Wednesday, October 26, 2005
NAR on Defensive
I almost hesitate to point out this release, for fear of giving it more attention/credibility than it deserves. But this press release yesterday from the National Association of Realtors (NAR) is just so comically desparate that I have to. Even if only for its entertainment value.
It’s entitled, brazenly, “NAR: Buyers Need Real Estate Professionals in the Internet Marketplace.” Of COURSE the NAR would say that!
The picture comes to mind of a grade school bully chasing his former “punching bag” classmate who, during summer break, went through a growth spurt and now towers above the bully - emphatically trying to convince him he still needs to give up his milk money “for his own protection.”
We as consumers are the ones who have undergone a growth spurt called “the internet.” The internet has liberated information only agents had access to for decades — what houses are for sale.
I would offer advice to the NAR on how to better communicate their message and not seem so desparate, but…how would you advise the horse-and-buggy makers to convince people not to use cars, back in the early 1900’s?? It’s just technological progress, and there’s nothing they can do about it. Time to adapt and move on.
~Robert Creek
The FSBO Bloh
October 28th, 2005 at 11:46 am
One piece of advice to the NAR might be to lower their sights as to their own compensation. They’re not doing anyone a favor with their efforts to keep commissions at 6%, as discussed in this recent CNNMoney post: http://money.cnn.com/2005/10/26/real_estate/buying_selling/real_estate_waste/index.htm
October 31st, 2005 at 8:12 am
They are defending the wrong weakness. Their weakness has become their insistence on charging 3% to sellers. Even the most zealous FSBO advocates like myself can see value in a a good buyer’s agent. It’s the 3% for the ’sign in the yard and MLS’ approach that realtors take that has consumers clamoring for change.
October 31st, 2005 at 9:57 am
“Addressing another panel at the workshop, Lawrence Yun, a senior economist at NAR, said that real estate customers are free to choose from nearly 80,000 real estate brokerages and more than 2 million real estate licensees”
…but how many of these 2 million REA’s offer fee structures alternative to the ’standard’ 6%? Not enough.
December 6th, 2005 at 10:44 pm
I read the statement and did not read anything that sounded like NAR was desperate. They were simply informing the public on services offered by Realtors. For those of you who understand the process I can see how you would think they were on the defensive but for those who don’t understand the process the Realtor is very important. Do you operate on yourself or relatives? I doubt it, you have a doctor perform the operation. Do you defend yourself in court? I doubt it, you hire an attorney. Do you clean your own teeth or fix your cavities? You see where I am going with this.
January 3rd, 2006 at 12:22 pm
I agree that the internet reduces the need for Realtors as buyers search for their dream home. But you should realize that there is much more to buying a house than finding the one you want. There is this little thing called “due diligence” that makes a good Buyer’s Agent worth every penny of the 3% that by the way, is paid by the seller, NOT the buyer.
If I was suing you, you would get a lawyer even though you could defend yourself (laws are public for everybody to see and you could do everything a lawyer does for yourself just as you can do everything a Realtor does for yourself). So why would you spend $300+ per hour on a lawyer? Because there is too much at stake for you to make a mistake that a seasoned professional would NOT make. Well, usually when one buys a house, they are making the largest investment of their life. And as a buyer, you can have an expert represent you for FREE since the seller usually pays the Buyer’s Agent. This is a NO BRAINER for the buyer.
As a FSBO seller, I can see why you would not want a buyer with a Realtor. I’ve been there myself and no FSBO seller wants to go without representation themself while paying 3% to their buyer’s Realtor. But to imply that a buyer is not well served by having a Buyer’s Agent is simply dishonest.
In Arizona, our standard real estate contract (the one everybody is familiar with) is about 10 pages long, not including the half a dozen other disclosures that are required in most SIMPLE transactions. Arizona law also REQUIRES sellers to disclose certain things about their property. How will sellers know what should be disclosed without a Realtor or a lawyer to tell them? And what’s worse is that without a Realtor in the transaction, the Buyer won’t know what things are not being disclosed until they already own the house. While this is probably exactly what the seller wanted, it is unfair and WRONG for the buyer.
I disagree with your grade school bully analogy. In this case, I think the bully is the FSBO seller that does not want their buyer to have the representation every buyer deserves when entering into a legal contract that could be very damaging to one party if every word is not perfectly written. For example, did you know that adding “and/or” instead of using just “and” or “or” could mean something very different than you intended? These are the kinds of mistakes that are made all the time by unrepresented buyers and sellers, and even by inexperienced Realtors. In fact, one of the reasons Realtors have to charge so much is because of the outrageous cost of E&O insurance. Why is it so expensive? Because our sue happy society makes it so…we always want someone other than oursleves to blame when something goes wrong. In the real estate world, it costs 6% to have someone to blame. And as a Realtor, I wouldn’t do it for a penny less. Use a discount Realtor and you will get what you pay for. And if you don’t hire a Realtor, you will have nobody to blame except yourself when you get sued 18 months later because your buyer found out they can hear airplanes from the nearby airport that the seller didn’t know they had to disclose.
I would recommend doing your own root canal before I would recommend representing yourself in a real estate transaction. Especially when most US cities saw 30%-50% appreciation in the past year….think about this for a minute. If you paid $150,000 for your house 5 years ago and you now are selling it for $325,000. Six percent of that is $19,500. Your closing costs are probably another $3,500. So after paying both Realtors and closing costs, the sellers are walking away with $302,000 minus the $150,000 they paid…a profit of $152,000. The $19,500 you saved on a Realtor won’t even pay your attorneys fees in a lawsuit if you didn’t do or disclose something properly. I don’t know about you, but I like to walk away from a deal and know that it’s over - not that it might come back to bite me in a year or two. That’s the same reason I pay good money for car insurance even though I drive safely and obey the laws. While I haven’t had a car insurance claim in years, I keep paying my insurance. All greed aside, if you really think about it in an unbiased manner, it just makes good sense for a buyer to have a Buyer’s Agent - especially when the seller would prefer to have an unrepresented buyer.
May 20th, 2006 at 11:48 am
Check out the Swanepoel Trends Report 2006 - is a very objective report written by an industry insider and actually affirms with facts and stats the significant changes the industry is undergoing. He also details declining commissions and strong consumer pressure forcing agents to change. Most agents argue that its not happening - here is a industry leader from the industry who know what he is talking about. He has written like 10 books about change and he actually proves that its happening. Every realtor should open their eyes and read this.