Editor’s note: Joy Canova, a Realtor with Coldwell Banker Bain Associates in Seattle, wrote the following in response to an Oct. 26 article, “Times change, real estate commission stays the same,” reporting on a public workshop held in Washington, D.C., on Oct. 25, to explore competition in the real estate industry.
Although the title, “Times change, real estate commission stays the same,” seems to hint at a need for real estate sales commission reductions, I see another meaning.
Times have changed for the real estate market; it has become increasingly difficult to protect clients from unintended consequences of a real estate transaction. If changes to commissions are overdue, it is to increase rates, not lower them.
In real estate transactions, one needs only to look at the volume of pages in a typical purchase and sale agreement to see the changes in the industry. As greater protections are needed for clients, full-service brokerages have sought the assistance of their attorneys to design contract addendums to close risky loopholes. Full-service sales agents have the skill and knowledge to put these protections in place when and where it is appropriate.
While it is true that every real estate transaction does not require the full spectrum of abilities that full-service agents and their companies provide, the consumer will not have the expertise to determine when his or her personal situation calls for it. It is better to depend on an agent who will know when such conditions arise and employ necessary actions on the consumer’s behalf.
The comparison of the real estate industry to airline competition is an interesting choice since so many airline companies are struggling to stay in business. Some may wish to blame all the woes on events after Sept. 11, but the trouble started long before that. Consumers of airlines are suffering as services and routes are cut in an effort to stay in business. A cheap ticket to nowhere is hardly a bargain.
If the federal antitrust agencies’ intent is to break the real estate industry to pieces in the same manner as the airline industry, real estate consumers will suffer as well. Agent expertise will leave the industry when consumers need an advocate most desperately.
Home buyers today are faced with affordability issues and predatory lending practices. Home sellers in the marketplace are falling prey to selling schemes that provide no assistance in negotiations and pricing suggestions that cost money as properties linger on the market.
With personal savings down and debt up for many Americans, homes are often the greatest savings a family has. To shortcut protections for consumers with this critical financial asset is unconscionable. Lowering costs without considering value is the poorest form of business in America today.
Joy Canova is a Realtor with Coldwell Banker Bain Associates in Seattle.
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