October 08, 2008
WBUR/NPR debate: Do buyer agents really help consumers save money?
Having already posted one comment to WBUR's heated discussion about "what caused the housing crisis and how to fix it," I was content to watch the debate unfold yesterday until several posts began spreading misinformation about the role of buyer agents and whether they help clients save money.
First, there is some truth that the current two-sided real estate commission does not align buyer agent compensation with performance. That's why some in the industry offer rebates and others are calling for commissions to be divorced. If that single reform comes out of this crisis, conflicts of interest would be reduced, competitive options would increase, and consumers would save billions of dollars as argued in these blog posts written two to three years ago:
Contrary to assertions on WBUR's blog, some REAL buyer agents, not
counterfeit buyer agents or "designated agents," actually do save their
clients money by (1) rebating some or all of the buyer agency fee built
into sales prices, and (2) by helping their clients shop wisely, time
the market, and negotiating aggressively on their behalf. For tangible
evidence, see Wall Street Journal article on the 100% commission
rebate offered by The Real Estate Cafe, our menu of fees & rebates, and map of client savings
totaling over $1 million during a twelve month period.
At least one other buyer agent in Chicago has helped clients save more than $1 million during a twelve month period and there are probably others. More importantly, new referral sites like http://www.ProOffer.com and conversations like this could bring performance based compensation into the real estate industry. My guess is that millions of real estate consumers, both home buyers and sellers, would agree that reform is long overdue!
What's your opinion? Do buyer agents really help consumers save money?
08:21 AM in Change Agents, Commission Reform, Defensive Homebuying, Dual Agency Detective, Inside The Real Estate Cafe, Real Estate Bubble, RECALL: Real Estate Consumer Alliance, Savings & Rebates, Timing the market | Permalink | Comments (7) | TrackBack
October 07, 2008
Response to WBUR/NPR: American housing & finance: What went wrong & how to fix it
WBUR / NPR OnPointRadio: Banks and Housing in Crisis
American housing and finance. What went wrong, and how to fix it.
You can join the conversation. What new rules should be in place? Should we make it more difficult to buy a home? Should we stop banks from playing with mortgage securities? Should we put up big firewalls on Wall Street to head off future disasters? Tell us what you think.
MY COMMENT TO WBUR BLOG, yours are welcome as well:
"Speed bumps" to protect the housing market from overheating? That's the role of a buyer agent in individual real estate transactions. Unfortunately, over the past 15 years, the real estate lobby pushed state legislatures nationwide to remove speed bumps by legalizing conflicts of interest inherent in "designated agency."
From my day-to-day experience as a buyer agent in Greater Boston, I know there have been countless "bidding wars" over the past decade. Conflicts of interest and manipulative business practices made those bidding wars worse. Now the cost is being passed on to society as this case study demonstrates:
"My so-called buyer's agent (who promptly switched roles at contract signing without explanation), initially advised me to bid $750,000 for my house of choice, which was listed at $699,900. When I told her that such an offer was beyond my price range, she was quite adamant that I not offer anything under the list price. When I finally backed out the deal because of her bait and switch scam, I later heard that the house in question sold shortly afterwards for $682,000—in other words, nearly $70,000 less than the bid suggested by my so-called buyer agent."
"This type of price inflation (caused by seller's agents masquerading as buyer's representatives) must have a very distorting impact on housing costs. The economic fallout is enormous: ordinary citizens are forced to move out farther in search of decent, affordable places to live, which leads to a host of problems connected with traffic congestion, suburban sprawl, etc."
"As I perceive it, the real estate cartel's use of dual agency [a.k.a. "designated agency"], which works to the detriment of the average consumer while enriching dishonest agents through the practice of double-dipping, contributes significantly to the manifold problems we see in the residential housing market and therefore should be fully exposed."
This case study is an example of what's wrong with dual agency / designated agency, and why I believe designated agency laws should be repealed and "blind" bidding wars should be managed with regulatory "speed bumps."
So, if Congress, policy makers, and consumers are asking what factors contributed to the overvaluation of housing markets, shouldn't dual agency and blind bidding wars be included in that investigation? My hope is that others will agree that it's time to expose systemic flaws and conflicts of interest in the residential brokerage practices, and the cost of blind bidding wars, not just to individual buyers but to tax payers.
This three minute audio post proposes four regulatory reforms to protect consumers — buyers, sellers, and tax payers — in the future. Please listen, comment, and / or join us for a TweetUp in Boston to listen to the rebroadcast of this program, 7-8pm in Boston.
AUDIO BLOG POST: What regulatory reforms are needed to protect real estate consumers?
Thank you WBUR for your continued coverage of this subject!
October 06, 2008
Limited time: "Bailout Bonus" for 4th quarter bargain hunters
As the housing market enters the final quarter of 2008, The Real Estate Cafe is contacting new and long-time clients to get an update on their home buying plans. Can you believe that one member of our 1,000 Click Club has viewed 6,247 MLS pages via The Real Estate Cafe’s MLS access system during the past 2.3 years? More than half of those page views (3,847 pages) have been since the start of 2008 and about a third (1,270) were during the 3rd quarter. If you're bargain hunting during the final quarter of 2008 and early 2009, can The Real Estate Cafe help you save money by serving you "a la carte"?
SPECIAL BAILOUT BONUS:
To encourage you to take advantage of falling prices during the current financial crisis, we’re willing to reduce our hourly consulting to just $50 for any work requested before close of business TODAY (offer extended through Wednesday, October 8, 2008 if payment made online by 5pm). That’s a savings of 50-67% off our current billing rate of $100-$150 per hour. So, if there is any work we can do to help you — for example, download & forward MLS listing data so you can analyze price trends — please let us know ASAP. At a minimum, would you like us to add expired listings to your daily email of MLS listings? An amazing, 1,136 single family listings expired across MA last week (9/27-10/3/08) alone; and surprisingly, 498 listings were priced UNDER $319K!
October 03, 2008
How will the Bailout Bill impact home buyers & sellers? txt your answer
If you're unable to join us at the TweetUp tonight at TogetherInMotion, One Broadway in Arlington, text your response to our Wiffiti board so anyone online or at the TweetUp can read your perspective.