Does It Matter Who Wins?
January 26, 2008
Sometimes it really does not matter if the fight is won. The wounds and the bleeding can cause considerable damage long after the fight has concluded. When a battle is waged and the pugilist is already weary and bruised, it can hasten his demise.
In Carlsbad, California, Marty Ummel, a 114 pound, 61 year old woman is prepared to be, in her own words, a “trailblazer”. The trail she is blazing is a path many others may soon follow behind. The path she is clearing could indeed spell the end for the real estate agent business as we know it today.
Many are saying that she does not have case, that she really can’t win. Is that really the end result she is looking for? Is that the end result the real estate industry is hoping for?
Whether she wins or loses does that really matter? The fact that a client is suing the professional is not a novel issue. Many lawyers and doctors have been sued for malpractice. The difference here is that those professionals were not and have not been looked upon as lowly rated real estate agents.
In case you are not aware, a recent study found real estate agents as having the least credible profession. The real estate business model is being attacked from every direction. Coupled with the fact that the Department of Justice is seeking to effectively take down the National Association of Realtors’ stronghold of the Multiple Listing Service and seeks to hold the NAR in violation of federal anti-trust statutes, does Mrs. Ummel really need to win?
Consumers are paying close attention. They know about the DOJ lawsuit, they already view real estate agents as the bottom of the barrel of professions, and now, possibly worst of all, the industry is seen as taking advantage of a little old lady.
It is this whole idea of choice, where consumers pick and choose which professional services they want and which ones they don’t want, . . . that is at the heart of the issue today, said Phil Querin, a real estate lawyer with the Portland, Ore., law firm of Davis Wright Tremaine. It is what has driven the U.S. Department of Justice and the Federal Trade Commission to take action against the NAR and to discourage state regulators from enacting minimum service laws.
In the court of Consumer Opinion, you can pretty much assume that this case has already been lost by the real estate industry. The outcome of the lawsuit is inferior to the collateral damage being inflicted in the marketplace. Web-savvy home shoppers and sellers are becoming increasingly disgusted with the profession. They are, as a whole, seeking out better ways to do business in the real estate sector. They are also becoming informed and educated as to the perils of doing business with the traditional real estate agent. Do you think they don’t know that most brokerages and the NAR seek to restrict co-branding relationships with favorite destinations like Yahoo!, MSN, eBay and Lending Tree, Redfin and the like?
Remember, these people are tech-savvy. When you post rants about how Mrs. Ummel is “an idiot” or when you post on blogs information on pocket listings and making huge commissions with an admitted lack of marketing …don’t you think they can read what you post?
When you are asked directly to justify your commissions and the best you can come up with is “stamps and gas”? How do you expect the American consumer to respond to your profession?
I have asked EVERY agent I have ever come in contact with to tell me how they justify their commision. I have asked every real estate agent I come in contact with to tell me how much their marketing budget is for a property. I get basically the same nonsensical tilting of the head with no reasonable affirmative response.
If you can’t tell a consumer why you are needed, and if your response to a lawsuit as in the Ummel case that “she should have done her due diligence”, then why are you as an agent needed? The next time you are asked that question don’t call Lawrence Yun or anyone at the NAR, think for a moment and realize the truth. In the current business model of rhetoric filled statements and boiler-plate forms, you really aren’t.
Do you think the 70-80% of those who start their search on the Internet looking for properties don’t read anything beyond listings? The real estate profession can’t possibly be that naive…or can it?
Sellers want their homes marketed to the broadest possible audience of prospective buyers. These same Sellers are being left speechless as they continuously learn that Realtors are PURPOSELY and WILFULLY restricting service, not acting in the best interest of the client and basically fleecing the consumer to inflate their commissions. Too add insult to injury these brokerages, instead of mandating a clean-up of their embarrassing rank and file members, are instead using their control of state licensing boards and lobbying power to influence state and national legislatures to protect their outdated way of doing business. This does nothing to improve the image of a real estate agent nor does it do anything to endear the consumer to the real estate agent. It actually serves to effect the contrary.
In April of 2007, the Department of Justice and the Federal Trade Commission issued a report about the state of the real estate business, and in that report it was concluded that competition, and the resulting necessary change of the business model was being hindered by some real estate brokers, the NAR, state legislatures, state real estate commissions and local Realtor boards.
Based upon their findings, the DOJ and FTC advised that certain changes would be needed to PROTECT the consumer from the actions of real estate agents.
Those changes advised a much more open exchange of information between the consumer and the real estate agent…but it seems the most significant change recommended was for real estate agents to actually promote change. The DOJ thought it wise for real estate brokerages to actually explain to consumers the “wide range of alternatives available to them when hiring a real estate broker, including the types of business models available and the negotiability of fees, for both home buyers and sellers”, who may or may not understand the duties owed by their broker”.
Lastly, the DOJ / FTC report advised that the business model may need to be retro-fitted. The report advised and suggested that real estate commission rates and fees charged that now move in tandem with housing prices may not be the best course for the future evolution of the real estate business model.
The DOJ vs. NAR lawsuit was filed in 2005, the DOJ/FTC report came out in April of 2007. There has been more than ample time to make broad sweeping changes to improve the industry we are all a part of. Why haven’t they been made?
Do we collectively think the consumer is dumb and has no choices but to accept the way business is being done? What changes have been made on a national or local basis to accommodate and better serve the interests of buyers and sellers? What exactly are you doing on an individual basis to enhance your credibility and ability to properly be the best agent that you can be?
These questions are not asked rhetorically. They require substantive thought and we should all demand a call to action. The bell has been sounded and if no one answers it with credible and impactful change…one can only expect more and more lawsuits. The alternative could mean the ultimate extinction of the current real estate agent business model. Which in review of the status quo, might not be a bad thing at all.
All of this now being said, do you really think Mrs. Ummel needs to win for her case to matter?
It’s unfortunate Realtors have such a bad wrap and I will not argue that there are MANY Realtors that deserve it. But isn’t the consumer is the one who chooses the Realtor they want to work with? Just as the Barry’s choose their Realtors, consumers have the same choice and MOST get it wrong. They don’t work with the most business savvy or the one with the best sales record. They choose to work with their “cousin who sells real estate part time” or they use their “friend who sells 2 homes a year”. Shouldn’t the consumer take some of the blame for not doing their due diligence? I mean this lady allowed her agent to process her loan? I can give you hundreds of examples of people who list with agents that don’t even have email addresses much less know how to advertise a home on the internet using multiple pictures or a virtual tour. I would love to see someone confront those sellers and ask them why they chose the agent they did while bypassing the successful tech savvy one.
I dont fully agree. Agents think that people NEED them when in fact it is they who need the buyers and sellers. Agents hate FSBO’s for this exact reason. When an uninformed buyer or seller (which is the majority of the public) chooses an agent, they think that they HAVE to and think that every agent knows what they’re talking about. The same thing way that you go to a hospital and expect EVERY doctor to know what he/she is doing. Same way you will go up to ANY police officer if you need one, because you think that he/she knows what they are doing. Same way you will allow almost ANY teacher teach your child in the school system because in our minds, that teacher is SUPPOSED to know what he/she is doing. People have been brainwashed into thinking that they NEED agents and agents salivate and take advantage of this. The normal consumer sees a big flashy blue capitol R on the agents license plate or a bunch of useless abreviations behind the agent’s name on his/her card and get the perception that the agent KNOWS WHAT THEY ARE DOING and is a …….dare i say it……..professional. The simple fact that they are an agent is enough to give them credibility in the consumers’ mind so no i dont think that it is the consumer’s fault for not making the best choice. Most consumers believe that agents have to take alot of courses and are all highly trained real estate professionals when that is FAR from the truth. When did trust become something of the past? WHY? Consumers trust their agents, period. Agents need to be held accountable for their actions if they help steer an uniformed buyer into a certain situation. I believe it’s know as being “predatory”. The truth is that agents are not doctors, police, teachers, or any other type of needed occupation.
DISCLOSURE, DISCLOSURE, DISCLOSURE!!!! I believe that’s one of the MOST important aspects of an agent’s job, right? Good, well let em hang! All he did was put his neck in the noose and tie his hands behind his back. Hopefully the jugde will take care of the rest.
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