Comments on "Call for Supplanting NAR" from Mark Nadel

By
Real Estate Broker/Owner with Cimpler Real Estate, Inc. CA BRE# 01330941

Just about two weeks ago I published post "Call for Supplanting NAR", where I commented on the post of Greg Swann , the Bloodhound Blog editor under this title. I mentioned that I am not convinced to the proposed idea. I share my doubts with Mark Nadel, the author of "A Critical Assessment of the Traditional Residential Real Estate Broker Commission Rate Structure".  Mark replied and provided very interesting comments to Greg's idea. Here is Marks response (he authorized me to share it):

 

Artur
 
Thanks for your email and for publicizing my article again.
 
I had not seen Greg Swann's post about supplanting the NAR with an entity setting much higher standards for brokers.  Although I am in agreement with much of what Greg said and your response, I have a different thought.
 
I think that it would be very possible to create an entity to rate brokers and agents relatively objectively.  If Greg wanted to follow the Underwriters Laboratory (UL) model of a minimum "safety standard," then I think that this could be achieved, albeit imperfectly, by using an "auditor" model.  Brokers would pay an independent auditor - created along the models of accounting firms - to carefully review the skills, performance, etc., of the broker and his/her agents and the broker would receive a "certified" rating if s/he passed.
 
I think the model would be much better if the binary pass-fail ratings were replaced by one with 3 or 4 rating levels, say fail, satisfactory, above average, superior (top 10% or 5%).  I think of the ratings that Standard & Poors or Moodys give to municipal and corporate bonds.  (Yes they make errors (see recent rating reduction due to mortgage-backed bonds) and their can be conflicts of interest, but nothing is perfect).
 
The key to this working would be for brokers and the media to convince consumers of the value of using a broker with an "above average" or "superior" rating by the auditor.  I think that if brokers believed that top ratings would strongly influence the brokers that home buyers and sellers chose, then those brokers would be willing to pay for the auditor to provide a rating.  Meanwhile, since the auditor would only be valued if it was able to maintain its credibility in the market, it would have a strong incentive to give accurate assessments (If it gave everyone inflated ratings or favored one type of broker, e.g., traditional, then it would, hopefully, be trashed by the independent consumer media, lose its credibility and go out of business).
 
I would also like to see such rating firms offer to rate brokers and agents separately on their set of a la carte services to enable those who offer superior service in one area, e.g., pricing, negotiations, cost-effective closing, staging, etc., to advertise that specialty to consumers.
 
While I - along with a long list of brokers, commentators, etc.- strongly support decoupling buyer and listing broker commissions, I see that as a completely separate issue.

Artur, thanks again for bringing this issue to my attention and feel free to share this email with others if you think it is worth sharing.
 
Best,
Mark

 

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Rainer
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Al Maxwell
Keller Williams - Marietta, GA
Real Estate Agent
I would like to see brokers AND agents held to a higher standard. I just don't know if subbplanting the NAR is the right way to go.
Sep 11, 2007 11:26 PM #1
Rainer
42,460
Artur Urbanski
Cimpler Real Estate, Inc. - Burlingame, CA
Helping property owners to maximize property value
Al - I absolutely agree with you.  I think that a lot can be done without "supplanting" NAR as I said in my reply to George Swann.  I believe that he is too emotional about the issue. Mark Nadel is making some good comments regarding George's idea of grading agents. While he doesn't think that the way to "cure" the system he believes that it could help in the process of improving agents quality. thank you very much for your comment.
Sep 12, 2007 05:40 AM #2
Rainer
60,557
Dan Homan
Coldwell Banker Ellison Realty, Inc - Ocala, FL

Just my two cents, but, trade associations never provide the kind of "self regulation" required to make the industry better.  Look at the state bar associations, the AICPA and the AMA as examples.  The quality of the practitioner is never something a trade association can take on and survive.  The Real estate market has seen so many changes and challenges in the last five years that it is hard for anyone to keep up with them.  The real challenge for the NAR is to be adaptive to the changing market and changing options that consumers have.  When 60 minutes ran their piece about the "sacrosanct 6%" Nar took the bait and argued numbers rather than address the problems caused by the "sacrosanct" business model.  This needs to be addressed in several areas including changing MLS rules and the Code of Ethics, which do put "Traditional Agents" at a disadvantage when competing with ABMs.  They also set impediments to ABMs from entering the market.  Unless the NAR can adapt level the playing field to the point that all business models are welcomed, embraced in a way that the rules protect everyone equally, we won't need to supplant the NAR, the NAR will supplant itself.

Sep 14, 2007 01:51 AM #3
Rainer
42,460
Artur Urbanski
Cimpler Real Estate, Inc. - Burlingame, CA
Helping property owners to maximize property value

Dan,

I agree with you 100%. I don't see the need for "supplanting", however there is tremendous need for additional external and internal pressure.  In my post NCREX and Quattro are here I am discussing progress in MLS consolidation in the Bay Area.  It couldn't happen without the external pressure from Trulia and Zillow. This is why despite my own experience that it is close to impossible to change trade associations, I believe that there is hope for NAR to evolve. Thank you very much for your comment.

Sep 14, 2007 06:17 AM #4
Rainmaker
605,033
Bill Roberts
Brooks and Dunphy Real Estate - Oceanside, CA
"Baby Boomer" Retirement Planner

Artur, I am also concerned about the changing face of real estate. I think that to be truly effective in the future real estate brokers need to be more like financial planners. NAR isn't going to change us, if anything we need to change NAR.

Bill Roberts

Sep 25, 2007 02:25 AM #5
Rainer
42,460
Artur Urbanski
Cimpler Real Estate, Inc. - Burlingame, CA
Helping property owners to maximize property value

Bill,

Have you read my original discussion with Mark and his reply? I am posting link just in case you have not:

Is your income below $12,000 per year?

Here is a link to a brief directory of all my posts on NAR and MLS:

Directory of my NAR and MLS related posts

 I appreciate your comments very much.

Sep 26, 2007 10:31 PM #6
Rainmaker
605,033
Bill Roberts
Brooks and Dunphy Real Estate - Oceanside, CA
"Baby Boomer" Retirement Planner

Artur, I read your $12,000 post. I found the link to Mark Nadel's paper. I tried four times to download and save the pdf but it made my computer "crash" each time.

I personally don't think that the National Association of Realtors is the right place to seek change. the change needs to be imposed externally, either by government or the marketplace, or a combination thereof.

As I mention before I like your business model. We could bring about a change in the way real estate is practiced simply by "capturing" a big portion of the market utilizing your model.

Looking forward to hearing from you.

Bill Roberts

Sep 27, 2007 06:43 AM #7
Rainer
42,460
Artur Urbanski
Cimpler Real Estate, Inc. - Burlingame, CA
Helping property owners to maximize property value

Thanks Bill.  I will email you tonight.

 

Regards,

Artur 

Sep 27, 2007 11:40 AM #8
Rainer
42,460
Artur Urbanski
Cimpler Real Estate, Inc. - Burlingame, CA
Helping property owners to maximize property value

Bill,

I definitely would like to talk to you.  Have you seen my reply to the news abouct Activerain and Move?. Here is the link.

You commented on: "ActiveRain sues Move Inc. over Failed Acquisition - User Beware?"

Somehow it does nor surprise me!

Sep 27, 2007 04:51 PM #9
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