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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.
Now where is the nerd-bit to this article? Apart from the fact that there's the word 'internet-based' in the summary. I mean, not everything on the internet is nerd.
Do it yourself, because no one else will do it yourself. [beta blockade 10-17 Feb]
Protectionist policies usually only protect a handful of businesses. In the case of the Real Estate industry, a high cost to entry bars a lot of business from entering into the market without going into co-hoots with the "big brand" businesses. What this does is allow independent realtors to compete with the big boys, which will in essence force the big boys to be more competitive.
The internet helps small businesses expand as fast as they can handle, and forces big business to stay competitive or lose business. This is really good for everyone. Not a perfect solution, but a good start. Now, if this would only happen for all industries...
20th century Marxism is not progress...
When I saw "Monster Suit" I at first thought the article would be about realtors winning a suit against Monster Cable. What realtors would call themselves monsters?
I've heard the same realtor's ad on the radio here for a month now, and one of its catch-phrases at the end is "Only Realtors are members of the National Association of Realtors.".
That always struck me as an "orly?" (/duh?) statement every time I heard their ad, but now reading this I wonder if they are trying to strengthen their "name brand" (NAR) so to speak since they are losing their lock-in? Since now merely looking for a Realtor doesn't necessarily mean they will get your business.
I work for the Department of Redundancy Department.
"Real" realtors will still blacklist listings by online or DIY listings. Non local "real realtor" basically translates into negligible viewings.
Obviously this is pathetic. I happen to have three realtors on my doorstep, and they sing the same song, claiming colleagues will do the same. You cannot break this kind of cartel when grassroots will practice it regardless.
I'm glad to see anti-competative practice and brokers in the same sentence. I don't know if internet brokers are going to have any positive effect on the rental market in major cities though. Right now the only realistic way to get a new apartment in NYC is to pay a fee equivalent to 15% of the annual rent to a broker for the privilege of renting from the landlord who has given them the exclusive right to make the public aware of the apartment's availability. So that's easily $3600, just to be allowed to deal with the apartment management company. I once paid a broker's fee to someone who had an exclusive on all the apartments owned by the broker who shared an office with her. I was in the same room with the landlord, but I couldn't rent from him without paying her first. i would love to use capitalism properly and not give my money to brokers, but they control far to high a percentage of the real estate for that to be a viable option.
We are all just people.
Wake me when someone acts against real estate agents who are supposed to be representing the buyers stop getting commissions paid by the sellers. This is an obvious and massive conflict of interest.
I saw an item on TV where agents were saying that sellers wanted to place their houses with agents on the basis that the buyer's agent got a larger commission. Now, why would they do that if they did not think it would influence the AGENT of the buyers? If the seller can influence the buyer's agent, there is something deeply wrong.
Can someone explain to me how this obvious conflict of interest has persisted for so long?
And before anyone tells me that a realtor is necessary -- I bought a house in the US (for several hundred thousand dollars) with no agents involved on either side of the deal.
The real "Libtards" are the Libertarians!
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.
Were on-line realtors outselling people standing in the property?
Was the internet better for buyer/seller?
Did the online agent get a better commission?
I thought real estate agents were all about follow the money$$$?
The only thing new in this world is the history that you don't know.[Harry Truman]
That '... interesting' started on a new line too, in case you're wondering. Curious.
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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.
"Internet-Based Realtors Win Monster Settlement...", soon to be sued by Monster Cable.
I hope this comment is well received... I could have moderated instead!
Persecutors will be violated!
tm
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Yes, now, they aren't getting as much profit as they used to, but some people are smart and are taking advantage of rock-bottom housing prices.
Taxation is legalized theft, no more, no less.
Welcome to the 21st Century, Century 21.
Learning HOW to think is more important than learning WHAT to think.
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Someone I work with buys and rents out houses as a side hobby, and in an attempt to save money is on her way to get her brokers license. Along the way she needs her agent license, which is being refused to be given to her until she joins the Texas NAR.
Interesting.
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Nobody gets excited about getting lobbying calls from a realtor.
Nothing a little makeup can't fix.
What?
That "monster" settlement infringes on the trademarks of Monster Cable, Inc.
"National Security is the chief cause of national insecurity." - Celine's First Law
You heard me right. Realtors are going the way of the dinosaur. I am already seeing it happen.
Consider, anyone in my generation (20-30 years old) who is looking for a new home. What is the very *FIRST* thing you do when you are even considering it? Do you call an agent? No. You go to the web. You look on Facebook, on Cragislist, on Google even, and yes, MLS too. but the only reason you go to MLS is because it is on the web to begin with! Consider now, if you are selling a house and aiming for this market. Why would you pay someone 2.5%-5% commission to list on just one of many websites, when all others are free? Why not try it with the other sites first? Also - consider the number of *very heavily targetted* Face book ads one can buy for the price of an agent's commission!
I know personally of three different people who have bought or sold houses in the past month *ALONE* who did not have an agent involved at all in at least one side of the transaction. The trend is already there... it will only accelerate.
The legal side of the transaction is usually handled by an attorney - all an agent really does is bring bodies in the door. If you can get the bodies in the door via your own means there is no reason to pay for an agent.
I actually work for a MLS vendor that supplies a MLS solution to these aforementioned real estate broker companies. I wonder how this will affect our business. It seems to me that with the Internet-based brokerage companies out there, it would enable more expertise to enter the MLS business.
I don't think "rock-bottom" means what you think it means.
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?
At least that's what I thought when I read the headline.
...that houses on the market are treated proprietary secrets...if you were selling your house, wouldn't you want anyone and everyone to be able to find it?
Much like the travel agent business, it looks like the internet is finally liberating all this information.
Sure, housing prices fell drastically, but as the AC pointed out, "I don't think 'rock bottom' means what you think it means." By stating that housing prices are at "rock bottom" you are saying that they will not go any lower in price. But housing prices are still grotesquely overvalued in most markets and still have a long way to go down before we see any kind of bottom. And even when that bottom is hit, chances are the prices will remain stagnant for many years, which translates to a continued real decline when accounting for inflation.
Housing costs, in aggregate, historically increase just a nudge over inflation. Yet we saw national median prices increasing at 20% per annum over the past several years, and 50%-100% in bubbly areas (San Diego, Miami, San Francisco, Las Vegas, etc.). Personally, I'd wager that we won't hit a national rock bottom - and by that I mean prices showing steady and "normal" increases of a nudge above inflation consistently for a one year period - for at least another five years, and I wouldn't be surprised if it's closer to ten years.
I could not justify my existence if I were a turkey farmer. Would I terminate myself? Undoubtably, yes.
When I go to sell my house, I will not be doing "For Sale By Owner". When I go to purchase my next house, I will be calling a realtor to help me find it.
The Realtor that helped me buy my first house was invaluable in walking me through a process I had never been through before. All the forms to fill out, what to look for when looking at the house, what the next steps are, etc. etc.
I wonder how many of the people saying "I don't need a realtor" have actually been through the home buying process. I wouldn't want to do it alone.
Internet + sleazeballs. What could possibly go right?
No sig today...
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!
First, I dislike the very government-like approach that the real estate industry is in. However, there are some positive benefits to using a realtor that go beyond pure technology:
/. to build sites for them. While they theoretically could learn how to build their own site. They don't have the time, inclination, nor talent for building real web sites. The same arguments apply for real estate transactions.
Most Realtors are bound by a code of ethics (and law) to disclose any material facts about the home. If they even suspect something (something that they *should* know) about a house, they have to disclose it to both parties. So, while a seller of a home can conveniently forget something, a realtor must disclose it if he/she has any knowledge of it.
Most people suck as negotiators in the USA. Just because a person sees a "fact" doesn't mean that the other person does. Negotiation is about bringing two parties together and finding that common ground for making a transaction happen. A Seller wants to sell their home. A Buyer wants to buy it. And home buying is rarely that simple. There are issues, in the real world that have to be worked around, including a ridiculous number of government laws and financial tricks to maneuver around. A professional agent can help both the buyer and seller to get through everything smoothly and close a transaction. Yes, you can do it without agents, but unless you are very knowledgeable about the business, one or both of the parties is going to get screwed.
Most people don't really know what a home's value is. They don't know how to get a good value for their home relative to how fast they want to sell/buy. It is the business of a real estate agent to spend every day steeped in the business. Just like it is the job of good developers to be on top of coding, servers, networks, and any new issues that pop up.
By their own rules, they have to be very knowledgeable about many aspects of the law, finance, and market. And they are to use that information to protect their client (whether buyer or seller) and to further their client's best interest.
Kind of combining the last two points: Let me use the same logic for developing web sites. We all know how easy it is to build a pretty complex and powerful system just using the very easy to use (for us developers) and free service from a Google. However, we developers know what the real limitations and challenges are with a system like that. Plus, the free tools will not build you a custom site with custom applications that give a business a technological advantage over their competitors. That is why they will pay (if not happily) $50-$200 per hour for people like the readers of
Okay...stopping now...got real work to do. However, I could keep going on this topic.
I think that the main problem with real estate is that the fee is based on a percentage of the home value. This causes all kinds of incentive distortion and offends people's sense of fairness.
If real estate agents switched to either a flat fee or hourly rate pricing structure (independent of the sale price of the house), I think that a lot of the animosity they receive would go away.
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People are usually cheap SOBs looking for the lowest price on food, clothes, toys, computers, cars, etc., yet they all of a sudden got Truly Stupid paying huge prices for homes. Why???
1) Houses were seen as a lifetime investment that would not depreciate.
2) Home ownership in the US is highly subsidized by the Federal Government through the mortgage interest and property tax deductions.
3) A lot of shady operators took advantage of poorer and less well-informed people by writing them mortgages with ridiculous terms (like a late payment increases your interest rate to double digits), waiting for the borrowers to run afoul of those terms, then foreclosing on a house the family had owned for years. It's called "predatory lending" for a reason.
There's been lots of corruption in the "secondary" and "subprime" lending sectors, too. Borrowers were encouraged to hedge, and sometimes lie, about their qualifications because the lenders felt no risk. Lenders found they could sell almost any mortgage into the securities markets where the liabilities were sliced and diced into pieces and repackaged as equity holdings. The Federal Reserve Board also helped fuel the housing bubble by holding down key interest rates and failing to perform any real oversight of its member institutions' lending practices. Many, many people, including many supposedly well-informed financial types, simply believed real estate would continue to rise in value over the years ahead.
Whenever large numbers of people become convinced that the price of a particular item, be it tulip bulbs or homes, can never fall, you have the potential for a pricing "bubble." In this particular instance, public policies and private greed together created the over-valuation of residential property that occurred over the past decade.
>I wonder who actually first marketed the magic grey rolls?
:) :) :)
They were invented by the SCA.
A work that expires before its copyright never enters the public domain and thus enjoys eternal copyright protection.
There is no law that says you have to pay your agent a percentage. You can specify a flat fee instead if that makes you more comfortable.
They don't grade fathers, but if your daughter's a stripper, you fucked up. --Chris Rock
Wake me when someone acts against real estate agents who are supposed to be representing the buyers stop getting commissions paid by the sellers. This is an obvious and massive conflict of interest.
Until you've signed a buyer brokers agreement with 'your' realtor they're working for the seller. The biggest ethical problem is they rarely disclose this. We knew, ours was happy to do it, her commission didn't change, but her allegiance did. Whacked system.
One house we looked at, the *seller's* agent was very hostile towards us. It was the strangest thing, he kept getting in the way of negotiations, treated me shabbily when I asked what seemed like reasonable questions.
Turns out, he bought that house. How's that for Conflict of Interest? Turns out the house was under neighborhood covenants, so I'm really glad we didn't go in there.
My God, it's Full of Source!
OUTSIDE_IP=$(dig +short my.ip @outsideip.net)
An excellent summary. I'd mod you up if I wasn't already commenting.
Just keep flagging them as 'prohibited/terms of use'. As more people start using CL in earnest, the SNR will go up. It seems like the spammers are the first to arrive in new CL cities (try searching for a used car in Guam!), while in cities where CL has more of a foothold (here in SF being the prime example) flagging knocks such spam down quickly. Also search only for listings with realistic price ranges (there is no free lunch), and
no
If you can read this... 01110101 01110010 00100000 01100001 00100000 01100111 01100101 01100101 01101011
Oh come on, nobody's managed to hack Slashdot yet?
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Thank you. I started investigating the housing issues facing us back in 2005 when my wife and I were considering moving up in home. Needless to say, we were floored by the price increases in our city since we bought our first home in 2001.
Two great places for reading up on and discussing housing, mortgage, and credit related issues are:
I could not justify my existence if I were a turkey farmer. Would I terminate myself? Undoubtably, yes.
Buying or selling a house should be like buying or selling a car. You can do it yourself, but you probably will need a mechanic, get it certified, and so on.
Likewise, buying or selling a house should be the same. If you need to fix up the house before selling it, employ a home repair person. Need advice about neighbourhoods or values, search it online yourself, or hire a specialist.
The problem is that with a home, your choices are limited. You are paying 3% regardless of the job your real estate broker is doing, even if you don't need one. To those who say a real estate agent does this and that, or how valuable their agent was, wouldn't that be the same if you employed a specialist and paid them hourly? Let's see $5000 / $50/hour is 100 hours... that should be enough time for you to employ any specialist to fix up your house, drive you around, do some research for you.
One way to break this monopoly is to first create a national database of homes sold along with contact number of the person selling. Make it required by law. After everyone is enrolled in this database, make it available to the public.
Problem solved.
The American Medical Association restricts the supply of MDs, and by law you can't get most medical care from anyone who isn't an MD.
AC is correct: you cannot be a "realtor." You can be a "REALTOR" (Registered trademark) if the National Association of Realtors permits it.
Both restrict capacity of the labor in their industries. This is known to create at best Cournot competition. Meanwhile, a market that is not capacity constrained has Betrand competition - where the mere threat of entry can keep prices near their minimum. Cournot competition reduces economic efficiency (id est, screws you out of money).
I'd estimate the average working American is getting "screwed" (how much he pays less what a competitive market would cost) by about $6,000 per year (of the approximately $16,000/yr of medical expense he and his company pay). Your paycheck is probably light by $500 per month due to the AMA tax.
It is also worth noting that a supply shortage of saved lives is equivalent to preventable deaths. This artificial shortage raises prices of having your life saved while simultaneously reducing your odds of having your life saved.
The AMA and NAR are de facto monopsonists, restricting the ease of health care and real estate purchase respectively, and using your medical bills and need for housing to make their members artificially richer.
Don't believe that doctors are getting paid "too much"? See if you can find the trend in the Forbes best paying jobs in America:
1. Anesthesiologist
2. Surgeon
3. Obstetrician
4. Orthodontist
5. Oral Surgeon
6. Internist
7. Prosthodontist
8. Psychiatrist
9. General Practitioner
10. Chief Executive Officer
11. Physician and Surgeon, Other
12. Pediatrician
13. Dentist
14. Airline Pilot
15. Podiatrist
16. Lawyer
Productivity in the US has been going up steadily over the last decade, but real median income has gone down. Where does all that extra money go that you're not getting paid? Your company spends it on health insurance, most of which ends up in the hands of MDs.
OPEC dominates the trillion dollar global petroleum industry. The AMA dominates the two trillion dollar national medical industry. Politicians blame OPEC for our economy because doctors write big checks.
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