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Real estate brokers in the hot seat
CNN.com ^ | 7-26-06 | Les Christie

Posted on 07/27/2006 5:37:21 AM PDT by Hydroshock

NEW YORK (CNNMoney.com) -- The fight over competition in the real estate industry went to a new battlefield this week as representatives of consumer groups, brokers and government agencies clashed before a House subcommittee.

Few participants pulled any punches.

Real Estate Impact Tell us your story Is the slowdown in real estate affecting you? Are rising rates beginning to take their toll through higher monthly payments? We want to hear your story for an upcoming feature. E-mail us at yourhome@cnn.com. (more)

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Steven Brobeck, executive director of the Consumers Federation of America, told the subcommittee on Housing and Community Opportunity that the real estate business model is a "cockamamie system . . . nonsensical and ridiculous."

Among Brobeck's beefs: He claims prices are rarely advertised, that restrictive state laws and anti-competitive practices prevent consumers from getting discount service, and that there are roadblocks to securing key product information through the Internet.

Aaron Farmer, a discount broker in Texas, described how full-service brokers discriminate against discounters: They refuse to show discounters' listings, Farmer said; pressure home magazines to not accept advertising; and refuse to allow discount brokers' clients to view home listings full-commission brokers control. They even destroy for-sale signs.

The full-service brokerage industry, as represented by the National Association of Realtors (NAR), has fought to maintain the status quo. In nine states, for example, there are minimum-service laws that effectively force all agents to provide full service - discounters would otherwise be willing to offer limited services and charge home sellers much less than the traditional 6-percent commission. There is move to pass such a law in Michigan.

(Excerpt) Read more at money.cnn.com ...


TOPICS: Business/Economy; Miscellaneous; News/Current Events
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To: Vision
Thanks for the info. We are going to be putting our house on the market in the near future and I intend to discuss all your points with the realtors and get a contract in writing as to what they are going to do to sell my home.

I am a big fan of staging and have gotten a book filled with ideas. We cannot afford to spend a lot to get our house ready but there is a great deal the realtor can do to reach prospective buyers.

101 posted on 07/27/2006 10:28:44 AM PDT by OldFriend (I Pledge Allegiance to the Flag.....and My Heart to the Soldier Who Protects It.)
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To: Vision
I didn't go through a real estate agent. I went through the broker who gets the 2-1/2 to 3 percent of the sale. It's easy to find a broker. There are many around who conduct their own business without real estate agents.

The houses I sold, one was $500,000 and the other $400,000. Figure the savings if you go through the real estate broker rather than spend the fees for a real estate agent who then has to turn around and pay the real estate broker their percentage.

Most of the fees you pay are negotiable, too. For example, here in AZ a full house appraisal is $175. You have to pay that. In CA the same full house appraisal is minimum $350. No negotiations on that, either. You just have to know what you're doing and with whom you are dealing.

Again, caveat emptor.

Sorry if there are any real estate agents out there, but you can become a broker yourself if another broker will sign for you to take the test. It's not that hard and not that easy, either.

102 posted on 07/27/2006 10:40:16 AM PDT by Slip18
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To: Vision
"It's amazing, every FSBOer Freeper can sell a home like nothing. But in America, over 8 out of 10 fail. In my experience, I practically never see a FSBO sell at a price higher than what they would have netted with a Realtor."

Another anecdote for you:

When we wanted to sell our house with some property in a rural area, we signed with the same realtor that we bought it through years earlier. After 6 months of him trying to talk our price down and not getting any response at all, we found out that he hadn't even put the place on the MLS or advertised AT ALL. His technique was entirely word-of-mouth (and only his mouth).

We found a realtor closer to the city and signed a listing agreement with her. Our place was an unusual old property with river access and a lot of history. We were sure that some city folks with some money would love it.

When we signed the agreement with her, it was understood that all showings would be by appointment only and there would be a certain amount of advertising paid for by the realty company. She immediately put a lock-box on our door and never did any advertising at all. When we questioned her about it, she said that we would have to pay half for any ads.

While we sat and waited for the listing agreement to run out, my wife created a web site for our property. We incuded digital video, historic studies about our property, a map with clickable links to photos of the place and many photos of the house(s) and outbuildings, etc. We handed the web site to the realtor on a silver platter and they still wouldn't advertise our place. They- of course- also put more energy into trying to talk our price down for a quick sale, than trying to sell the property.

The day the listing agreement expired we ran 2 ads that cost us a little less than $500.00. One in the Wash. Post and the other in the NY times. They were one line ads with the web address under the heading of Vacation Properties. We watched the hits on our web site and could see the same people looking at it again and again. We had a showing arranged the first day after the first ad ran. Those people wanted the place but the guy had to talk to his banker about money. The next day we showed the place again. The second group met us the next day and signed a contract for the full listed price. No home inspection. No contigencies at all. We sold the place it 2 days. We had over 25 contacts in the first weekend that the ads ran.

Afterwards, we kicked ourselves for not asking for more money, but the stupid realtors had shaken our confidence so that we left the price where we had started. As it was, they kept trying to get us to lower the price by at least 25%. It became clear to us that all the realtors wanted to do was get the price so low that it would sell quickly and they wouldn't have to do any work or spend any money on ads. For the six weeks following our ad, we had people pestering us to sell to them. We had people trying to fly out from all parts of the country to look at the place. 6 months later, well after the closing, people were still putting notes on the door of the house trying to buy the place from the new owners.

103 posted on 07/27/2006 10:44:24 AM PDT by the-ironically-named-proverbs2
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To: Slip18
I know how you become a broker, I worry about what the ceiling of market price is vs what a broker will buy for.
104 posted on 07/27/2006 10:46:20 AM PDT by Vision ("...cause those liberal freaks go too farrrrrr")
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To: True-Stu
Exactly!

First home I sold I got reamed by the real estate agent. Swore I would never sell another home. But I did, and there were no problems using a broker.

105 posted on 07/27/2006 10:48:03 AM PDT by Slip18
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To: OldFriend

Staging is really good. If you want more info mail me. Some of the marketing items are more effective than others and one is a waste of time and money. Most important is be friendly with the Realtors(don't just go with the one that promises the most services), keep calm, and find someone you want representing you. I don't like to take any business if there is ANY issue- material or emotional- between us. We are a team and I try to get that mission statement defined ASAP.


106 posted on 07/27/2006 10:51:44 AM PDT by Vision ("...cause those liberal freaks go too farrrrrr")
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To: the-ironically-named-proverbs2
After 6 months of him trying to talk our price down and not getting any response at all, we found out that he hadn't even put the place on the MLS or advertised AT ALL.

That's in our listing contracts and must be done unless noted. If you signed that agreement without MLS exposure being in there, I'm sorry to say that was your fault/inexperience. If not, you have a great legal case. I just had something like that happen to a poor elderly lady in Atlantic City and it was a MESS.

While we sat and waited for the listing agreement to run out

Cancel it. In Maryland you can cancel any listing for any reason in 24 hours(but a contract from a buyer brought in by the voided listing still is under that agents domain).

That's terrible. I'm sorry to hear you had to go through the hassle and lose money to boot. If you sold it that fast with that much residual activity, you must have been really under priced. I wish real estate required a college degree or some way of complaining about slob agents.
107 posted on 07/27/2006 11:03:07 AM PDT by Vision ("...cause those liberal freaks go too farrrrrr")
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To: Hydroshock

FSBO is the only way to go. I've sold two homes FSBO-very successful and no blood suckers taking 5-6% off of the top for doing very little.


108 posted on 07/27/2006 11:06:13 AM PDT by mrmargaritaville
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To: Vision
It's the highest sued business in the nation.

Speaking as a lawyer and a licensed real estate broker - please show me the source for that comment.

By the way, most business lawsuits are not from consumers but from one business suing another business.

109 posted on 07/27/2006 11:37:18 AM PDT by CharacterCounts
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To: Vision
I do not like anyone being overpaid. I want to work a hard satisfying life. But if you hate agents, look in the mirror at YOUR choices.

You have made many good points in your defense of your profession. However, the above quote is exactly what the thrust of the article is about; Realtors limiting your choices by discriminating against discout brokers, refusing to show their listings and seeking legislation essentially requiring that all brokerage business be full service.

110 posted on 07/27/2006 11:45:57 AM PDT by CharacterCounts
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To: CharacterCounts
"Speaking as a lawyer and a licensed real estate broker"

Wow! I bet you're the butt of many jokes!



Just kidding of course!
111 posted on 07/27/2006 11:47:16 AM PDT by jaydubya2
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To: CharacterCounts
I thought this was known. I've been told that from day one in the business. What's that saying in real estate "if you're not being sued, you're not doing business". I'll try to find some links.
112 posted on 07/27/2006 11:50:25 AM PDT by Vision ("...cause those liberal freaks go too farrrrrr")
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To: CharacterCounts
How is the above quote is exactly what the thrust of the article is about?
113 posted on 07/27/2006 11:51:54 AM PDT by Vision ("...cause those liberal freaks go too farrrrrr")
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To: Vision

"That's easy, just do the research"

And that's the response I thought you'd give.


114 posted on 07/27/2006 12:00:49 PM PDT by EnquiringMind
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To: EnquiringMind
Research, do you have any?

I know that every year NAR puts out stats but I'm not at the office right now to look them up. But they track their listings and continually find 80+% of FSBOers list with an agent. I don't have a link to that right now, but it's known industry wide. It's not a secret, except to you FSBOers who are too crafty to ever need an agent.

Look, from now on, never use an agent. You've got it all figured out.
115 posted on 07/27/2006 12:14:37 PM PDT by Vision ("...cause those liberal freaks go too farrrrrr")
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To: Vision

"I know that every year NAR puts out stats but I'm not at the office right now to look them up. But they track their listings and continually find 80+% of FSBOers list with an agent".

Perhaps some FSBOs that are hounded night and day by realtors wanting to list their homes eventually cave. Curious to know how NAR (National Association of Realtors) gets their information.

Oh, and as I stated earlier, we never have used a realtor, and I can't see that we will do so in the future.


116 posted on 07/27/2006 1:39:39 PM PDT by EnquiringMind
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To: EnquiringMind

Good for you


117 posted on 07/27/2006 1:48:43 PM PDT by Vision ("...cause those liberal freaks go too farrrrrr")
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To: Vision
Some Realtors end up representing both the seller and buyer. Hence the top 6% number.

Many houses around here sell in days. No way did the Realtor "earn" his/her 3ish percent. The median house price here is $500k plus. So that's $15k to sell the house. No way were the expenses to the Realtor on a typical house sold here anywhere near that. With the Intenet actual costs have to have gone down.

The entire Real Estate business is ripe for change.
118 posted on 07/27/2006 2:13:48 PM PDT by DB (©)
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To: DB
You're welcome to your opinion, but please don't generalize that selling both sides of 500k home in a few days is normal in the residential real estate industry. If you're so concerned, contact your state representative.
119 posted on 07/27/2006 2:36:55 PM PDT by Vision ("...cause those liberal freaks go too farrrrrr")
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To: Vision

Where did I say that I wanted government intervention?


120 posted on 07/27/2006 7:13:05 PM PDT by DB (©)
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