Thursday, December 21, 2006


[12/27/06 Update - This afternoon Inman News featured an article on its website highlighting the CFA study. It was the most in-depth media report I have seen on the study, which I suppose excuses its belated mention.]

I am a regular reader of Inman News, and am overall impressed with its real estate reporting and blog-disseminated insights. In my humble opinion it is one of – if not THE – most respected and balanced real estate industry news sources in the United States. Which is why the following error and omissions of the past week caught my attention.

First Omission #1. Why no mention of the recent Consumer Federation of America study and accompanying press release evidencing the growth of 'nontraditional real estate brokers' notwithstanding the myriad of obstacles presented by traditional brokers, NAR, MLSs and some state regulators? The study examines discrimination against the nontraditionalists (I prefer the term competitive real estate brokers and others) in the form of exclusion from MLSs, boycotts, defamation and harassment by state officials. It also encourages consumers to be mindful of their market options and attempt to negotiate all terms, including price.

Is there a single player in residential real estate that isn’t touched upon in this report, authored by a (THE?) leader in consumer advocacy? Isn’t this worth a mention by Inman News? I’m hoping I missed it, and someone will bring it to my attention.

Omission #2. On the Inman Blog today, we are presented with The List, Inman News' annual list of people to watch.” Granted they hedged by saying this wasn’t the complete list, but these names obviously made it to the top. You can see for yourself who they included in slots 1 – 5. Each one of them is a private sector actor (one, in fact, is essentially an entire nation of private persons) but I’m not opining one way or the other on their inclusion. Also, I recognize the whole concept of such a list is subjective in nature. Yet I was surprised we did not see some ode to law enforcement officials from our federal government, specifically the Department of Justice and Federal Trade Commission officials that have made it a priority to identify and eliminate anticompetitive conduct in the residential real estate marketplace. See prior entries on my blog for some of the successes accomplished by both groups this year, and the positions of strength both find themselves in with regard to litigation against NAR and a certain Michigan MLS going into 2007. Given the limited resources of most ‘nontraditional’ real estate brokers, websites and other innovators, it’s the FTC and DOJ enforcers that are on the frontlines in the battle against the impediments experienced by the nontraditionalists and consumers across the country (had Inman News covered it, you would have read about the CFA study on this subject released last week). Everyone should be watching the feds in 2007.

And finally, here’s what I think was an
error in a separate but related Inman Blog posting of earlier today. Also dubbed “The List”, this posting consists of Inman News’ annual “wild predictions,” Coming in at #4 is the following prognosis for some nontraditionalists in 2007:

4. A raft of discount brokers will go out of business. Tough markets will squeeze out many who just started during boom years as sellers grow more willing to pay top dollar to get their homes sold.
I’m not sure how many a ‘raft’ is, or how the blog would define ‘discount brokers’. Given that the balance of the post relates to sellers, I am going to assume the blog has two types of brokers in mind – those that provide full or limited services but will work for a smaller commission than the next guy, and flat fee brokers that see to it a seller’s listing makes it to the local MLS and, perhaps, beyond.

My objection here is to the assumption that a tough market dictates that sellers are more willing to pay top dollar to a full-priced broker to unload their abodes. Like I say, I’m no economist, but it seems to me that if sellers have it in their heads that market conditions are going to depress what they can get for their home, such sellers are more likely to talk to a discounter who has the MLS at its disposal and will charge the seller a fraction of what a full-priced broker demands. So I think this could be a very promising year for discount brokers and other price-competitive brokers and websites.

1 comment:

  1. If Inman turns out to be correct, with regards to the prediction that tough markets will lead to a raft of discount brokers going out of business, I think it will be as a result of superstition and innuendo, and not economics.

    I fully expect brokers will use the oversupply of property in the marketplace to sell the concept that a lack of marketing of a seller's property by discounters is why that seller's property isn't selling...when it is far more likely that the seller is simply priced too high for the marketplace.

    If exposure is adequate...if ample showings are actually taking place, the problem is PRICE, relative to marketplace conditions. That problem will exist with discounters and "full" service brokers alike.

    The real problem will be if "full" service brokers fail to tell buyers of discounter properties or otherwise steer buyers away from discounter properties, while claiming to sellers that it is a lack of discounter marketing keeping the property from selling.

    In that fashion, a flat market could indeed hamper discounter effectiveness, as worried sellers buy into the concept that it is an issuing of marketing, instead of being one of price.

    Jay Reifert, Broker/Owner
    Excel-Exclusive Buyer Agency