Slashdot Mirror
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.
Yes, it's ridiculous.
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.
My wife is a Real Estate agent (not a broker; there's a difference) and there is a ton of work she does for her listing clients, often including spending hundreds of dollars of her own money, sometimes over a thousand, to pay for preparing the house for sale and marketing the home. I've also donated many hours of my own time ripping out old carpeting, taking down wallpaper, painting, and doing various light carpentry jobs for her clients.
Her clients also get her experience. I've seen a number of For Sale By Owner homes, and they never look as nice as my wifes listings. People just don't realize that you have to clean your home and make repairs before you try to sell it. Otherwise, it looks like run-down junk, and buyers will treat it accordingly. First impressions are everything, and you need an agent who knows what to spend money on and how much to spend, so that you get the best return on your last-minute fix-up dollar.
All of that is before the house even goes on the market. Once it's on, there are endless phone calls, viewing arrangements, and follow-ups that have to be performed; it's definitely a full-time job. Once an offer is negotiated and accepted, there's even more phone calls and work to do meeting with inspectors, dealing with lawyers, and making sure the deal doesn't fall through. It's just a steady stream of work, and if you've already got a job, you don't want to do the agent's job too.
Finally, all of the buyers know that you're not working with an agent, and since they're probably selling their home as well, they know just how much you're saving. 99% of the time they'll deduct that amount from what they would otherwise offer you, figuring that you wouldn't have gotten the money anyway, and why should you get a free ride? It can't be for your time; agents don't do anything, right?
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.
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?
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