One of the tenets of the National Association of Realtors© (NAR) is to advocate for the right of the individual to own, use, and transfer real property. For more than 100 years, the NAR has worked to protect property owner's rights as well as supporting or opposing any legislature that would have an effect on property rights or home owners. [i.e. property taxes and the expanded clean water act.]
I remember when the insurance corporations campaigned to get more control over health care delivery. It took them decades but in 1983 they finally got Congress to support DRG's (Diagnosis Related Groups). That was their toehold and every year after they took more and more control away from medical doctors, other health care professionals, and hospitals. Today, our health care delivery system is in shambles.
Now I'm watching as bankers, financial corporations, and others try to wrest control of real estate transactions from real estate brokers and agents. If you are not alarmed, you are not paying attention.
I'm sure you receive the same emails I get when a bill is up for vote in Congress. You know the ones, Urgent: Take Action Now! from RPAC or your state and local Realtor© associations. I always take time to make the phone call, sign the petition, and/or send the email or letter to my Congressman voicing my support or displeasure with the bill under discussion.
Recently, I've noticed a number of companies offering their services to the general public that concerns me. On the surface, it may seem like a good idea to a homeowner to save money on commission by using these flat fee, limited service, or discount brokers.
It's certainly mildly concerning that a homeowner would choose limited service/representation in the transaction of an asset worth several years of their income but more alarming than that is the possibility that this trend continues. The voice of 1 million Realtors© can make an impact with Congress. What will happen to that voice if more and more people leave the field?
Already, there are about 800,000 real estate agents and brokers who choose not to belong to the NAR and adhere to our Code of Ethics. We all know agents who left the business during the last few years with the recession, banking debacles, and increasing challenges of making a living as a Realtor©. If our voice becomes weaker, who will stand up and fight for homeowner's rights?
The Department of Justice, on this site, seems to be advocating for these reduced service business models. This concerns me on two levels. One, that the DOJ sees fit to steer the public in this manner. And two, that the DOJ does not offer any guidance on how the consumer might choose one of these discount, flat-fee, or limited service brokerages. It seems irresponsible to encourage a homeowner to choose a broker based only on cost.
There is a house listed in our MLS now by a flat-fee broker in Florida. I am not familiar with this company but I worked on a transaction with a limited service broker out of California that was a nightmare. They did not return phone calls. They did not know local law and procedure. They did not return documents according to the timeline defined within the real estate contract. They did not inform their client about the Inspection Period procedure, deadlines, or resolution. My workload was twice what it is in a normal transaction with a competent agent on the other side. My client was able to get very good terms for the house they bought but still, it was a nightmare and I felt bad that the seller did not have good representation.
The long term effects of consumers migrating away from agent representation to flat fee, limited service, and discount brokerages may not be in the homeowner's best interest. It may seem to save them money on commission but in the end could cost them much more than the perceived savings. And not just on the sale of their property.
We, the members of Kansas City Regional Association of Realtors, keep our Heartland MLS up and running with accurate data entered 24/7 as changes occur. Zillow, Trulia, Realtor.com, and all the others pull from our data. We revise our customizable, standardized contracts annually, with occassional amendments mid-year, to reflect changes in real estate law and local procedures. We pay dues to KCRAR, Heartland MLS, the State Board, and NAR. This money keeps all the tools going. Our monetary contributions to RPAC and our state and local political action groups assure we have a voice when bills threaten homeowner rights.
If enough people sell on the cheap, systems could be developed to shoot them through an assembly line from listing to closing. I'm sure the banks would love to get in on that! All of the niceties could be cut out. Sellers could watch instructional videos instead of having their own personal agent to help them evaluate comps. I suppose companies will come up with all kinds of self-help programs to sell to the homeowner. The fees are low now but I'll bet they rise as more people use them. Eventually, the homeowner could end up paying what we charge now in commission but with far less service and no one who really cares about standing up for homeowners' rights.