Nothing, except for the fact that I’m going to write about both of them here.
A couple weeks ago, I posted about Thomas Robinson, an accounting professor at the University of Miami who, through ancestral DNA testing, had been deemed the first American to be able to genetically claim to be a descendant of Genghis Khan. Well, it turns out that someone fudged the test. Robinson had first been informed of his relation to Mr. Khan by Oxford Ancestors of England. But, with induction into the Mongol royal house underway, as well as a potential movie deal, Robinson asked for a second opinion from Family Tree DNA of Houston. No Khan connection, said the Houston outfit; and a second British DNA company concurred. Which makes me realize: if I’m running an ancestral DNA company like Oxford Ancestors, it’s pretty easy to tell any customer that he is related to some warlord or artist or athlete even if he’s not, and the odds of him ever finding out — unless I have the misfortune to claim he’s related to someone really famous, and goes to the trouble of getting a second opinion — is quite rare.
As for the National Association of Realtors: there are at least three bad things happening:
1. The Department of Justice’s antitrust case against the N.A.R. is moving forward; settlement talks between the two parties have broken down — over the issue, I am told, of whether certain new breeds of real-estate brokers should have full access to the MLS system.
2. The Consumer Federation of America has released a report about the real-estate “cartel,” a report claiming to show how “many traditional real estate brokers, and their associations, successfully stifle competition, what reforms are needed to protect home buyers and sellers, and how these consumers can protect themselves.” In the Washington Post’s rather entertaining summary, the C.F.A. boss called the current commission system “cockamamie” (a word you don’t hear enough these days), to which an N.A.R. official replied, “It’s clear and evident that they don’t understand the real estate business.”
3. I have been told by a heretofore reliable source that the House Financial Services Committee (Housing Subcommittee) will soon hold a hearing to explore the competitive (or anti-competitive) practices of the brokerage industry. “This is significant,” explains my source, “because this is the first Congressional action on real estate – dipping the toe in the water – in many many years (other than the question of whether national banks can engage in brokerage). Congress has for the better part of a century obeyed the National Association of Realtors’ instruction to allow the brokers to run the MLS system.”
FWIW, we’ve written in the past here and here and here and here about this subject.
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Crap! There’s more than one breed of real-estate broker? We’re screwed!
“…settlement talks between the two parties have broken down—over the issue, I am told, of whether certain new breeds of real-estate brokers should have full access to the MLS system.”
— docmartnI’m from a real estate family and I do generally believe that the real estate brokers, as we currently know will need to change. I don’t believe they will become extinct but a hybrid will need to emerge to complement technology. Internet car sales are further along but it still isn’t without issues.
The reason is that real estate is still a ‘high touch’ transaction, different from stocks and travel since you are dealing with a physical, costly, and immobile good. There is a fair amount of understanding of local markets, codes, and laws that needs to be adequately understood (I would argue that it isn’t adequate in the current environment). In addition there are layers of liability that must be dealt with. I don’t think that an internet wholesaler can accomplish all these requirements.
What we’ll see happen is a the new internet market process emerge with some shortcomings and have those filled in by existing agents to develop a hybrid model that makes up for each others shortcomings resulting in faster and cheaper transactions with higher volumes without sacrificing local presence and liability coverage.
— kkwanMein Gott! They are not only breeding but evolving into more than one species? There is no hope.
Story:
A woman in the checkout at a grocery store in California attempts to write a check. The clerk politely askes her for her California Real Estate Liciense. Confused she asks; “Don’t you mean my drivers liciense?” Exasperated the clerk retorts; “Of course not! Not eveyone has a drivers liciense.”
Disintermediation is steamrolling the entire real estate industry.
— Robert Coté“Disintermediation is steamrolling the entire real estate industry”
Can you point to any empirical studies that confirm that?
— BoJacksRecently I’ve seen TV commercials from the NAR touting the strict ethical code governing Realtors and how they’re worthy of one’s trust. Figured something had to be up.
— prosaOne common restraint of trade that Realtors engage in is the transaction listings provided to local newspapers. Instead of school district sort sequence, they’re supplied to newspapers in town/county sequence. The very first cut that any home buyer or seller wants–even before price and number of houses away from a “busy street”– is school district. The underlying databases could be sorted by school district/elem attendance boundaries. It took State by State legislation to require all car and truck advertising to publish VINs. Maybe it will take legislation to have school district geocoding up front.
— JosephCombsThis is a very interesting issue. I wonder if this industry has an essential perversion of price: The more realty agents there are the firmer they try to hold to 6% … the actual sales become so fractured among them that 6% becomes necessary for any one to earn an living?
Second, I have seen, but do not have my hands on studies that show how many agents fumble their leads … that buyers may work with many agents prior to reaching a decision. In the CFA article the NAR officer talked of the “risk” agents incurr with no income in showing homes. Perhaps, the risk would be lessened if they were better skilled at client management and retention.
Lastly, here’s an interesting piece from Tim O’Keefe’s blog:
Its Raining Realty Agents!
I feel like I just recently posted that there was one agent for every 75 people in California. I even put it into my presentations.
“At one time there was an agent on every corner with a website, now there is an agent on every other driveway with three websites or more!”.
Well, time to pull out the metaphor book again.
It seems that there is now 495,000 licensed agents in Cali. The state now boasts a licensed agent for every 52 adults, the California Department of Real Estate reported.
“The level of interest in real estate licensure is unprecedented,” said Jeff Davi, the department’s commissioner, in a statement.
— jdshipleyOh, we just checked. In Illinois 1 in 92 adults holds a Realty license or 1 license for every 5 homes in the state. This data is not confirmed
— jdshipleyFor all the data on realtors take a look at Hsieh and Moretti (JPE 2003)
http://www.econ.berkeley.edu/~moretti/real-estate19.pdf
— sophistryGreat post. From what i’ve read, banks want access to the MLS– and that mighty group can cause NAR more problems than discount brokers.
PS In crazy NYC a seller is offering to pay a 10% broker’s commission.
http://blog.sellsiusrealestate.com/?p=1083
— jfData confirmed using state license registery, with no differentiation between active and inactive, and census data. The 1:5 is the ratio of real estate licensees to owner occupied housing units.
— jdshipleyI recently resigned from my position as Associate Sales Manager for a large real estate corporation at a mega office. Quitting my job took a lot of courage, but I never acquired a taste for “corporation cool-aid”. I am now the owner of a small real estate company trying to build momentum in my business in a very competitive area of Connecticut. A few weeks ago, I noticed that my listing was not appearing on Yahoo.com which has signed an agreement with big name corporation for IDX feed. When I made a simple search to see my listing, it did not appear. I inquired with the IDX and they said it was not a problem on their part. I checked Realtor.com and many other real estate websites and made copies of where it appeared and what company omitted it. Then, I email the real estate company supplying the feed to Yahoo.com and spoke with their tech rep who said I was doing something wrong. Well, that is not the case. And after letting her know quite frankly I was going to follow through on why my listing was being omitted, my listing appeared. But, alas, that was short lived and it is omitted again. The tech keeps directing me to another web address where it does exist, but that is not where the problem is. And I have sent her several emails with the yahoo.com web address. Computer snafu? Possibly. Or could it be something else? Go to Yahoo.com, Click on real estate, in the Find a Home box type in Weston, CT and select a price of $650000 to $750000, you will see several different houses listed by several different real estate companies, but you won’t see one listed by small company, Ruthman Real Estate.
— RKIt is farsical to argue that the current MLS system benefits the sellers or consumers. In any other market it is accepted that the wider the distribution of the information, the fairer ther market…
…how did real estate morph into another dimension?
check out US Condo Exchange to see where the brokers that “get it” are listing their properties. US Condo Exchange is a global advertising portal and international MLS for condos. showing properties to over 15 million buyers a month for a low fixed fee.
— mrcondoGhengis Khan and the misuse of statistics
Media coverage of Thomas Robinson’s genetic link to Ghengis Khan has consistently misrepresented a huge and fascinating issue. The testing that was performed establishes direct descent from the male line alone. Direct descent from males along is vastly less probable than direct descent from either sex. Thus, while it’s extraordinary that, as was widely reported, 8% of Asian men share a Y-chromosome from a male ancestor, what makes it astonishing is that it must have been passed through men all the way down.
It’s not at all extraordinary that lots of people would be direct descendents of Khan if one includes descent through women and men. In fact, it’s very common, and vastly more than 8% of Asians are likely direct descendents of Khan. This counterintuitive claim was well demonstrated by the statistical work of Joseph Chang at Yale University (himself, almost certainly, a direct descendent of Khan). For an excellent summary of this work, check out this article from the Atlantic:
http://www.theatlantic.com/doc/200205/olson
— Mark SlavoniaTom Robinson’s blog can be found here: http://trrobinson.com/
— milam rogersIt is interesting what he has to say about the whole Khanissue.
I am a flat fee realtor. ($2995 we sell the home) I am a full time, FULL SERVICE, flat fee realtor. I have never been a 6% realtor. I had 40 (closed) transactions, 3 months out of real estate school!! (Over 15 million in sales 3 months out of school). I became a platinum realtor in less than 3 months. Our office has 22 fully licensed, full service, flat fee, agents, 17 are already platinum realtors for 2006. There are 5,500 realtors in our valley. In 2005 we had 18 agents, 11 were platinum. We started 4 years ago at ground zero. No clients, no leads, no experience, no agents. Last month our office did 10% of the total home sales in the area. Remember, there are 5500 agents in the area. Our 22 did 10% of the volume! Over 50% of our customers are a product of customer referral. That’s a big deal! We have only been in this community for 4 years! In our 4 years we have sold over $300,000,000.00 in homes (nearing 1/2 a billion) we have saved our clients over $9,000,000 in commissions in the past 4 years!
The only people in this valley who do not like us are Traditional 6% Realtors. They really do not like us at all. Everyone else loves us! We are members of the MLS, however we use it as a last resort. Last month we had 95 closings and 91 of them were not on the MLS. (4 needed the MLS) We do everything within our power to sell our property without offering the buyer’s agent a commission on the MLS. If I am really looking out for the best interest of my client, why would I convince them to offer 3% to a buyer’s agent if it would sell anyway?
This is the future of the real estate industry baby. The only reason people continue to pay 6% is because they do not know any better! People are creatures of habit. We are taking over!
Remember, Friends don’t let friends…pay 6%.
If you are getting your real-estate license do not sign up with a 6% brokerage…you are getting on board a sinking ship.
This is Real-Estate Evangelism!
— realtorAn website that I just found that is related to real estate and really shows the ignorance of some realtors is http://www.dont-it-yourself.com/.
I wrote a short review about it on my site: http://esenai.com/blog/eMarviews/2006/09/dontityourself_do_they_think_we_are_stupid.html
Personally, I think it is pretty insulting to anyone who reads it. Who says that we are not already real estate experts? Realtors are not necessarily experts. The realtors that created that site could learn a thing or from “realtor” above.
— eMarv