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Is it time for more stringent regulation in the real estate industry?

THE REGULATOR COMING OVER THE HILL.

C Lloyd McKenzie writes: "Considering the fact that we are intricately related to the financial industry, why would they not look at us?"

Why wouldn't they indeed??

C. Lloyd provides a timely warning about things that could happen if the government, in it's zeal to take over an ever larger segment of private enterprise in this country, sets it's sights on the real estate industry.

I find this post utterly fascinating.

Are we going to see a "Real Estate Czar"? If so, will they have any knowledge of the real etate industry?

A Real Estate Czar will naturally go after the money, i.e., commissions. Probably through a tax on all agents and brokers commissions. What an easy target that would be. Forget the schedule C. Just tax the gross commission check. Ouch!!!.

Don't laugh at this suggestion. The government has one guiding goal at this time, take control of as much of the American economy as possible and the easiest way to do that is through taxation of financial transactions.

Only time will tell and I am very apprehensive. The performance of the present government is like a run-away train when it comes to taking control of more and more private enterprise entities.

As C. Lloyd aptly points out, regulation of the financial industry, the focus on foreclosures and lately short sale transactions, one more step and they are right in the middle of the real estate industry.

Am I paranoid. Indeed, but not without cause.

Visit C. Lloyd's blog and leave a comment. This is very interesting.

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Via C Lloyd McKenzie, MBA, e-PRO, CDPE (ALLSTAR REALTY, LLC):

This subject might not appeal to many real estate practitioners because none of us like regulations. However, with the barrage of misleading information out there, I wonder if our lawmakers are paying attention. After all, it was only in the recent past that we almost experience financial collapse. Were there co-conspirators from the real estate industry? Will we be on the radar screen in the foreseeable future?

As a consequence of the aforementioned crisis, the current administration is taking measures to reform the way business is done in the financial industry. Yes, they are re-writing the rules of the game. Considering the fact that we are intricately related to the financial industry, why would they not look at us? One only has to take a look at the latest foreclosure statistics to see that there are some serious problems that need to be addressed.

Besides that however, there are some very reputable Realtors who are addressing problems that exist in the real estate industry. Below, I have cited two very prolific bloggers, Lenn Harley of Rockville, Maryland and Ruthmarie Hicks from White Plains, New York. I have provided an excerpt from their blogs.

Lenn Harley, Real Estate Broker, Rockville, MD in her blog entitled, "LOOKING AT REAL ESTATE TEAMS AND TEAM SPECIALISTS," addressed the following questions: DO REAL ESTATE "TEAMS" EXHIBIT EXPERTISE. The concept of "teams" in real estate practices is popular and often compared to medical "groups". I see little to no resemblance and, in fact, assigning a title of specialty such as "Buyers Agent" to a member of a team is often misleading to the consumer."

Ruthmarie Hicks, Associate Broker, White Plains, NY in her blog entitled "This Brokerage Has 750 Listings.....So they must be the best! (Part 1)"

Here are some of the issues she brought up, "Does size really matter? Does the number of listings or the size of the brokerage have anything to do with the ability of the agent to market and sell a home successfully? Is it the brokerage or the agent that is the determining factor? What Does the Brokerage Bring to the Table?"

What is your opinion?

Posted by Lenn Harley, Real Estate Broker, Maryland & Virginia on 11/01/2009 05:27 AM

Comments (31)

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31 Comments on Is it time for more stringent regulation in the real estate industry?

NOV

Lenn, I couldn't agree more! I also fear the capping of any bonus or salary in any industry. Since the public believes REALTORS make too much money, I can see the present administration stepping in to regulate commissions, in the public interest of course!

Laura. Absolutely! The government will recognize early on that they'll have public support for this grab.

An attorney that works with us told me that in 2010 all HUD-1's will have to display their cut of the title insurance. .she is not very happy about that.

If we are relying on NAR. .it will be like we are being protected by Pewee Herman at a pornographic convention. . we will be left out in the cold.

Fernando. You are right unless the publication of this info will increase membership.

If an industry does not regulate itself, then history says the government will. I sure hope we do it ourselves! Concerning salaries/commissions, let the free market process prevail.

Lenn.....there are many real estate agents who make good of money, in spite of themselves!!! If the government has more control, we could easily see our "independent contractor" status disappear along with regulating commissions charged.....fasten your seat belt on that one.

Dick and Dixie. The free market has prevailed for 100 years. Only the government can kill it. No one is required to pay any broker more than they wish.

Barbara. WOW! You hit on something I hadn't even considered. Our Independent Contractor status is for tax purposes. How quickly it would be to put 50% of us out of business in a nanosecond.

We could still, as brokers, require "employment contracts", but I see this as a slippery slope.

Lenn....a cap on commissions, most of us will survive.....no more 1099??? we could be dead in the water.

Barbara. Forget the 1099s. It's the Schedule C. We have to report income whether or not we get a 1099. I receive a lot of income without 1099s, commissions and copyright settlements. I still have to report.

It's the schedule C that makes the difference for me and most small business persons.

Eeeeekkkk.

Interesting. Any industry that thinks it may be under this administration's radar is mistaken.

Lenn....yes, you're right.....

Big brokerages?? Here's my comment on some of them and RE in general. How can it be 'respectable' to represent a client and push your company's listing(s) first and foremost when another company's listing(s) might be in the client's best interest?

Gary. Mmmm. Did the auto industry think that??? Did the banking industry think that???

Susie. If you "represent" a buyer, it isn't.

Lenn, I suppose the question is 'why wouldn't they'. The 'Realtor' has always been viewed as overpaid. The 'Realtor' is also one who is not accounted for in the unemployment/employment stats.

It seems we are one of the few professions, that we get to show our client our whole paycheck on the HUD1 with no indication that money comes out of our pockets in order to run our business.

We can probably expect to be carved like yesterday's pumpkin.

Lenn,

Thanks for posting the link to C Lloyd's blog. I had missed it.

Huge numbers of Americans have been programmed to misunderstand business fundamentals, educated to lack proficiency in arithmetic, and taught to suspect that wealth is nearly always unearned. That makes for an electorate that is easily exploited by leaders who would plunder and vandalize ambition to further their power. We are seeing it now.

NAR does some truly dumb stuff. But, who else will speak for us? The ACLU? LOL

That was my point. ;-)

Until Brokerages start policing themselves and increasing their standards for their agents, we are doomed. Think about it, how many agents in your area would you really trust with your personal purchase or sale?

Tina in Virginia

The US Government, and administration is sickening, self serving and very corrupt. This is just another attempt to make it look like they are doing thier jobs innstead of viewing them for the total failures they are. We have a humongous government yet it is all failures:

SEC - could not discover ponzi fraud
The Post Office
Fannie Mae & Freddi Mac
Sallie Mae
FDIC
Federal Reserve
Congress

And one of them were doing their job, and no one notified us about this coming economy. So what could they possibly do now, that they should have already been doing?

Lenn, I would not be surprised at all, there is over 80 Czars, unvetted in our government running things.

Just an FYI in (you know where I am from) if I put in my state Google will send me an alert on that key word.

But, here where I live they have been trying for 6 years to get a tax on service fee. All folks in our industry, dentists, plumbers, anyone who works in the service industry a tax on the gross. PLEEEEEEEEEEEEZZZZZZZZZZZZZZZZZ

God Save America and lead us back to our heritage so we can prosper and be in peace.

Lenn,

Geez I have been watching the government takeover of our beloved free market system and had not even considered the direction you speak of. Talk about a wake up call it is frightening to think that that could and would get around to us sooner or later. Now that we talk about it I would not be surprised. I am just wondering if we all wake up and can change the political landscape in 2010 would we be able to eventually undo some of the damage that is getting ready to be done?

Hi Lenn, Thanks for bringing this to light - now I'm paranoid too. Feel like duck in ducking hunting season.

Wow, this is something I hadn't thought of either. I've been too busy trying to eek out a living in my second year licensed to think about more of our hard-earned money being taken by the gov't.

I'm with Mary.. only I feel like a blind duck.

Dawn M. Bush

NOV

Lenn, the irony is if they do they may hypothetically be trumping their anti-competitive rhetoric of the Sherman and Clayton Acts by reserving for themselves the very things they banged the MLS and brokerage houses for. I love irony but not this type of irony. I am researching the fines for a class paper and it stands to reason finding more items to fine a practitioner for may be more lucrative than a blanket tax... The again, they could do both since they are mutually exclusive items. Free marketplace, eh? We shall see how free we remain. I have a few questions regarding this myself... Will be parked and lurking. :-)

Thanks Lenn! More bad news posted.

It's coming Lenn. I believe this and I am not paranoid. You have an excellent point.

Thank you for reblogging Lloyd McKenzie's post.

Lenn

Realtors have to have their voices heard as a voting block.

Good luck and success.

Lou Ludwig

Lenn ----I say "amen" to Missy's comment --- what are we to do?

Mama Liz

Bigger Government. Just what we need. This makes my blood boil.

Lenn, Thank you for bringing this post to our attention the Answer is Easy we live in a free country where politicians can be removed it is Nov 2nd after all. Time to stand up and vote for our rights.

Hi Lenn,

Just what we need a Real Estate Czar!!I appreciate the heads up on this issue.Time for voting some of these jerks out!

I'm sure it's only a matter of time before we're under the microscope. But I have to admit to being a bit disillusioned with "people" in general, and how they view things. No matter who it is, I'm quite fed up with the "me, me, me" mentality.

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