attended the hearings. Actual transcripts are not yet
available - we have been quoting from planned remarks released by the various
witnesses. Finally, we will ask those of you with an interest in this
subject to respond - there are points to be made on each side and we
would like to hear them. Again, complete contents of the (planned) testimonies
can be read at www.financialservices.house.gov/hearings.asp.
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Comments (15)
| Over the last few years, so many goofball and incompetent Realtors emerged, along with other Real Estate "professionals", due to the easiness and overwhelming real estate sensation. However, historically under normal and sensible market conditions, Realtors, good Realtors are great in the residential buying/selling sector, especially in Commercial Real Estate. I do think the average homeowner has become more savvy and you will see top brokers with reputable brokerage firms survive and thrive. I feel much of the animosity expressed here is from people who have dealt with much of the incompetent Realtors that emerged the last few years. However, reputable brokerage firms market, negotiate, and consult for their clients which can create success for the respective client: all traits required during normal market conditions. Middlemen will never be squeezed out. Especially in the finance world as this conduit was created to offset typical bricks and mortar business. Oh and Zillow is not the answer for everything. Generally, people like the relationship with a human being with the purchase or financing of their HOME. |
|
| Above Posted By:
AmericanStreetBlog
| Thu, 3 Jul 2008 05:38:53 EST |
| Realtors are middlemen. In almost every other industry, the middlemen have been squeezed out of the business. Travel, finance, banking, retail, wholesale, you name it.
They have been squeezed because consumers now have the information that middlemen once had.
Real estate is exactly the same. One word, Zillow.
If I were in real estate, I'd find another job. |
|
| Above Posted By:
joe
| Mon, 30 Jun 2008 07:18:43 EST |
| Realtors don't sell houses. Homeowners sell their houses. How? Well, how many boxes and loads of extra stuff did my realtor pack and take to the storage unit I paid for to de-clutter my house? None. How many times did my realtor clean and vacuum my house? None. We did it everyday, twice a day for 90 days. Realtors need to get off their high horse when it comes to thinking THEY sell houses. Real Estate is easy work. It may not pay well if you don't do much business and it's not convenient, but please don't call it hard work. |
|
| Above Posted By:
Ric
| Tue, 17 Jun 2008 08:29:09 EST |
| In Maine, the NAR is so powerful that realtors don't even have to pretend to play by the rules. They're a den of thieves from the top on down. Everyone knows it, nobody cares. |
|
| Above Posted By:
Linda
| Mon, 28 Apr 2008 13:25:05 EST |
| Realtors are useless, and collect a very high fee for doing almost nothing. If fact, many work against you. The second I enter an open house, what comes out of a the realtor's mouth are phrases like "It's a buyers market.", and "This home is going to be reduced." Give someone a freaking moment to fall in love with the home first! |
|
| Above Posted By:
East
| Tue, 10 Apr 2007 10:45:03 EST |
| I am a Realtor! This has been a long time comming and its about time. We are forunate to operate in states where the MLS is public and a attorney is not required. We have been offering unbundled or fee for service for the past 2 years. It has been the best business decision we ever made. For the most part the consumer wants more control on the services they purchase. Its the consumer's job to set value not the Realtor. |
|
| Above Posted By:
Rob Truman
| Mon, 6 Nov 2006 08:17:54 EST |
| I have been selling real estate for over 15 years at what is considered to be a "discount" rate (5%) with complete full service including MLS. My business has evolved nicely to a point where I work mainly with referrals and past clients. However I still encounter many potential clients who chose to pay 6-7%. They perceive that there is something that the other realtor is doing that I don't. That is their choice.
Look around...the choice to pay less has been ignored for years. |
|
| Above Posted By:
Sue
| Fri, 25 Aug 2006 11:36:47 EST |
| I WANT to use a broker to buy. But in my state I can't get into even a watered down version of the MLS to scan large numbers of properties over a wide area. Instead I'm stuck with Realtor.com which is nearly useless and slow. I want to find my property first - then contact a buyer broker. I dont have time to visit tons of realtors or their sites to find out what's for sale. Sad that they just don't get it. |
|
| Above Posted By:
George
| Mon, 21 Aug 2006 11:42:25 EST |
| I'm a consumer reporter who's stories air in 80 cities nationwide. I recently did a series on the NAR, Justice and FTC. My only comment in conducting many interviews and reading sites like this is: Realtors really need to stop insisting they're services have value. The issue isn't that you don't provide value: We all have value at work, or our jobs wouldn't exist. What you have to explain is how sometimes you earn 20 grand for 40 hours of work. Until you can, this issue won't go away. Period. |
|
| Above Posted By:
Stacy Johnson
| Sun, 20 Aug 2006 15:28:38 EST |
| Realtors like Loan Officers (good ones) do much, much more work for their commission than the average client, person or crudading gov't offical realize. So "large" commissons are often earned and for the client (seller/buyer/borrower) fall in the department of "You get what you pay for".
But having said that, what is so sacred about "6%". Let the Market correct all this. If dicount brokerages want to charge less, per service etc? To the better businessmen and women will go the spoilsl |
|
| Above Posted By:
PurpleFlash
| Fri, 18 Aug 2006 18:24:57 EST |
| I've seen loan officers drag their feet and bring down the wrath of a real estate broker upon them. Generally it was deserved. I always had a we're in this together attitude but have butted heads several times with arrogant brokers who would not come off their commission by one penny when it was necessary to close the sale, while at the same time telling the mutual client that I was overcharging them. Guess who was taking the biggest slice of the pie? Its not a zero-sum game. All can win. |
|
| Above Posted By:
Former LO
| Fri, 18 Aug 2006 10:11:09 EST |
| I was a broker for a few years and think the industry must either change or collapse due to its inability to evolve. A six percent commission is totally outrageous, and splitting it 4 ways is pure greed. Basically, they're not worth it and the market will correct this as all before have undergone correction due to technology. I foresee an open internet service of listings and sales soon, with brokers serving whatever services their clients require on a per-service fee basis, period. |
|
| Above Posted By:
Jean
| Thu, 17 Aug 2006 22:10:04 EST |
| I've only been a realtor since 1998. Times and the way business is done has changed. So many lawsuits out there, I believe you need someone you trust to guide you through the process of selling and buying. I deal with stacks of LEGAL contracts and difficult people (sometimes when an escrow closes I feel I deserve more than I agreed to take due to the extreme stress I suffered during the transaction). Walk in our shoes for a mile and you may then appreciate all we do to 'earn a commission'. |
|
| Above Posted By:
Long Beach Realtor
| Thu, 17 Aug 2006 21:08:16 EST |
| I'm a Realtor in NJ and I have read over the arguments presented for why Realtors are useless. I know why consumers want discounts or to pay no commission at all, they feel that the money they've accumulated on their homes is theirs and hate to have to pay it to some Realtor who's only job is to fill out some paperwork and make some phone calls. And if your Realtor's only work on the sale is this than they should be fired, but it is much more complicated than that. Believe me. |
|
| Above Posted By:
Re/Max NJ Realtor
| Thu, 17 Aug 2006 18:34:13 EST |
| This sounds like a firestorm brewing, but full-service brokers have no worries. With large transactions such as this, you want a professional, few people have the process down well enough to buy/sell their own home. Even fewer have the practice and expertise. After all, how many homes does a person buy/sell a home in a lifetime?!
Realtors have the experience needed, smaller discount brokerages just don't have what it takes to get the job done for most areas. (I'm a Loan Officer.) |
|
| Above Posted By:
Michael
| Thu, 17 Aug 2006 17:41:25 EST |
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