Looking Out From the Garage

Wandering through the DoJ website...

What is it going to take to make them happy?  Did someone at the DoJ have an unsatisfactory experience with a real estate agent?  Or is it simply that they know our approval ratings are down there with our Democrat led Congress (which would love to have even the dismal ratings of George W. Bush), so we are an easy target? 

There is an interesting report called "Competition in the Real Estate Brokerage Industry" that is a pretty interesting read... ok, not that interesting as a read, but interesting to look through because of the way things are presented.   I'm going to give my personal impressions after spending the morning looking through it online.

  • They really don't like full service brokerage.  At every opportunity the report bashes full service brokers. 
  • The data that they use often contradicts what they are trying to point out.  Some examples of this would be that there isn't sufficient competition in the industry either at the brokerage level or at the sales agent level.  But, the report begins by stating that there are no significant barriers to entry to the sales agent level, and few barriers to entry for the brokerage level.  It also states that there is a lot of fluidity in the industry.  Finally, it states that competition is fierce... but apparently not fierce enough, because it says that competition is needed to bring prices down for consumers. 
  • More and more consumers are choosing to utilize full service brokerage models... even though there are more brokerages offering other than full service options. 
  • There are very few mentions of limited service brokerages offering fewer services for consumers... but plenty of mentions of consumers saving money by utilizing flat-fee or limited service brokerages. 
  • Commission rates have been going down, but not fast enough for the DoJ.  Because home prices were rising, average commissions were still increasing.  But, because of the low barriers to entry, the increased competition led to the pie being split more ways.  One has to wonder if the DoJ wouldlike to see more agents (more competition) or fewer agents (less competition, but perhaps ?more reason to cut commissions?).
  • The DoJ asserts that the MLS is imperative to consumers, but decries the fact that it is owned privately. 

I was really disappointed.  There are so many contradictions, yet in EVERY case, the DoJ asserts that the real estate industry is flawed.  The price that is agreed, even though there is fierce competition from many players, must not actually be fair... and is a result of a restraint of competition.  The restraint of competition is because there are too mazny competitors...

It goes on...

I think there is someone at the DoJ that dealt with a crappy agent and has decided to go after the industry.   

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Unless otherwise noted, all content of this blog is the property of Lane Bailey, ©2012 Lane Bailey. 

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2 comments • Lane Bailey - REALTOR & Car Guy • October 19 2007 03:02PM

The law of unintended (and invisible) consequences

That isn't what I meant... 

It happens all of the time.  We mean well, but the results of an action reverberate and come back ugly and in a different direction.  The examples are numerous.  I'll start with a few that aren't real estate related, but then tie it up in a nice little real estate package...

  • This summer in Great Britain there was a terror scare that involved medical doctors.  In the aftermath of these incidents, we found out that Great Britain has had a hard time keeping the country stocked with doctors.  So, to combat the doctor shortage, and keep the growing lines from getting further out of control, immigration standards were relaxed for medical doctors.  Background checks and other measures were let down in order to help curb waiting lines in hospitals.  Why were there waiting lines?  Some would argue that the socialized system of medicine in Great Britain caused the lines. 
  • A number of years ago, California passed a legal requirement for a certain percentage of vehicles from each manufacturer sold in the state to be ZEVs (Zero Emissions Vehicles).  Prior to the drop dead date, California succumbed to the pressure from the auto dealers as ALL of the major manufacturers prepared to pull out of one of the largest markets in the world.  Also, (perhaps coincidentally) around the same time, a group from MIT did a study of ZEVs.  The results were that so-called Zero Emissions Vehicles actually polluted more that the average car on the road at that time (and this was the early 1990s).  Because the power for these electrical cars had to be generated, and then transmitted over long distances, between the line losses and the pollution from electrical generation, it was more accurate to refer to the vehicles as Remote Emissions Vehicles. 

And finally (here is where real estate starts to creep back in to the picture)...

  • The NAR, while trying to make a better system for its brokers to exchange information about listings, introduced the concept of a Multiple Listing Service for members.  All of the members agreed to exchange information about all of their listings.  But, then as the NAR became the dominant player in real estate, the MLS became the single most important tool to sell real estate.  Then, the DoJ decides that the MLS system should be a public domain information source... and lawsuits start to fly. 

But, there is more to the story.  And it is slightly related to the NAR v DoJ tidbit. 

I have seen a lot of posts on here and elsewhere about the number of real estate agents.  I've even had a few of my own.  But, one of the things I see bandied about is that states should increase the amount of training, and make licensing more expensive.  Further, many posters think that the NAR should raise their dues to the sky to get the part-timers and under-performing agents out of the business.  

In ways, it is hard to argue.  In Atlanta, if the numbers I've seen are accurate, 1% of the population hold a real estate license.  I've seen quotes on Active Rain that 2% hold licenses in California.   Nationwide, the number seems to be about almost 2.6 million licensees, with 50% of them being members of the NAR.  That is almost 1% nationwide.  

At the same time, we are accused of restricting entry (I think the numbers above prove that we do anything but...).  We beat down competition, and lock them out of the market to keep commissions artificially inflated.  

While I will concede that I think that there are just too many agents, I think that restricting the numbers by making unreasonable barriers to entry would be a PR nightmare.  And, since the DoJ already seems to think the NAR is a cozy little Good Ole' Girls (and Boys) network, tossing in high fees... which I think would be wasted... would only give them further ammunition.  

I DO think that we need to find ways to make agents (and especially REALTORS(R)) better qualified to serve our clients needs, I don't think that barriers to entry that would be perceived as serving our own self interest are the best way to do it. 

In the words of Winnie the Pooh... "think think think... think think think"

So, that is what we need to do... 

Find YOUR Dream HomeWhat's YOUR Home Worth?How's the Market?

Unless otherwise noted, all content of this blog is the property of Lane Bailey, ©2012 Lane Bailey. 

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2 comments • Lane Bailey - REALTOR & Car Guy • October 14 2007 09:11PM