March 07, 2006
Endangered species protection act?
This Sunday an article by Stephen J. Dubner and economist Steven D. Levitt, controversial authors of Freakonomics, was published in the New York Times and Boston Globe (which is owned by the Times) under separate headlines. The Times used the hard-hitting headline "Endangered Species" while the Globe used a softer, almost apologetic headline, "If real estate is prospering, chances are your agent isn't: Most realtors don't make much money in a boom."
The editing didn't end there, though. Four sentences, the first of which points to the Department of Justice's lawsuit against the industry, were deleted from the Globe article:
"More often than not, agents are portrayed as hustlers or sharks, unimaginative opportunists who, for not all that much effort, pocket a significant chunk of the sale price of your home."
"Most real-estate agents seem to spend 95 percent of their energy chasing clients (for which they are paid nothing) and 5 percent actually serving them (for which they are paid way too much)."
"There will always be some home sellers who prefer full-service, full-fee agents, and a handful of these high-end agents will undoubtedly thrive (just as some full-service travel agents and stockbrokers still thrive, except they are now called "travel counselors" and "financial planning specialists," respectively). But more and more home sellers, armed with data from real-estate Web sites and facing a variety of pricing options, will surely choose another route."
While we prefer the unedited version of the story, we agree with the bottom line in both publications: fee-for-service brokerage models, like The Real Estate Cafe, are "likely successor[s]" in the future. Some industry pundits, including the former chief economist of the National Association of Realtors, have been predicting that for a nearly a decade. So what's the problem? A variety of anti-competitive trade practices, currently the subject of legal action against the National Association of Realtors by the U.S. Department of Justice, need to be reformed to unleash billions in consumers savings annually in an open, competitive marketplace.
In that context, a cynic might ask who the Globe was protecting by deleting key sentences from their guest column? Admittedly, traditional real estate agents don't appear on the official list of Threatened and Endangered Animals and Plants but is that grounds for muting the headline and critical content from a consumer-oriented critique of the industry? Ironically, in an era of citizen journalism, the deleted sentences have the potential to get more visibility via blogs, particularly when the guest columnists are using their blog to recruit alternative brokers to participate in additional research.
The Real Estate Cafe would like to go several steps beyond that by inviting real estate consumers to participate in our yearlong "Intelligent REdesign" series. Watch this blog for more details. We welcome your unedited ideas about how to change the industry to better meet the needs of home buyers and sellers.