Stacking the Cards Against the Real Estate Industry by Al Heavens
I bumped into Steve Cook, the National Association of Realtors' vice president of public relations, at the National Association of Real Estate Editors meeting in Philadelphia last week. The topic turned to the CBS 60 Minutes' May 13 segment, "Chipping Away At Realtors' Six Percent," which few saw but about which many in the industry were talking. The NAR had asked for corrections to some misstatements, and CBS ran Cook's letter pointing those out, as well as some misinformation about what happened to the Internet-based ERealty (was purchased and did not go "belly up" as reported.) I watched the report again, and came away with the same feeling I get reading a teenager's blog -- often amusing, but rarely filled with knowledge I'd be willing to bank on. This should not be construed as defending real estate agents. My own experience -- let's see, I've used about 10 over the years to buy and sell houses and only used one twice -- has been mixed at best. Still, I prefer using a real estate agent when I'm selling a house. The time saved is worth the commission I pay, which, as everyone but CBS seems to know, is negotiable, since there was readily available data to prove that it is more like 5.1 percent rather than 6. When you get up on national television and make broad generalizations, you need to have a book of facts somewhere near the camera. On Monday, the Consumer Federation of America announced that it had analyzed year-old data collected by Opinion Research Corp. for the AARP, and determined that "most Americans view real estate agents, brokers, and services favorably, but understand these services poorly and object to specific industry practices." "Respondents who had recently used the services of an agent or broker view the industry more positively, and are more knowledgeable about yet more critical of actual practices, than are other respondents," according to CFA's executive director Steve Brobeck. That's one of the most complimentary things CFA has said about the industry lately. So what don't these 2,036 Americans -- about a quarter of whom had used a real estate agent in the previous five years -- like? "Most consumers disapprove of actual industry practices related to access to listings, disclosure of representation and compensation, 'dual agency,' commission levels, anticompetitive state laws, and industry domination of state commissions," he said. I'm having a tough time trying to think of something they did like. "Industry domination of state commissions" was on the CFA's radar screen last year, and when I mentioned it to a member of my state real estate commission, well, his response was not printable. The fact that the typical consumer is not particularly savvy about the real estate industry comes as no surprise. At a NAREE session on subprime mortgages last week, one of the panelists asked an audience of the nation's real estate journalists how many of them had read every document associated with their last real estate transaction. No hands were raised, and these folks write about this stuff for a living. Without having to read an entire survey, I know that few consumers read all those documents at the settlement table and even fewer understand what they are reading, even after more than a decade of legislative rumblings about transparency and plain English documentation. A few weeks' back, I received an e-mail from a homeowner who discovered that his adjustable rate mortgage was adjusting at a higher rate than he thought. "I just took the lender's word for everything," he said. Surely you read the documentation from the lender, I said, before you signed the papers. "Not really," was his reply. "I realize now that I should have done it, but the lender told me ... ." Often we hear only what we want to hear. Read the documentation. According to the CFA's data analysis, more than two-thirds of respondents and nearly three-quarters of those who had recently worked with a broker viewed agents and brokers, and "their consumer practices" favorably. Even higher percentages viewed their own agent or broker favorably. Small majorities viewed the traditional services offered by agents and brokers as useful. Yet, somewhat larger majorities of those who had recently worked with a broker viewed these services as useful -- listing homes and helping buyers search listings, helping sellers price homes and buyers evaluate these prices, helping buyers visit homes, helping sellers and buyers negotiate price, and closing the sale. However, "questions about overall consumer views of the industry were asked before questions about specific industry practices," said Brobeck. "If consumers knew more about these practices, they might view the industry, and their own agents, less favorably." In other words, even if the an agent breaks his or her neck for the consumer, and even if the consumer is overjoyed with the service, it doesn't matter, because the system they work under is flawed. It's a wonder anyone bothers to get out of bed in the morning. | 
