60 Minutes has taken the proverbial stab at REALTORs, especially those that actually provide service to their clients, and it has struck a chord here in the Active Rain community. As you can see, it has generated a lot of discussions lately:
As you can see, this segment has started a lot of discussion. The majority of reactions point out that 60 minutes presented an incomplete picture, misrepresented facts, and lead viewers to make false conclusions. Few comments, if any, praised the segment.
You can also email 60 Minutes and let them know how you feel about the article: send email to 60m@cbsnews.com
EDIT- for those of you wondering why the title of my post apparently mis-spelled the famous quote from Caesar, I took liberties, and used the feminine ending, -ae, instead of the masculine ending, -e. This was intended to obliquely refer to Ms Stahl, and was intentional, not a typographical error. I do appreciate the thought, though, and thanks for trying to point out an error. You all know I hate typos in my posts.
If you have a link to an article I missed, please feel free to add it in a comment, below.
52 Comments on 60 Minutes -- "Et tu, Brutae?"
MAY
13
2007
Here is the text of the email I sent to 60 Minutes at CBS News. If you send anything to them, please share it with us here, also.
Dear Ms Stahl,
This email is in response to your recent segment about REALTORs commissions.
The whole full-service vs. discount vs. pay-for-service broker debate is a bit of a non-debate, if you ask me. Every business model has a place in the industry. In fact, I think that the more models there are to choose from, the better we all are in the long run -- professionals and consumers alike.
Let me explain a bit:
Competition is beneficial for all. Competition keeps us learning, and improving our skills, so that we can better serve and retain the clients we work for. This benefits not only the long-term viability of our own careers, but the quality of service available to the consumer. As Brand X rolls out a service that gives them an edge, Brand Y adapts and improves their available services, to remain competitive. No longer the only brokerage with that "edge" Brand X streamlines their effectiveness, to climb back to the top, starting an "arms race" of sorts. Lather, Rinse, Repeat. The consumer wins. Both Brand X and Brand Y win, because they now have the benefit of the additional training and services available to them to serve their clients, and to attract new ones.
Some consumers are price-driven, some are service-driven. Not every brokerage model will be right for every consumer. The client who bought their home last year with an 80/20 package and is being forced to sell due to a job relocation, may find that there has been no appreciation in price since a year ago, and working with a discount broker will be the only way for them to sell the property and afford to pay a commission after paying off their mortgages. A full commission could force them into a "short sale" type of situation, and no REALTOR I know would recommend that as being in the best interest of their client.
Sometimes, a full service broker can actually net more for the client than the discount broker can. It is not always a matter of pricing, either. The additional fees paid to the full service broker are often justified because they go to a greater expense to market the property to the right pool of potential buyers, which can attract multiple and/or higher offers.
When entering this industry in 2006, I thought long and hard about the type of service that I wanted to provide my clients. I created a vision for my own practice, and then began interviewing various brokers to determine which model was the best fit. It soon became clear to me that to provide the type of quality service to my future clients, I would need to align with a full service brokerage. The structure of commissions never really entered into the picture. What mattered the most to me was having the ability to deliver the type of service that would have clients "coming back for more" -- that is, repeat business and referrals. I could not imagine clients regularly saying, "Oh, yeah. I got great personalized service and attention to my needs when I worked with XYZ Realty. My agent took care of me every step of the way" when talking about a discount broker. That's not to say that it can't happen that way, and as I said before, there are valid reasons a client would want or need to work with a discount broker. The discount model just doesn't fit with my business plan.
I take issue with your recent piece because it leaves a false impression with the viewers. You say that the commission is split between the agents on either side of the transaction. What you failed to explain is that it is more likely split between the brokers on either side, who split their share with the agent. In some business models, that may mean that the sellers agent gets paid 1.5% of the sale price, not 3%, and certainly not the full 6%. If that agent's client came to them as a referral from another agent, that commission might be shared even further with the referring agent. A 30% referral fee would lower that 1.5% to 1.05%. In that case the $500,000 sale in your example would represent $5,250 into the pocket of the agent, not the $30,000 or $15,000 that the segment implied. I think that part of your piece was an example of irresponsible journalism, which misleads the viewing audience, and has them reach potentially erroneous conclusions about the value of a REALTOR's services.
60 Minutes is a great program, and over the years the show has exposed many scams that have abused consumers. I think the producers who thought it was appropriate to suggest that full service brokerages are taking advantage of consumers may have some something other than objective journalism in mind. I has the appearance that they have some personal or political "horse in the race" as it were. It certainly did not seem as objective as some of their other pieces I have seen. Any time you tell only part of a story, it is easy to appear to be exposing something as being less than upright. I understand the producers reluctance to tell the whole story, though. They need to sell airtime. If they told the whole story, they might bore viewers, and the sponsors might not like that. I have probably bored you with my lengthy email, so I understand if you tuned out, and went on to read the next one, hoping for more titillating content...
Beautifully written and undoubtedly will make an impact on their "ideas" of realtors. The SERVICES that differ are the most profound point to compare with pricing. Ala Carte is not the same as offering the same as.
Rich - Thanks for being proactive in contacting 60 minutes directly. I appreciate the link as well so I can put my 2 cents in as well. I will need to calm down a bit before I do so.
Rich, I'm glad to see this morning that you put this great collection of links together. Also kudos to you for contacting them already. I think I'll have to resort to reading the transcript. When I tried to view the show through the link provided on a post last night my computer froze up, repeatedly.
Nice work Rich! I have watched 60 minutes since I was a kid, and unfortunately I didn't tune in last evening until well past the half way point so I'm going to have click on the link to see what I missed.
It seems that every spring we as Realtors, have to endure one of these stories from the major network news sources. Last year I think it was Smart Money (the magazine) that reported on the issue. Same ole concept.
I got a call from an agent friend when the piece started. I did watch it and it was pretty bad from the REALTOR perspective.
My question was, where did they find the spokesperson for the "traditional agent"?? She reinforced the stereotype of the agent who charges 6%, puts out a sign, puts you in the MLS and collects here money.
As long as the public doesn't understand that real estate transaction are complicated and we are paid for what we know and not what we do, this bad press will continue because bad press is the only news that makes the press.
As long as the focus is on the fee and not the service and risk reduction for the buyer and seller, we'll continue to lose market share of sellers.
Sensationalism sells. If 60 minutes had done a staid piece on how hard Realtors work for their clients, it would not get the coveted ratings points that they desire. Therefore, whenever the media covers a subject they almost always go for the dark side to highlight the small percentage of individuals who take advantage of their clients.
Unfortunately, I didn't get to see the piece. Its probably for the best as I almost assuredly would gotten upset. I hate when the buttheads get their 15 minutes of fame while the hard working professionals are over looked.
I try to take the media reports with a grain of salt because I know how slanted their stories can be. Now, if only we could get the public to do the same.
We failed to ask the people at 60minutes "why do you get paid so much money to just read off a script and sit in front of a camera" heck, my commission compared to YOUR pay is P E T T Y!
Rich...That was an extremely well written letter to Leslie Stahl. I'm going to pass it around the office. Personally, I also have no issue with discounters simply because in the absence of service, a reduced fee is all they can ever use against us. I, like you, believe in full service and my clients need it more than ever in this market here on the Massachusetts North Shore.
Great post Rich. Sadly I missed the segment due to mothers day activities. so, I'm off to read the transcript. With 30k members on AR we should be able to get a pretty strong email campaign off the 60 minutes.
Watched it to the did not talk about the time an agent has to put in to get the sale or the problems that occur. I wonder what refin does when a problem comes up?
I really pity the title clerk, or whomever has to handles the closings for Redfin transactions. Without a pro-active agent working hard to make sure all the paperwork is in order before the closing, I imagine they get a lot of sticky situations that come up at closing that require the settlement to be postponed or kill the deal altogether.
If you bought a home for $100,000 in 1970, it was the equivalent of $514,948.50 in 2006 dollars. This is pretty much on par with overall inflation. If average commission rates remained constant over that time (which they have not – they have gone down), Realtor income per trade would have grown at no greater pace than the cost of living. Net result = no real value raise in pay over 35 years. Try to put that past any Union in the US, I dare you.
In 1970 real estate commission rates over 6% were the norm. Today’s average rate is slowly dropping and runs between 4% and 6% across Canada and the US depending on the community. The net real value income Realtors earn per trade is dropping. Commission rates are not fixed and fluctuate based upon the demands of the consumer just like home prices do.
The cost of licensing for a Realtor was around $200 in 1970 and is into the thousands of dollars today (just for starters). Brokers carried all liability in 1970 and agents paid little or no expenses. Today’s realtor is personally liable in a transaction, pays desk fees board fees, office fees, long distance fees, printing fees, insurance, ongoing educational expenses and more on into the thousands of dollars each year. Add to that, internet fees, cell phone expenses, marketing expenses and on and on. There is no pension plan no medical plan or any company benefits built into the job. 80% of graduates leave the business of Real Estate in the first two years mainly due to the high cost involved. I wonder how Leslie is making out compared to 1970 and who she might call when she needs to trade her seven figure NYC digs?
Mike, if journalists talked about commissions in those terms, they would be forced to admit that they are themselves greatly overpaid. I thought about going there in my letter to Ms Stahl, but thought better of it.
Einstein once said that a problem cannot be solved with the same level of thinking that created the problem. With that in mind, I chose not to stoop to their level, and present a piece to the story I thought they missed. (Although I did get a little snippy toward the end, I admit. -- I tried to keep it civil, although I was inwardly seething.)
I have a hard time watching 60 minutes due to their left wing bias and one-sided stories. They hardly ever give a good debate showing both sides, this story was no exception. Just because technology has enhanced our business, doesn't mean it has gotten any easier. It is regulated more than ever!
How come doctors pay is not being attacked so venomously? They have had more technological advances then any industry, thus making their jobs "easier". Could the reason be because they still offer something of value to clients that is very easy to see... we as Realtors need to take the charge client by client. When a client asks for a commission reduction, show them why you are worth your fee. Until you prove your worth, articles like this will continue to pop up.
A discounter isn't worth much because they don't offer much. But that doesn't mean they don't earn a fee that is equivalent to what they charge. All business models should be welcome. What works for some doesn't work for others, and what works in some markets, like Redfin in Seattle, won't work in other parts of the country. Redfin will soon discover this fact just like others companies out there doing the same thing. Redfin is nothing new...their business model has been around for decades through companies like AssistToSell and HelpUSell.
Hi Rich, Great work! It is my hope that all Realtors send an e-mail to CBS and let them know that they cna not get away with one sided reporting. I am all for envoking discussion; but both sides of the story need to be told. Realtors keep on fighting we are worth it!
I'm an old newshound and let me tell you even in the good old days of unbiased news there was always a good guy and bad guy. The broadcast is a news magazine, (not necessarily news, it is also entertainment). I did not see the broadcast but posts elsewhere and here gave me the impression it was more about a new business model for real estate than anything else. True they grabbed some schmuck stuck a camera in his or her face and asked them to put a sign out in the yard. The sign is traditionally a realtor image. It doesn't say the person is a good traditional realtor but a realtor nonetheless. The person representing traditional realtors was obviously excited at the opportunity of appearing on tv and didn't give it much thought.
I don't think it is wise to keep commenting about certain companies and adding to the exposure that they have already received. Realtor, Columbus Ga
I can see why all of you who are real estate agents wouldn't like this development. It will cut into your profits. But from a home seller's point of view, nothing you can say will convince me that $30,000 is a fair price to pay for selling my $500,000 home. Yes it's more complicated than selling a car, but not $30k worth. And it's not that hard. I know many real estate agents who don't work as hard as me and who make more money than I do. When a house sold for $125k, 6% made sense. Now it doesn't. And while some of you may discount that commission, the majority of agencies I've contacted still want 6% or even 7%!
So perhaps you'll need to better educate me, the home-seller as to why I should pay you $30k to sell my house. If you spent 40 hours working on just selling my home (an unlikely scenario - you'd probably spend less time) then $30k works out to $750 per hour. Even split with the broker, that works out to more than a typical brain surgeon makes.
As long as you're trying to defend this sort of salary, the services like the one profiled on CBS will prosper.
My neighbor who is a police officer made an interesting comment. "If a Real Estate Company is not physically checking the homes they are listing, is this not going to attract clients with grow-ops, mold or infestation problems with their home who otherwise would have a hard time listing through a full service Realtor?"
I wonder as well about the safety aspect of having total strangers, unscreened coming to view your home. Again would that scenario not be attractive to the criminal element?
2.) Rich, I thank you for the list of required reading- great resource! I like your letter to 60 minutes but I personally would argue that 60 minutes is NOT a "great program" in fact I would file it under the geriatric ramblings of a "news blog" that hand picks what information to air and what NOT to air- whichever fits their predetermined opinion. Sounds to me like someone on staff got mad at their Realtor and decided to do an op-ed piece and air it as factual "news"- shame on them!
3.) I only say shame on Redfin because they want to play ball by their own rules and throw out the Code of Ethics along with Realtor dues (talk about greedy). They'll be a better competitor if they step on the same field instead of attempt to be a faceless internet platform for people who don't know any better- 60 minutes should have exposed THIS as a scam!
This whole thing is not worth wasting my breath over. It's completely ridiculous. I have grown so tired of everyone showing us as the BIG BAD realtors......How about we spin a new story....it's getting old!
Scott Bourne, Please remember there are a lot of things that go on in the sale of a home besides collecting the commission. I will agree that there will be some adjustments in the rates but there also needs to be adjustments in sellers attitudes. Remember, every advertisement, every drop of gas, all of the expenses come out of pocket until your house sells. If not it just comes out of ours. Multiply that a few times and you probably start getting the picture.
Note the comments by the public. They are NOT siding with Realtors. We have not been successful in selling our value to them. Let's focus on how we can differentiate ourselves from limited service providers and prove our commission (which is NOT 6%). The difference in cost between limited service providers and full service providers now is narrow. We have not done a good job in explaining the difference.
As Mike Montague's neighbor astutely observed, if you have a home with problems list it with a limited service broker who won't send an agent to your home. Let's get the other side of the story out. Saving $25,000 in commissions is great Redfin, but not buying a toxic mold home for $800,000 is priceless (than you, full service Realtors).
I read their documents on line...they suggest taking a GOLF BALL with you to check for slanty floors, and make sure you look in the attic..so bring your ladder, oh and don't forget your flashlight for the crawlspace, all while you are touring the open house on your own without representation!
If these poor uneducated home buyers just realized most of us trained professionals could save them more than the rebate off the asking price because we are TRAINED to be good negotiators, they would run from companies like these!
If anyone EVER asks me for a rebate, I'm yelling FORE!
I read in a comment either on active rain or another blog in a post by a Seattle agent that he had checked the list and sell prices of the homes the couple in the 60 minutes piece claim to have saved $26k on in Real Estate fees.
According to this agents research of area values they undervalued their sale and paid too much for their home by as much as the savings claim they made to the nation. I wish I could find that post to link to here. Anyone else see that?
This is both what I like about the real estate community, loathe about news in general, and dislike about my own industry. First what I like about the real estate community: you are a mobile, active, and cooperative community all while being competitive with each other at the same time. You are all chasing the same business but then when something like this comes along you mobilize as a single unit and get results. Second what I loathe about the news: every story is a partial truth, or a completely biased opinionated one sided view of a situation. It is rarely factual, in most cases it is alarmist propaganda that leads to misinformation and causes more problems for the public, rather than educating the pubic about facts of a situation. Think of this while you watch the news, if they got it that wrong about your industry, how good do you think they are doing on the rest of the topics they report on. Lastly, what I dislike about my own mortgage industry. We are too busy being competitive with each other to work together as a community the way that real estate agents do to combat misinformation in the news, protect ourselves and our lively hoods by creating advocacy groups for lobbying for regulation changes, etc.
I often wonder how much of the shift in the real estate market in the US can be attributed to the bombardment of headlines and news stories on the bursting bubble?
The Canadian market saw a record first quarter and there is only an invisible line separating our markets.
Some interesting comments were made in response to a market update story I posted here in active rain recently, have a look click here to view post
The comment above is slightly off topic, and seems to be best suited for inclusion in a conversation about the DOJ vs NAR. Better yet, post it as a separate topic. I am sure that you want your point to be made in the best light possible. Posting it here is not only off topic, but seems a bit "spammy". I ask that the anonymous commenter please move the comment to an appropriate topic.
I don't know much about Redfin, but I do know that the National Association Realtors have publicly stated their reasons for being opposed to it - which are many. From what I've read, Redfin is the Walmart of real estate, and why would you trust one of your biggest investments to a discounted warehouse store? I know my average days on market for my listings is 78 and on average I sell those listings for 98% of asking price. It's funny, Redfin doesn't publish their stats.
Christina Asad Edwards, REALTOR 2006 & 2007 Sales Masters Top Agent Christina.AsadEdwards@RealLiving.com www.teamedwards.info mobile or text 937-205-4741 office 937-573-0082 fax 937-433-3561 Real Living Realty - #1 in OHIO! Realty, Mortgage, Title, Relocation
Christina -- Remember, though, that the "Wal-Marts" of Real Estate do have their place in the economy. Ultimately, it is the consumers' choice - they determine the level of service they want to pay for. The underlying issue I had with the 60 Minutes segment was that it lead viewers to a false conclusion - that all brokers perform the same degree of service, therefore traditional, full-service companies are getting paid too much and are thereby not worthy of the consumer's confidence. It is my belief that by fostering that sort of public sentiment, the national media has contributed to the slowdown in the housing market.
I will be posting information intended to be helpful for home buyers, sellers, and investors.
I will also post articles intended to be of benefit for other Real Estate Professionals.
I will try to avoid articles on religion or politics, unless it has direct bearing on Real Estate matters, but I reserve the right to be thought-provoking, and even philosophical at times. (And even humorous, if I am feeling in the mood)
Please sign our guestbook:
Name:
Email:
How can we help you?
Renting a Home
Buying a Home
Selling a Home
Home Loan
Relocation Package
Investment Property
Home Evaluation
Disclaimer: ActiveRain Corp. does not necessarily endorse the real estate agents, loan officers and brokers listed on this site. These real estate profiles, blogs and blog entries are provided here as a courtesy to our visitors to help them make an informed decision when buying or selling a house. ActiveRain Corp. takes no responsibility for the content in these profiles, that are written by the members of this community.
60 Minutes has taken the proverbial stab at REALTORs, especially those that actually provide service to their clients, and it has struck a chord here in the Active Rain community. As you can see, it has generated a lot of discussions lately:
Posted by 
;)
;)
Here is the text of the email I sent to 60 Minutes at CBS News. If you send anything to them, please share it with us here, also.
Dear Ms Stahl,
This email is in response to your recent segment about REALTORs commissions.
The whole full-service vs. discount vs. pay-for-service broker debate is a bit of a non-debate, if you ask me. Every business model has a place in the industry. In fact, I think that the more models there are to choose from, the better we all are in the long run -- professionals and consumers alike.
Let me explain a bit:
Competition is beneficial for all. Competition keeps us learning, and improving our skills, so that we can better serve and retain the clients we work for. This benefits not only the long-term viability of our own careers, but the quality of service available to the consumer. As Brand X rolls out a service that gives them an edge, Brand Y adapts and improves their available services, to remain competitive. No longer the only brokerage with that "edge" Brand X streamlines their effectiveness, to climb back to the top, starting an "arms race" of sorts. Lather, Rinse, Repeat. The consumer wins. Both Brand X and Brand Y win, because they now have the benefit of the additional training and services available to them to serve their clients, and to attract new ones.
Some consumers are price-driven, some are service-driven. Not every brokerage model will be right for every consumer. The client who bought their home last year with an 80/20 package and is being forced to sell due to a job relocation, may find that there has been no appreciation in price since a year ago, and working with a discount broker will be the only way for them to sell the property and afford to pay a commission after paying off their mortgages. A full commission could force them into a "short sale" type of situation, and no REALTOR I know would recommend that as being in the best interest of their client.
Sometimes, a full service broker can actually net more for the client than the discount broker can. It is not always a matter of pricing, either. The additional fees paid to the full service broker are often justified because they go to a greater expense to market the property to the right pool of potential buyers, which can attract multiple and/or higher offers.
When entering this industry in 2006, I thought long and hard about the type of service that I wanted to provide my clients. I created a vision for my own practice, and then began interviewing various brokers to determine which model was the best fit. It soon became clear to me that to provide the type of quality service to my future clients, I would need to align with a full service brokerage. The structure of commissions never really entered into the picture. What mattered the most to me was having the ability to deliver the type of service that would have clients "coming back for more" -- that is, repeat business and referrals. I could not imagine clients regularly saying, "Oh, yeah. I got great personalized service and attention to my needs when I worked with XYZ Realty. My agent took care of me every step of the way" when talking about a discount broker. That's not to say that it can't happen that way, and as I said before, there are valid reasons a client would want or need to work with a discount broker. The discount model just doesn't fit with my business plan.
I take issue with your recent piece because it leaves a false impression with the viewers. You say that the commission is split between the agents on either side of the transaction. What you failed to explain is that it is more likely split between the brokers on either side, who split their share with the agent. In some business models, that may mean that the sellers agent gets paid 1.5% of the sale price, not 3%, and certainly not the full 6%. If that agent's client came to them as a referral from another agent, that commission might be shared even further with the referring agent. A 30% referral fee would lower that 1.5% to 1.05%. In that case the $500,000 sale in your example would represent $5,250 into the pocket of the agent, not the $30,000 or $15,000 that the segment implied. I think that part of your piece was an example of irresponsible journalism, which misleads the viewing audience, and has them reach potentially erroneous conclusions about the value of a REALTOR's services.
60 Minutes is a great program, and over the years the show has exposed many scams that have abused consumers. I think the producers who thought it was appropriate to suggest that full service brokerages are taking advantage of consumers may have some something other than objective journalism in mind. I has the appearance that they have some personal or political "horse in the race" as it were. It certainly did not seem as objective as some of their other pieces I have seen. Any time you tell only part of a story, it is easy to appear to be exposing something as being less than upright. I understand the producers reluctance to tell the whole story, though. They need to sell airtime. If they told the whole story, they might bore viewers, and the sponsors might not like that. I have probably bored you with my lengthy email, so I understand if you tuned out, and went on to read the next one, hoping for more titillating content...