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Internet-Based Realtors Win Monster Settlement
coondoggie writes "Until today, most Internet-based real-estate brokers were considered second-class citizens, and their clients were left in the cold. But perhaps that will change with today's news that the Department of Justice has reached a proposed settlement with the National Association of Realtors that requires NAR to let Internet-based residential real estate brokers compete with traditional brokers. NAR has agreed to be bound by a 10-year settlement, under whose terms NAR will repeal its anticompetitive policies and require affiliated multiple listing services to repeal their rules that were based on these policies." Here's the whole settlement document on the DoJ's site.
internet realtors might also 'benefit' by being small, anonymous and easier to abuse (through title fraud, etc...)
There are two sides to every coin, and increased competition isn't always better...
Yes, it's ridiculous.
From previous experience, any home in southern California for sale is not only on the MLS portal, but is also on someone's web site, usually the listing agent. I do not know of ANY listing agent that is going to tell anyone NOT to advertise their listing for free. Given the above, all it means is that the same address will get on the search engines more than once. The impact will be that other properties will be pushed down the list. I do not know if that is a win for the Seller, or Buyer, but this is going to be the outcome. There are going to be some legal problems about the listing, but I figure the folks that won the law suit already know how to side step it. Ya, I am a Realtor, if you have a question about homes ask me, my advice is always free.
The way they phrase it (I'm a real estate licensee, in addition to my primary gig in IT) is awkward/duh, but what they mean is that Realtor is a registered trademark of the NAR, and that only members may call themselves a Realtor.
What, you may ask, is the benefit of that? Basically, it comes down to your rights if an agent screws you over. If that agent is not a member of her/his $STATE Association of Realtors (and by extension, the NAR), you can file a complaint with your state's Real Estate Commissioner and/or go to court. If the agent with whom you have a dispute is a Realtor, you can also file a grievance with your $STATE Association of Realtors and go to their arbitration panel. Those arbitration panels are fair, and the Realtor Code of Ethics is far stricter than what is required by state laws (and at least here in California, those state laws are fairly strict themselves). If a Realtor has violated the Code of Ethics and/or state real estate laws and you have some proof, the Realtor could be suspended and/or expelled as a Realtor, and may also face license suspension and/or revocation.
While more than a few of those reading this may doubt it, the majority of real estate agents, and particularly Realtors, are honest people who seek to do the best job possible for their clients. However, if you do have a legitimate problem with an agent, whether it's through dishonesty or just incompetence (and they are out there; it was through dealing with an incompetent agent when my wife and I bought our first house that I decided to get my own license; after joining a brokerage, I was amazed to find that a large number of my colleagues, including my broker had themselves gone into real estate for that very reason), you have a better chance of redress if your agent is also a Realtor.
Disclosers/disclaimers [1]:
1) I am not a lawyer, and none of the forgoing is intended as, nor should be construed as, legal advice. If you need legal advice, see a lawyer.
2) I hold a real estate agent's license but am currently not affiliated with a broker and so may not practice real estate. None of the forgoing is intended as, nor should be construed as, real estate advice. It is solely my personal opinion, and as such, may be completely wrong. Don't rely on it in any way.
3) I am not a real estate broker, and none of the forgoing is intended as, nor should be construed as, real estate advice. It is solely my personal opinion, and as such, may be completely wrong. Don't rely on it in any way.
[1] Why all the legal stuff? Real estate is very litigious business. If you're a doctor and the likelihood of a malpractice suit bothers you, just be glad you're not a real estate agent.
I don't think that part is ridiculous. There's a distinction between a real estate agent and a Realtor®. One is a person who has a license to sell real estate, and another is a person who pays dues to and is a member of the National Association of Realtors®. It's been that way for many decades, as far as I know.
The fact that a brand has become so successful that
many people informally but incorrectly use it to refer to anything in that generic class doesn't mean anything in that generic class should be allowed to call *itself* by that trademark.
Actually if you let your term fall into generic everyday use without defending it you can lose it. Companies that are in danger of losing a trademark because if common use often mix in their company name in all their ads.
Microsoft Office
Kleenex Brand Tissues
Ziploc Brand Zip-Locs (you never hear the ad say just "Zip-Loc")
BandAid brand Band-aids
The latter variant is the most common. The formula is simply "(company name) Brand (trademark in danger name)" Listen for that pattern and you'll be amazed how much you hear it. That's the sound of a company trying desperately to hang onto their trademark.
Some of them I don't know the status of, and will probably never know who if anyone ever had the trademark for them. "Duct Tape" and the like. I wonder who actually first marketed the magic grey rolls? I'd like to say 3-M but that's just because they're known for stuff like that. Whoever it is lost that round of the trademark game, badly.
Some words got defended heavily and as a result, the "next best thing" market invented name stuck better than the trademark. (sorry, you lose, please try again!) "CD" is my favorite. Who really calls it a Compact Disk(tm) anymore? This is basically the result of the combined marketing campaigns of all your competitors doing a better job of marketing than you.
I work for the Department of Redundancy Department.
It's a lot more than who pays who. One basic problem is that agents are paid on a percentage of the sale. Let's say a property is worth $500,000 and the commission is 3% to each agent (seller and buyer). The seller's agent knows that if he can get the seller to sell for $450k, he only loses 10% of his commission and he'll make the sale with nearly no effort. Hence, the interest of the seller's agent (in terms of pay/effort) is to make the seller accept any price even if it's low.
On the buyer's side, it's even worse because if the buyer pays more, the agent gets more, so there's clearly no incentive for the buyer's agent to help his client bring the price down *if* the client is buying anyway. In the end, both agents' *only* interest is to get the property sold, no matter what the price and the interests of the clients. It's as simple as that.
Opus: the Swiss army knife of audio codec
The landlord will never pay the fee, because there is always someone who will step in and pay it for them, because of the permanent housing shortage in NYC. "As of April 2005, the rental vacancy rate in New York City was 3.3%, making it one of the tightest housing markets in the United States. (A vacancy rate under 5% is considered an official housing emergency under New York state law. Nationally, the rental vacancy rate is approximately 10%.)" The apartment scene in NYC is out of control, for $2000 a month which will get you a small studio in Manhattan or a small one bedroom in Brooklyn, this is what you pay: "In addition to a security deposit, some landlords also want the first and last month's rent. Tack on a broker's fee and a prospective renter for that $2,000 apartment is out of pocket nearly $10,000 just to get the keys to the place."
We are all just people.
I don't think buying a house that is still +60% of '00 values would be considered anywhere near the bottom.
first off, here's the actual proposed final judgement that actually came out today, the actual news part of this, as the links above seem a few months old.
secondly, both the submitter and the linked article seem to have absolutely no clue as to what this settlement means. it is in no way about 'enchancing competition' or 'opening up the industry'. it merely clarifies rules that allow brokerages to limit this data.
specifically, this has to do with VOW (Virtual Office Website) data. if you don't know anything about MLSs (Multiple Listing Services) here's a quick rundown: most regions of the US are served by one or more MLS. real estate brokerages pay to be a part of the MLS, and in return they are granted access to the full database of current property listings.
(now, before some of you go screaming that this database should be simply open to the public, like i initially did when i first learned about the MLS system, please realize that there is information contained in it that people may not exactly what to be in public hands. part of the job of the MLS and the traditional brokerage system is verifying the character of the agents)
for many years, the NAR had a policy allowing brokerages to restrict VOW data. through this, a real estate office could block their listings from appearing on a competitor's web page. the obvious point of this is that the listing brokerage would also like to be the selling brokerage (capturing both ends of the commission.) the not so obvious point is that the MLS prefers to have brokerages in it that contribute listings, not just 'leech' off of it in order to captured leads, and make money off of referrals.
a few years ago, the DOJ ended this practice, calling it anti-competitive. NAR came up with other policies, and contested the original DOJ order. this settlement allows NAR to reinstate VOW practices.
this settlement also has some other interesting pieces, such as giving a seller the right to not have a blog post or home estimate displayed next to the listing data, which will probably hurt sights such as zillow.But, compared to everything else, housing prices fell sharply. Just look at a gallon of gas back in 2000, it was $1.50-$2.00ish if I remember correctly, today it has nearly doubled to $3.50-$4.00
Taxation is legalized theft, no more, no less.
Here in TN, the NAR just bought a piece of legislation making it illegal (you read that right: illegal) to give a purchaser a rebate. They have a lot of power, and they'll use it.
Do you have ESP?
The seller brings the house to the table. All of the money that is brought to the table is from the buyer's side (which includes the institution that makes the loan). So while the seller might be paying the realtor, they are paying with money gotten from the buyer. It might be presented as otherwise, but that is just a fiction.
That's an insightful and shocking analysis.
Until last week I would've agreed with you, and helped light the torches at the next realtor lynching.
Last week I had a change of heart because I set about to buy a house. That's when I realized how valuable a good realtor really is.
It's important not to score their work along Marxist "physical labor is the only real labor" ideas. Mostly what you're paying for, as a buyer, is their expertise in assessing the value, condition, and livability of a house. Once your realtor understands what you want (and they'll spend the first six house visits figuring this out about you), they can give insights that you would otherwise have to learn the hard way.
The good ones also know what maintenance issues to look for. And of course they guide you through the buying process and give advice on negotiations. My realtor had all sorts of insights into reading between the lines of the seller's listing verbiage.
As a seller you benefit from a similar expertise, except in reverse: a good realtor can show you how to market your house's strong points.
In both cases, their expertise can add or subtract thousands from the closing price. My realtor just led me to a fantastic house for which I signed an offer letter just this past weekend. He's going to get $4500 out of the deal, and I consider that a reasonable fee for an expert consultant.
FATMOUSE + YOU = FATMOUSE
What I find amazing is that no-one has done any international comparisons. In the UK when I sold my house I paid 1.5% of the price to the agent (we only have agents), and about 0.5% to the lawyer (who does the paperwork). The agent only gets paid if the property sells. OK - I don't have anyone acting on my behalf when I buy, but I could pay for that if I wanted. I could also have paid less - there's an agent here who charges about $700 for listing and the same again if you sell, putting you in all the main websites. It's pretty easy to tell if the price is fair as all property transactions are now published online, so you can see pretty much what equivalent properties are going for.
We think agents are pond scum here, and earn money for nothing - but it sounds like nothing on you guys!
WOW, it's funny how well hated Realtors are. I happen to be one with a lot of dislike for my fellow Realtors.
A lot of Realtors are really not trained correctly and only have a transaction based mentality ( nothing wrong with that but they forgot the long term part of the deal )
but here is my problem with internet Realtors, let's say I have house for sale, and one of these internet companies that send the people out without a realtor wants to see the house, no problem, I show the house to the best of my ability ( I also prequalify them to make sure that they do have the money ), and I won't tell them that the house next door is for sale that's a private sale ( see I would tell them, if their realtor was their, since life is a 2 way street and Realtors remember who's a jerk and who is not. )
The other issue is liability. Do I really want to show a house to a possible thief that is casing the area. This happens more than you think, and when you show an internet couple, you have to do a tag-team ( you and an office worker ), I've had this happen to me and I just happen to get unlucky that the place got robbed 2 days later, they caught them, but I was the unlucky realtor that it happened to.
another issue of liability: what we can and cannot say, if a realtor ask me if the area is a black/Jewish/white/catholic... area I can bitch slap him via e-mail and notices and the board, if an internet person ask, I have to say "look around yourself" ( huge can of worms if anyone says anything other than a pat answer of " look around "
Another liability : Procuring cause, I have a 10 point check list, this check list is my procuring cause check list. Some basics about it http://homebuying.about.com/od/realestateagents/qt/Procuringcause.htm When I interview clients, I use my checklist ( since 99% of them never tell me that they are using an internet based agent and this only applies to them ), internet firms might try to demand the commission, but when I produce my checklist, and if it even goes to arbitration, I have yet to have to give up anything big ( unless they informed me that they were coming from an internet firm ). this issue happened already when a rebate firm sent me an offer, I just started laughing since I knew exactly whom the couple were, what I toured them on, and my entire log file of over 28 properties that I showed them, guess what, I gave up 1/2 point as a courtesy.
Now I do deal with a few internet firms and have great respect for 1 of them, they get there 33% to 50% of the split every time without issue and they have real intelligent clients.
if you see me, smile and say hello.