Editor’s note: Inman News has compiled a list of 10 reforms for the real estate industry (see "Reforming Real Estate"). We invite your discussion in refining this list. Send any suggestions and commentary to firstname.lastname@example.org. The following essay is a guest contribution written in response to the list.
By DOUG PATTERSON
I’m certainly not against regulation, and I’m not trying to defend the status quo. I’m against BAD regulation, and against government interference in free markets. I’m also opposed to CHANGE for the sake of itself. The discussion is good, but let’s be sure we use our brains and THINK about the consequences of change.
MORE GOVERNMENT never helps anything because governments are not subject to, and therefore don’t understand, free markets.
The whole reason for regulation is consumer protection, and it should be. However, a lot of what passes for consumer protection is just political grandstanding to get media attention and contributions. Left to itself, government would regulate every free market into the ground, and many of the proposals in this ("Reforming Real Estate") editorial would do that to the real estate industry.
The article contains incorrect or unsubstantiated "facts" such as:
- "In the boom, too many unqualified professionals were proffering poor advice." Such as?
- "Too many parties are involved in the real estate value chain." Who are they, and which ones would you do without?
- "Promote a more efficient real estate industry, reducing costs." Competition does this by its nature. Every one of us tries to cut costs almost daily.
- "Wasteful advertising spending also contributes to the cost of the transaction and could be minimized by improved measurement around successful online ad investments." DUH? The only reason we use any print ads anymore is because the clients don’t understand that they don’t work.
- "Real estate agents should be required to provide up-front, detailed disclosures on how they are compensated in the real estate transaction process." Don’t we do that?
- "The various fees that consumers pay in closing a real estate transaction must be standardized." Price controls, anyone? Let’s just drive all those service providers out of business!
- "The industry, in partnership with third-party companies or on its own, must free the (multiple listing service) data." I know the debate is huge on this. In my humble opinion, an MLS exists for the exclusive use of its dues-paying members. It was never meant for public access. Part of that is to protect sellers from everyone knowing how much they agreed to pay the listing agent and other private data. I think much more info could be disclosed on IDX sites, but not the full boat.
- "Remove barriers to alternative business models." What barriers (except for the tendency of many to cling to tradition) do you mean? In the next breath you say, "Innovative new companies break the mold of tired real estate practices." There’s your answer.
- "Both federal and state governments should vigorously police industry antitrust behavior that restricts innovation." What antitrust behavior? This one probably ticks me off more than most. Real estate is not an oligarchy. We don’t fix commissions. We compete.
- I agree with this one, though it makes it sound like it isn’t happening: "The industry must embrace a robust marketplace with a range of pricing options." That is happening before our eyes, even if progress is slow. It will happen. To me the best thing that could happen is for BUYERS to pay their own agents, and SELLERS to pay theirs. I agree that the current system of listing agents paying buyer/sub-agents makes no sense.
The biggest problem with the public on compensation is the mistaken idea that "we make 6 percent" — I WISH!
Doug Patterson is no longer a Realtor but maintains a real estate license with WeSellGreenville LLC in Greenville, S.C.
What’s your opinion? Leave your comments below or send a letter to the editor.