I love it! Inman Blog cites an amazing open letter from the Minnesota Association of Realtors to its membership.
The gist: Real estate brokers are retards but it’s not their fault!
Wait, that’s not right. What it says is, if you’re not making money as a Realtor, you should probably quit now, because your broker won’t sever you, even though, by not severing you, he is hurting his business and the real estate industry as a whole.
What it really says is this: The real estate brokerage safe harbor exclusion to the federal income tax withholding laws makes real estate brokers behave like retards, only this time they can’t seem to grow another foot to shoot themselves in.
Too frolicking bad for them, huh?
Here’s an interesting question: How do you charge a premium price for a commodity that is not in short supply? The DeBeers diamond cartel has an answer. The National Association of Realtors does not…
Technorati Tags: blogging, compensation for buyer representation, disintermediation, real estate marketing
Broker Bryant says:
Hi Gregg, That letter from the Minnesota Association of Realtors is quite the read. Part of the problem, as I see it, are all the Real Estate Companies that are in the business of renting desk space and not selling real estate. It’s a very simple biz plan, we’ll give you a 100% split and all you have to do is pay us X amount of dollars every month. Where is the incentive to train agents? What do they care? Hire a few hundred agents and voila! the cash roles in. If they sell a house or two down the road even better, slap on a transaction fee and per deal E&O premium and you can be a very successful Broker and never sell anything. The only one that pays is the consumer. There is no way a Realtor can know what they are doing if they are not regularly doing deals. Experience cannot be learned in a classroom.
October 25, 2006 — 4:40 pm
Athol Kay says:
It is a crazy set up. Though could be worse than in Minnesota, Palm Beach FL has 11,000 Realtors in an area that does 10,000 transactions a year. Check my Oct 22 post on it.
October 25, 2006 — 5:04 pm
Greg Swann says:
When I was a kid, I was told that the Italian Navy had more Admirals than boats. Y’all got that beat!
October 25, 2006 — 5:09 pm
Todd Tarson says:
Wow… talk about telling it like it (almost) needs to be told (Greg, you actually have told it like it should be).
I’m not expecting a letter like this from AAR (nor should my Members expect one from KGVAR) anytime soon. I doubt Arizona is faced with some of the same problems since population is expected to continue to increase state wide.
However, there still is this problem with brokers though…
October 25, 2006 — 5:55 pm
Maureen Francis says:
So is the solution to change the tax code that created the problem in the first place? In the end, the tax code is probably keeping commissions higher than they need be because of great inefficiencies in the industry. The extra overhead created by a gaggle of non-producing agents is difficult to absorb.
October 29, 2006 — 2:14 pm
Greg Swann says:
> So is the solution to change the tax code that created the problem in the first place? In the end, the tax code is probably keeping commissions higher than they need be because of great inefficiencies in the industry. The extra overhead created by a gaggle of non-producing agents is difficult to absorb.
Every bit of that is correct. Entreched brokeages cannot allow for elasticity in pricing because they have allowed for an infiintely elastic labor supply. They promise $30,000 pots of gold to recruit gullible licensees in order to milk them for one or two sphere of influence transactions before they flame out. Because there is no hiring-cost, the broker’s best business model is rape and run. Divorcing the commissions would fix a lot. Making agents employees instead of independent contractors would change everything — overnight.
October 30, 2006 — 6:28 pm
TheJohn says:
I am a sucessful investor who is looking to hire a nice starving real estate agent to do a lap dance for me for $200+.
November 14, 2006 — 10:06 pm
Aaron Dickinson - Edina Realty MN says:
That’s the difference between the National Association of REALTORS and the DeBeers cartel. Though real estate agents are the largest trade organization in the country, we are all still independent contractors with limited loyalty to any broker and great autonomy in day-to-day business decisions.
Some agents can’t justify a premium price because they do not offer anything of value for the additional cost. On the other hand, some agents offer a-la-cart service at cut-rate prices and make more than those charging much higher for basically the same level of service. Still other agents charge a full-service rate and do in fact offer full service. These agents can also be quite successful and many times do not close the same volume as the discounts but make the same or better money.
Just like Walmart didn’t end the department or grocery stores but did create industry consolidation, the same thing will happen with the Internet and the real estate business. New leaders will emerge, likely with a discount business model, and that will cause a shakeout in the business. Capitalism at its finest.
March 3, 2007 — 11:24 pm
Concerned parent says:
Please don’t use the word “retard” like this. It’s so disrespectful to families of children who ARE mentally retarded.
May 6, 2007 — 2:41 pm
Greg Swann says:
> Please don’t use the word “retard” like this. It’s so disrespectful to families of children who ARE mentally retarded.
Hmm… What’s your policy on self-important censorious busy-bodies who troll the internet looking for scabs to pick? Oh, wait. They’re retards, too. Feel free to come back when you can identify which mind is yours to govern.
May 6, 2007 — 8:42 pm
Concerned parent says:
Actually, I was doing research on the conflicts and wars caused by the diamond industry and came across this post. Interesting that it found this site – I’m currently in real estate school. Does that mean that I’ll have to work with people like you?
I found not only your post but your return comment very disrespectful. Do you have children? I guess they’re perfect little beings, aren’t they? Hope nothing ever changes that. Karma is indeed a bitch.
May 7, 2007 — 5:39 am
Greg Swann says:
I think your need to push other people around at pout-point will work against you in real estate. But if you actually want to learn how to do this job, rather than latch onto a rationale to justify failure, you should grin and bear it. This is one of the best places on the internet to learn how to succeed as a real estate professional.
May 7, 2007 — 7:38 am
Concerned parent says:
Oh, I agree…it probably is a great site.
I don’t push people around and I’m mature enough not to call people names like “retard”. I know better. This world is not a perfect place and there are plenty of people who suffer from disabilities, whether they’re physical or mental. I happen to be a parent of a child with a mental disability. He’s not retarded but I’m sure people assume that when they see him. So yes, it bothers me beyond belief when individuals such as yourself find it humorous to call someone else by the very name that puts grief into our hearts. Look up “empathy” – hopefully it will teach you something.
Michael
May 7, 2007 — 7:46 am
Greg Swann says:
Concerned Parent: I will grace you with an important moral principle, one that used to be widely understood in America but has been steadily eroded by pompous jackasses who treasure every wound and wound every treasure: Mind your own business. I’m sorry about your child, but it doesn’t grant you the right to tell me how to think, act or write. Lecturing me about respect when you behave this way would be ironic if life itself in the age of political correctness had not become so absurd. In any case, if your goal is to test your mettle as a wannabe word-Nazi, you picked the right opponent. I will not yield on this point. Why? Because that would be retarded.
May 7, 2007 — 7:58 am
Concerned parent says:
If you truly want people to mind their own business, why do you have a public blog? It’s meant for people all over the world. So if I want to comment on something that offends me, I will.
Sorry for telling you what you should or shouldn’t write. I was hoping to raise your level of consciousness to the world around us. I’m sure none of the clients you work with have a friend or a family member with a physical or mental disability, right? I’m sure none of them would be offended by your use of the word “retard” right? Wake up, Mr. Swann.
From your picture you look to be late 40’s, early 50’s. Are you having a mid-life crisis? Because really, usually the only time I hear the word “retard” being used in such an insensitive manner is by teenagers. Grow up.
May 7, 2007 — 8:53 am