The wall in this case is The Wall Street Journal. On Friday, Aug. 12, The Wall Street Journal – the nation’s pre-eminent business newspaper and the protector of capitalism – ran a scathing opinion article condemning the National Association of Realtors for encouraging anti-consumer and anti-competitive legislation and regulations. In “The Realtor Racket” it slammed NAR for efforts to pass legislation or implement regulations requiring minimum levels of service and/or prohibiting rebates. The tone of the article was something you might expect from some newspapers or consumer advocacy organizations with a liberal bent, but not from a conservative business publisher like The Wall Street Journal.
To be sure, the Journal occasionally speaks out against corporate executives who are guilty of particularly unsavory practices, but this is the first time in my recollection that The Wall Street Journal has taken an entire trade association to task for its anti-competitive behavior. And The Wall Street Journal didn’t mince any words.
“Why are governors and state legislatures enacting regulations to make buying and selling homes as expensive as possible?” the article began, and it went downhill from there. It ended with “We don’t know who is more at fault here: the Realtors who maintain that such protectionism benefits consumers, or the pliant state lawmakers who actually believe them.” And, in between, The Wall Street Journal castigated NAR for supporting practices that it deemed “a clear breach of the fiduciary duty of the agent to find the best home at the lowest price for clients. Instead, the brokers are in effect finding homes for their clients that will afford them the highest fee structure.”
The Wall Street Journal also pointed out how much consumers are saving in other business sectors where new technology solutions have been implemented without interference from traditional brokers in those sectors. The reason airline tickets are 60 percent less today than they used to be is that traditional travel brokers let Expedia, Travelocity and Orbitz flourish. And traditional stockbrokers also didn’t try to stop the discount online brokers from driving the costs of securities trades down to pennies per trade. We are all benefiting from those changes.
When a respected and strongly pro-business publication like The Wall Street Journal condemns an industry’s lobbying efforts, I believe there must be something wrong with those proposals. Especially when they are echoing the views of President Bush’s Justice Department Antitrust Division and Federal Trade Commission. It is sad, because the image that is projected to consumers by NAR’s lobbying efforts – one of callous disregard for consumers – is the opposite of the nature of most real estate agents I know. Most agents I know care about their clients and put the interests of homeowners ahead of their own. They don’t deserve to be painted with the same broad brush that The Wall Street Journal paints the NAR. Many traditional agents have told me privately that they don’t have a problem with competition from companies using new business models. They too are concerned that NAR is conveying to their clients the impression that the main goal of real estate professionals is to preserve high commissions through lobbying efforts to limit consumer choices.
There have already been articles similar to the one in the Journal in the Washington Post and other major newspapers. If NAR and NAR state affiliates continue to pursue these current efforts I believe we will see more and more of those articles. They will only continue to feed growing consumer distrust of NAR itself and real estate agents and brokers, regardless of which side of this issue they are on (if they care about it at all). This is unfortunate because NAR truly does many fine things that are very helpful to consumers, such as its professional development and certification program to name the most obvious one.
The march to new technology solutions in the real estate and other sectors is not going to stop. NAR leadership needs to sit down, take a deep breath, and face this growing reality: the antitrust agencies of a conservative Republican president condemn your efforts to limit competition; the nation’s pre-eminent business newspaper has now condemned them, consumer organizations condemn them, and growing numbers of newspapers are condemning them. Continuing this fight can only further tarnish the reputation of all real estate professionals as a growing and nonpartisan swath of society raises its voice. Is it really worth it? Real estate professionals, consumers and the NAR itself will all be better off if NAR focuses on helping its members – and consumers – benefit from the competitive real estate technology tools of the 21st century.
Bruce Hahn, CAE, is the president of the American Homeowners Grassroots Alliance. The group’s government affairs department can be reached at (703) 536-7776 or AHGA@AmericanHomeowners.org.
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