Monday, May 23, 2005
Why you can get more information about a $25 toaster in Consumer Reports than you can about that $500,000 home you want to buy.
Most real estate agents just can't understand why the media picks on them. I am one of those agents who actually can come up with a few good reasons.
Take the recent Department of Justice ruckus. The realty industry is under the microscope for being anti-compettitive. You can "Google" the phrase "Realtors anti-trust" to read about that. The focus is on a set of rules that govern how agents in an MLS can share data with other agents and consumers.
Basicly agents say they have a legal bond with the home seller whose house they are "listing". The way Realtor packed state boards have written the laws, they are right :). So the Realtor argument is that getting the listing took great skill and has great value, and should not be shared indiscriminately with all licensed agents.
The problem with that keeping that data so tightly held --- is that disclosure about the home-asset is severely limited.
Here are several reasons there is not a lot of compassion for the Realtors in the DOJ matter and in related Realtor-centric issues that hit the media.
• The represention provided by agents is watered downed. Big brokers have pushed for state laws allowing "dual agency", and in some states “transaction agency”. This means the movement is just to get the deal done, not represent the seller or buyers interests solely.
...I would imagine once in a while a listing agent may focus on getting a buyer's offer into shape a bit more if they also represent them ;) - as compared with what they do with an offer another's agents client. I wonder what would happen if all parties saw the bids of others like in Ebay, would sales prices go up or down?
• As noted in the recent DOJ matter, there is the hoarding of asset data that drives sales to the listing agent in obvious, but also in under-current ways that are anti-competitive, and that I would argue keeps transaction costs high and disclosure low.
• I estimate 20%-30% of agents sell 80% of homes. Translation: your agent may not be as great as their self-promotion, or that the size of their firm lends you to believe. It's hard to take 1 week of class and pass a simple test that lets anyone sell real estate -- and then try to pass off Realty firms and their brands as "experts". I have a Realtor friend who used to advocate raising board membership dues from a couple hundred to $5000 dollars a year. The response was that "we’ll lose 90% of our members....to which he responded, So? Tell me why that’s a bad thing!”
• Lets change Respa so we can hawk other products. Realtors now use their position to sell you mortgages and title insurance, and other things such as home warranties and homeservices. But they are fighting to keep your bank from selling you real estate. "Sell you home for free through State Bank, if you have an account with us." If they give me a free mountain bike or coffee maker I'm in. ---Oh, I forgot, Realtors have laws passed in several states like New Jersey - so rebates or incentives or forbidden -- so no toaster. It would have worked on me.
• Yes, I understand state listing laws, but my favorite is the rally cry that Realtors own 5-6% of the homes they sell, by virture that you sign a listing agreement with them. I think if sellers realized that’s what brokers are saying some of those sales agreements would see some changes.
Disclosure, We are brokers at Smarter Agent...yet we are a little introspective, and like most entreprenurs we enjoy pointing out the hypocrisy --so we can change it!
Take the recent Department of Justice ruckus. The realty industry is under the microscope for being anti-compettitive. You can "Google" the phrase "Realtors anti-trust" to read about that. The focus is on a set of rules that govern how agents in an MLS can share data with other agents and consumers.
Basicly agents say they have a legal bond with the home seller whose house they are "listing". The way Realtor packed state boards have written the laws, they are right :). So the Realtor argument is that getting the listing took great skill and has great value, and should not be shared indiscriminately with all licensed agents.
The problem with that keeping that data so tightly held --- is that disclosure about the home-asset is severely limited.
Here are several reasons there is not a lot of compassion for the Realtors in the DOJ matter and in related Realtor-centric issues that hit the media.
• The represention provided by agents is watered downed. Big brokers have pushed for state laws allowing "dual agency", and in some states “transaction agency”. This means the movement is just to get the deal done, not represent the seller or buyers interests solely.
...I would imagine once in a while a listing agent may focus on getting a buyer's offer into shape a bit more if they also represent them ;) - as compared with what they do with an offer another's agents client. I wonder what would happen if all parties saw the bids of others like in Ebay, would sales prices go up or down?
• As noted in the recent DOJ matter, there is the hoarding of asset data that drives sales to the listing agent in obvious, but also in under-current ways that are anti-competitive, and that I would argue keeps transaction costs high and disclosure low.
• I estimate 20%-30% of agents sell 80% of homes. Translation: your agent may not be as great as their self-promotion, or that the size of their firm lends you to believe. It's hard to take 1 week of class and pass a simple test that lets anyone sell real estate -- and then try to pass off Realty firms and their brands as "experts". I have a Realtor friend who used to advocate raising board membership dues from a couple hundred to $5000 dollars a year. The response was that "we’ll lose 90% of our members....to which he responded, So? Tell me why that’s a bad thing!”
• Lets change Respa so we can hawk other products. Realtors now use their position to sell you mortgages and title insurance, and other things such as home warranties and homeservices. But they are fighting to keep your bank from selling you real estate. "Sell you home for free through State Bank, if you have an account with us." If they give me a free mountain bike or coffee maker I'm in. ---Oh, I forgot, Realtors have laws passed in several states like New Jersey - so rebates or incentives or forbidden -- so no toaster. It would have worked on me.
• Yes, I understand state listing laws, but my favorite is the rally cry that Realtors own 5-6% of the homes they sell, by virture that you sign a listing agreement with them. I think if sellers realized that’s what brokers are saying some of those sales agreements would see some changes.
Disclosure, We are brokers at Smarter Agent...yet we are a little introspective, and like most entreprenurs we enjoy pointing out the hypocrisy --so we can change it!
