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DOJ or NAR - Which do you trust?

Real Estate Agent with Meridian, Idaho

October 14, 2007 05:50 AM

Scales with money I saw the headline on Inman News the other day about the Dept. of Justice's new web site attacking Realtor commissions. Watching how this government agency seems hell bent on crushing Realtors, started me to wondering why. I don't buy the "we're looking out for the defenseless consumer" bit. Government actions are usually based, I believe, on accruing power. So I started leaning toward the thought that the federal government wants to wrest control of real estate from the states, since it is such a huge portion of the economy, in order to control still more of the economy and find new ways to derive tax revenue.

Then Blanche Evans wrote an article in Realty Times that analyzes the situation better than I could.

Her thought is that the NAR is under attack from DOJ because they are the organization that is most in the way of this federal power grab. And I think she is right.

I have never been a strong proponent of the NAR. Their perpetually sunny "it's always a good time to buy...or sell...no, BOTH!" positioning has kept my tongue planted firmly in my cheek and my eyes rolling to the back of my head. Little Witch

But that is not the big issue. The big issue is that the NAR does work on behalf of us (discounters and full fee folks alike), our families and the notion of expanding the ranks of homeowners in America. The DOJ is trying to wear that "protector of the consumer" costume but it is bunk.

The DOJ Seems, at the moment, to be working for the benefit of the folks pursuing the discount model, but I would suggest that's merely a tactic in the overall plan. It lets them sound like consumer advocates while they are destroying the group that works the hardest to keep the federal government at bay. That would be the NAR.

The time has come for me, (and I would strongly suggest for you, too) to get off my backside and start working with my local, state and national association to fight off the danger that is the DOJ. This isn't about commissions. It isn't about what model is best for the consumer (another time maybe, I'll address that every model is good for the consumer). This is about protecting the consumer from the force of the government and the path to which that leads: more taxes, less service and more layers of government interfering in more facets of our lives.

We need to work together - all of us, no matter what business model we use- to work for the benefit of the industry and the consumer and get the feds to back off what is a state issue.

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Mitchell J Hall

Manhattan, NY

Lic Associate RE Broker - Manhattan & Brooklyn

From DOJ website: Some states require real estate closings to be done by lawyers, reducing competition and raising costs.

The lawyer requirement in NY is supposed to protect the consumer in real estate transactions that can be complicated. The DOJ is saying there would be more competition and it would be cheaper if lawyers were not involved. lol

Oct 14, 2007 03:41 PM

Gary White~Grand Rapids Home Selling Pro Call: 616-821-9375

Flexit Realty "Flexible Home Selling Solutions" - Grand Rapids, MI

Real Estate Services You can Trust!

Great Post Steve, the points are well taken and the articles which you referred have been well traveled on the internet too! It is time to do more than read and shake our heads. Nice post.

Oct 14, 2007 03:45 PM

Carol Williams

Although I'm retired, I love sharing my knowledge and learning from other real estate industry professionals. - Wenatchee, WA

Retired Agent / Broker / Prop. Mgr, Wenatchee, WA

Perhaps the people at the DOJ ought to get their real estate license and start making those "big bucks" they think we make. Truth be known, they'll find out how hard we work, and how much expense is involved in running our business.

Oct 14, 2007 05:35 PM

Dwight Wolfe

Emerald Coast Realty, Inc. - Panama City Beach, FL

OH BOY !! As I see it now, as of the posting of the DOJ website, they are now practicing real estate in all 50 states without a licence ?! What do you think?

More distressing, a government agency, without cause, attacking private industry, the right of private association, and free commerce. I am not widely read on this issue, but if the DOJ is a prosecuting agency of the government, they have clearly overstepped their authority with this website. THEIR JOB IS TO FILE CHARGES AND PROSECUTE WITHIN (within !! within !! within !!) THE JUDICIAL SYSTEM !! When the case is complete, their job is to go to the next case.

This agency should be made to Cease and Desist regards this website immediately. Should the NRC (nukes) start running a health care website? Should the EPA start running an education website?

Maybe this is in our favor as the DOJ is now 'tainting the jury' (or judges) so to speak.

Oct 14, 2007 07:11 PM

Anonymous

Steve Stoddard

I really don't think the DOJ cares about the Real Estate business or consumers. They care about the needs and wants of corporate America. We saw lobbyists for the pharmaceutical companies write legislation prohibiting the government from negotiating lower costs for medications which showed us that the government has become nothing but a tool of big business. Now we're seeing a government agency trying to destroy an industry in order to pave the way for wall street swoop in and take over while setting up another revenue stream for the government. The banks may have lost their bid to enter the business, but that doesn't mean they're running away with their tales between their legs. This is the beginning of their counter attack.

Oct 15, 2007 12:00 AM

#25

Armando Rodriguez

QUEST REALTY SERVICES - Orlando, FL

Orlando Homes 4 Sale, Real Estate Broker-GRI

I think the eventual arbiter of what the consumer needs will be the consumer.

Good post though!

Thanks for sharing it

Take care and good luck to you!

Oct 15, 2007 12:10 AM

Jennifer Kirby

Kirby Fine Homes - Minneapolis, MN

The Luxury Agent

Bob, actually there wouldn't be a national MLS because there would be no real estate agents. No real estate agents mean no listings, since you have to be licensed as an agent or broker to list a house, thus no MLS. What you might have is a bunch of FSBO sites. I am sure owners would be trilled but once they started to have to actually work to sell the home, I bet alot of them would be crying out to the government to MAKE us come back.

Oct 15, 2007 01:07 AM

FRANK LL0SA Esq.- Northern Virginia Broker .:. FranklyRealty.com

Northern Virginia Homes - FRANKLY REAL ESTATE Inc - Arlington, VA

A year ago I was chastised by our local association for my lambasting of the "Now is the time to buy and sell" ad. A year later they are finally rethinking that approach since people have lost millions in our area since then.

Why not talk about the other benefits of home ownership and get out of the prediction model.

Also does the DOJ include rebates in their statistics?

Frank

Oct 15, 2007 02:08 AM

. .

San Diego, CA

Jennifer, there are many ways to sell a house. You wouldn't need agents to list a home for sale on a nationwide public MLS.

Zillow, EBay, Google and Yahoo each would have a viable option in days.

If real estate agents went away tomorrow, there would be partying in the streets (and in bank lobbies).

The only entities that think real estate agents are necessary are real estate agents.

Oct 15, 2007 03:10 AM

Jennifer Kirby

Kirby Fine Homes - Minneapolis, MN

The Luxury Agent

Bob - I guess we will have to disagree. Yes, there might be some "partying in the streets" but once reality sets in, I bet alot of people would miss us. Alot more goes into selling a home then listing it on the internet. Of all the homes I have sold, not one buyer has bought it because they saw it on the Internet. Why is it that 80% of FSBOS eventually list with an agent? Because they don't have the time or knowledge to sell it themselves.

So I guess the only people that think lawyers are necessary are lawyers. Sorry, but I beg to differ.

Oct 15, 2007 03:40 AM

Steve Norris

Meridian, Idaho - Meridian, ID

Silvercreek Realty Group

Man, take a Sunday off the computer and look what you miss!

Daniel - I'm struggling to come up with an example since the 10th Amendment. And they've generally ignored that, too.

Eric - Let the market decide. Exactly.

Margaret - I'm enough of a reactionary to suspect the DOJ doesn't actually believe that Realtors harm the consumer (or that the DOJ necessarily gives a hoot about the consumer), but to think this is all about power. I can't see any other purpose behind this, unless Eric Webster is right about retaliation regards the banks.

Jim - If you're making a joke, I'm laughing with you. If not, I think they'd use something splashier.

Bryant - Absolutely.

Lenn - Thanks for the five. Maybe we should be looking into whom those contributions support.

Debbie - I think we need to be more proactive as individuals and be working on our own elected representatives with mail, phones, etc and working within our sphere of associates to encourage them to do the same. We need voices more than we need to send in more checks. Although (and I don't think I've ever said this before) RPAC checks are good, too. As for Bush the Younger - I voted for a conservative and I got GW.

Laurie - I agree that an informed consumer is a very good thing. And if the DOJ were merely trying to educate the public about options I'd have less of an issue (although I'd still have an issue because that isn't their job).

Leigh - Amen. And thanks for the tip on mailing the site.

Bob - I'm not sure I agree with you. If I have my facts right (always an if), this is based on DOJ's contention that an agent must share his listing information with anyone as if it were public domain and NAR's contention is that the Broker,as the privately contracted representative of the seller, retains the right to advertise when and where the Broker deems appropriate. It's a stretch, to say the least, that Broker A's not wanting to share his listing information with a company that is going to use that information to advertise for leads which it is then going to turn around and try to sell to Broker A is anti consumer.

That said, the hue and cry against alternative service, bundling and pricing models does make the industry look bad.

Patrick - I haven't read either, but I've heard second-hand the ideas in Freakanomics. Now I'll make a point to read both. Thank you.

Oct 15, 2007 03:45 AM

Steve Norris

Meridian, Idaho - Meridian, ID

Silvercreek Realty Group

Jessica - MMMM, Coffee!

Mitchell - Nah, the career bureaucrats that make up most of DOJ and every other government agency will be there long after the administration changes. And you are making the wildly optimistic assumption that the new administration (whoever it ends up being) will be competent. Based on the last 50 years, I'd bet against.

Kirk - All they need to do is successfully get, at most, 5 Justices to agree that the current system is anti-competitive. Then we get federal, rather than state regulation and federal, rather than state taxation. They have more than enough resources for that.

James - True. But I think there is a "lesser of 2" situation here in that one side will ultimately be better for the consumer and more consistent with the constitutional notion of state's rights.

Eric - Republican, Democrat. Once in Washington it's all about power. Mr. Smith died with Mr. Stewart.

Mitchell - We don't require attorneys in Idaho and most closings take place without one. Should attorney review be required? I don't believe so, but I would maintain that is a state regulatory issue. Would it reduce costs? Probably, to some small extent.

Carol - It would certainly give them a different perspective.

Dwight - You couldn't be more correct about what their role should be. It deserves to be shouted. They aren't practicing, but they sure are advocating. Dupe deleted.

Jennifer - I love it. Atlas, the Realtor, Shrugged.

Steve - I think you are dead on.

Armando - In a correctly operating system, I agree that would be the case. But if government, by regulation or court order, limits consumer choice in one area or another, then the consumer doesn't really get the freedom to choose that which he might ordinarily decide is best for him.

Frank - Read your article and thought it was dead on. Don't know about the DOJ's math. It would be interesting to look into. (For those of you who haven't read any of Frank's stuff, you should check it out. Not your average Realtor perspective.)

Bob and Jennifer - The other entity (entities?) are the folks who hire us. I agree that if Real Estate Agents went away tomorrow, the marketplace would find another way to get real estate bought and sold. But there would still be intermediaries of some sort, fulfilling the same duties and services we do. It is the function that is needed, not necessarily the title.

Oct 15, 2007 04:35 AM

Jennifer Kirby

Kirby Fine Homes - Minneapolis, MN

The Luxury Agent

Steve - WOW, such insight! Is it that obvious that I love Ann Rand and think she has hit the nail on the head? If you love it, then I guess you understand her philosophy, if you can call it even that. More people should read her novels,but then again, I am afraid many wouldn't get it. Have you read any of her smaller novels?

You are right, once a Dem or Rep gets into office, the title party doesn't matter anymore. What matters is how much power and money they control. Getting a job done is second at best. I thought the Dems were going to change everything in the first 100 days of control of Congress...guess they forgot about that once reality set in, or they just used it to paint a pretty picture so everyone would feel "safe" now that they were in control. Doesn't matter who it is, they are all still politicians.

Oct 15, 2007 07:57 AM

. .

San Diego, CA

Comparing real estate agents to lawyers is funny. To be a lawyer requires a 4 year college degree with grades decent enough to get into law school, followed, of course, by graduating from law school

To be a real estate agent requires, well, not much by comparison.

The real issue here is that both NAR and the DOJ hit on some points and miss on others. NAR has a monopolistic stranglehold on the MLS which the DOJ seeks to break. If the DOJ wins on that point alone, and Jennifer is right, then NAR has nothing to fear. My gut feeling is that Realtors do not truly believe that the public values them as much as agents say, and the thought of open access to an mls system scares them spitless.

Oct 15, 2007 11:27 AM

Steve Norris

Meridian, Idaho - Meridian, ID

Silvercreek Realty Group

Bob- I always cringe when I see/ hear the comparisons to doctors and lawyers, too.

I disagree with your characterization of the MLS as a monopolistic stranglehold. I see it as controlling the inventory that I worked to create. That said, I also think it is my obligation to my seller to get exposure for that inventory from as many venues as possible. But that's a decision to be made by the seller and the broker - not by someone who wants access to the listing information to pursue a business model that isn't of benefit to the seller. That's what the suit will eventually decide.

I agree that there are a lot of folks out there who are scared spitless by the changes taking place in the business from this and other challenges.

Oct 15, 2007 01:09 PM

. .

San Diego, CA

I mean monopolistic in the sense that it is controlled almost entirely by NAR. Try being an agent with inventory that you created, but not be a member of NAR, and see what you have to do to join the MLS.

Part of the issue is that the DOJ sees NAR as trying to control an entire industry, not just act as a trade organization that seeks to represent it's "voluntary" membership.

Oct 15, 2007 02:54 PM

Lane Bailey

Century 21 Results Realty - Suwanee, GA

Realtor & Car Guy

Battle of the titans. There are points for both. As a libertarian, I am appalled at the DoJ for pursuig a private group over private intellectual property. But, I'm also a little miffed that the MLSs won't let anyone join for a fee... NAR member or not.

good points on the government reason to knock the NAR down a few steps.

Oct 15, 2007 03:30 PM

Lane Bailey

Century 21 Results Realty - Suwanee, GA

Realtor & Car Guy

I just took a moment to go the the DoJ website, and there is a pair of nice charts that shows the prices rising until the last couple of years and the commissions rising as well. But, if one does the math, they will see that as prices rose, commission percentages dropped. When prices started down, the commission percentage crept up ever so slightly.

Unless broker costs were also rising sharply during this period of time, competition among brokers should have held commissions in check even as home prices were rising. (from the DoJ website)

However, while the price was rising, the average commission percentage WAS dropping, from 5.48% down to 5.02%.

I guess they just don't do the math on their own site.

Oct 16, 2007 03:30 AM

Sarah Nopp

South Sound, WA

Blanche's analysis of the hidden agend of the DOJ was chilling. I hope NAR has the money to fight this for the future. The DOJ has the bigger biggy bank. Without NAR, our professions and our country would be a very different place.

Oct 23, 2007 03:17 PM

Larry Hotz

Kentwood Company - Greenwood Village, CO

larryhotz.com

The real issue here is that both NAR and the DOJ hit on some points and miss on others. NAR has a monopolistic stranglehold on the MLS which the DOJ seeks to break

Bob, things move fast nowadays. Since you wrote that comment many national services are getting closer to a "National MLS'. Google or Yahoo may be first to the finish line.

Mar 22, 2008 10:00 AM

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