Anyways, thanks for the reply. btw, if your ever in the market for Real Estate in Lexington Kentucky I believe my wife will do the job, and truly earn the commission she well deserves, feel free to contact her. Her name is Nancy Ramsey.

I need to see more than an ad saying that realtors have a code of ethics to believe that they have consumers best interests in mind. I need them to show me that they aren’t going to try to limit my options as a consumer to a 6% commission without any evidence to show why 6% is the fairest price for every single residential transaction.

****As with bills passed in nine other states including Texas and Illinois, the Michigan bill is being pushed by the state’s powerful Realtor trade group and would effectively force all agents to provide full service. Some discounters would otherwise be willing to offer limited services and charge home sellers much less than the traditional 6-percent commission.

Elizabeth Boyd, an aide to Michigan Gov. Jennifer Granholm, wouldn’t promise a veto – “we try to stay away from the ‘V’ word,” she said. But Boyd did make her boss’s position clear. “We do not believe the legislation is needed,” she said. “It forces consumers to purchase services they neither want nor need.”***

It appears the realtor lobby needs to invest more in MI governor races.

I applaud your attitude to invite competition. I think any entrepaneur who believes he or she is providing the consumer with a fair and high qulaity service should have the same approach. So don’t you also find laws that say consumers may only utilize full service brokerages to stifle competition?

I can provide examples of laws that prohibit realtors from advertising discount brokerage rates, boycotting of homes offered by discount brokerages by realtors (thereby violating their fiduciary obligation to the client), and of course trying to restrict internet brokerages.

You are aware that the Federal government has been completing anit-competitive practices investigations about your profession because you try to premptivley deflect this issue by saying “I have heard of local instances where boards around the country have enacted policies that were subsequently removed because someone complained.” Since most laws involving real estate aren’t under federal code, I guess its easy to brush each incident as just a “local” abberation. But you seem to portray the way anti competative practices as being rescinded when John Q. Public makes a phone call to his local realtor and the realtor saying ” Aw shucks, where did this law or practice that hurts my consumers ever come from? We are going to volunteer to stop doing that.”
In fact, what a review of recent events shows is that the practices get changed only when the Federal Trade Commission starts gathering evidence for anti-trust prosecution of your industry. Only then the practice stops and the realtors lobby desperately trys to get the wording of the settlement against their industry changed so their practices aren’t on Federal record.

You then go on to defend the 6% commission by saying that it is neccessary because there are too many realtors these days and you can’t make as much money as you used to. I am aware that there has been a huge increase in agents recently (I would wager a significant number of them are real estate investors that got sick of paying full commissions). But the argument that a glut of professionals in your field should translate to increased fees for the consumer is outrageous (but apparently real in practice). If there is an oversupply of workers in a field, a free market would normally dictate that the workers fees should decrease or the number of jobs should be limited to maintain the same per job income. But you seem to think the correct remedy for a glut of professionals is to have your consumers absorb the impact of the problem through increased fees. Thats an incredibly shocking admission.

I still am curious to know why people think a 6% rate makes sense across the board. If a realtor sells or buys one house for 250K and another for 500K, does the realtor really put only half as much effort into selling the cheaper house?

I was speaking to someone who use to be a realtor in the early 80s and has been out of the industry for a while. She said that it used to be the case that realtors woudl take 6% off for, lets say the first 100K of a transaction and then a much smaller percentage for the amount after that. The higher the transaction, the smaller that percentage was. This was done because the arduous coordination that you speak of to get a deal done was the same for any deal that was done. She was shocked to hear that realtors try to take 6% across the board these days.

I am too.

I quote: “The last time I checked buying and selling a house as a process has not gotten easier, but rather more difficult. In today?s market my average transaction involves a contract of at least 10 legal pages and 5-10 pages of sellers disclosures, and that is just the offer.”

1. All those scary legal pages are form documents. It’s not rocket science. If it were so legally complicated then it would require counsel from a lawyer and not a real estate agent. Last time I checked, real estate agents are not bar certified to practice law.

2. Those equally scary seller disclosures are also form documents. Lead paint disclosure? Form 17? I better get a real estate professional to HELP ME READ since obviously I didn’t learn about that in the 1st grade.

Another choice quote: “It takes the coordination of 4-5 professionals in different industries to pull the final transaction together.”

You are trying to justify the 6% commission by including people that don’t share in that commission — smoke and mirrors. Let’s break down the “professionals” involved closing the sale of a house:

1. Sellers agent
2. Buyers agent
3. Home inspector
4. Mortgage broker
5. Escrow agent/coordinator

Last time I checked only 1&2 share in the commission.

If it is as complicated as you say then why does your trade group (PAC/lobby) spend so much money trying to convince the general public of what all real estate agents believe to be a simple truth?

Name one other industry trade group that spends more money on PR just to justify their fees. I bet you can’t.

I would be interested to know what these chinks that are beginning to show are.

CSP

Once again thank you for posting your comments. I appreciate that they come in such a polite fashion, Lord knows that from time to time things can get overheated in these conversations (even I do too, shame on me). Now to your post.

You are correct that the industry is changing. In fact, it changes in many different ways every day. I agree with you that the most successful agents in the future are those that will adapt to the changes in the market. However, that is where our agreement ends.

Aside of placing active listings online for the buyer to view from their skimmies while drinking their morning coffee, I really don?t see how the internet has changed our industry. Sure Zillow.com came about and has been found notoriously inaccurate by both the real estate community and the anti realtor press. Mapping software has helped people see the neighborhoods and community WebPages tell a prospective resident about the features and benefits of an area, but by in large buyers are still visiting houses before buying them. In fact the team of agents that I work with has only written one offer on a house where the consumer hadn?t physically visited the property. However, it should be noted that the buyer was an investor and was tearing the house down to build a new one. So I guess I will defer to you to tell me how the internet has made the process of buying a house so much easier that professionals should be looking at a reduction in fees. Will you also assert that doctors should lower their fees because webMD exists or that lawyers should reduce theirs (I heard recently that they were actually rising but can?t produce any viable source to say for sure) because I can research case law online now?

Reduced service models like Redfin?s will neither make much of a dent in the market nor will they fail completely. A realtor?s primary function is a service model, there are always people who want to do things on their own (people change their own oil, that has never put Jiffy Lube out of business). However, to sustain long term growth and success in the real estate industry a company must first have high class customer service. I don?t mean well trained college students in a call center, or a webpage I can go to an email someone for an answer. As a caveat I am still waiting for a reply to an email that I sent to Redfin on Monday. But I am talking about a real expert who I can call whenever I need help or find a house that I want to see. Someone who makes their customers feel as though their entire career is devoted to making their lives? dreams come true. Someone willing to drop everything on Saturdays, Sundays, evenings and holidays to make sure their clients are happy.

If a company comes about that can afford to attract those types of agents and still charge reduced rates, then I suppose that we will all have to adjust to their model. However, my limited understanding of economic theory tells me that a company can only compete on so many different levels. If a company chooses to compete on price, then they must give up something somewhere else in order to remain profitable. In the case of the vast majority of discount brokers, they give up service. Long term economic viability in real estate is driven by past clients and word of mouth referrals; this is the reason why 75% of new agents fail. If you give up service, your referral and repeat base will just find the next cheaper model and use them. In real estate, you get what you pay for and after clients have gone through the stress and emotion of buying and or selling a house, they understand that what they pay for our services is a bargain. If you disagree you have never seen the effects of what a real estate transaction gone bad looks like.

Ultimately however, you missed the point of my original post which was: Why does Redfin need to go to congress to complain about the rules of a system that they electively joined. If you don?t like the rules, don?t join the game. And if you need to legislate your business advantage, you model is not strong enough to survive in the long term anyway.

The point I’m trying to get across is that the industry is changing.

Technology, namely the internet, has empowered every day people with the ability to do things on their own. There is less reliance on industry experts and much more focus on personal ability.

Reduced service models like Redfin will continue to experience growth and capture market share.

Supporting legislation to prevent this growth instead of adapting to the changes is not a good focus of resources.