Trevor Smith writes:
First, I want to say that you are incredibly articulate and a great writer. You know what you believe, you’ve researched it, and you stand by it. So, as far as that goes I respect you.
Second, I am with John L Scott, where I charge 4% commission for a full service listing package. I love John L Scott, and my Broker has been very supportive of my business model.Third, I recently interviewed with Redfin. This is not because I don’t like John L Scott, but becasue I believe in Redfin’s model. I believe that the REALTORs who will succeed in the next 30 years will likely adapt to a model similar to Redfin’s (ie lower commissions)
I would point out that since John L. Scott is a proven company and Redfin isn’t – your odds of success are far greater at your present home. If your present company – I believe it is the largest and most successful real estate brokerage firm in the entire northwest – is willing to support you in your desired business model, wouldn’t it make more sense to stay there? Check around and find out what the most successful John L. Scott agents earn and compare that to what the most successful Redfin agents earn.
If Redfin were not a public company (one supported by raising cash from investors) they wouldn’t even have their doors open now. It isn’t a sustainable business model. You are free to ignore my comments and to believe that I am “biased” against them because they are a discounter, but you would be wrong in that assumption. Many companies are “discounters” and do quite well and I have no quarrel with them either.
Fourth, by interviewing at Redfin, I learned EXACTLY how Redfin operates their business, and so when you say that Redfin is not procuring cause… respectfully you’re the monkey… because you’re wrong. Redfin, does show houses to their buyers, does do the paperwork, and does take it to closing. That is procuring cause.
There may be circumstances and transactions where they aren’t guilty of violating procuring cause, nevertheless, that business model is founded on ripping off others. I am going to repeat again Glenn’s INTENT to rip off others (as in steal, get something for nothing, act in a manner calculated to take something that does not belong to him):
“…Just so you know where I stand, I am here today to ask that Congress act: … to ensure that consumers are able to access directly all the relevant information stored by multiple listing services about a property, so they don’t have to rely on agents.”
Now compare that to what you wrote – in your other comment:
If you don’t want the public to view all MLS data, why is there a huge button on this blog’s homepage saying, “Search the Complete Pheonix MLS.” Isn’t that a bit misleading and hypocritical?
Please understand that I am NOT against MLS data on websites (the “Search the MLS” button you asked about here isn’t my site). This is and so is this one. Both have (as do all my other sites) public MLS search. What I am against is what Glenn Kelman said during his testimony (posted again just above). That is NOT the same thing as “MLS search” on a web site. He was asking congress to steal something that belongs to Realtors and has – as its primary purpose – the offering of a commission to a fellow Realtor and “open it up to everyone” so they don’t need a Realtor.
Not only does he have criminal intent – he is also (despite his high IQ) a fool. If he (and the other jackals who want the government to steal for them) were successful at getting their way (a sort of “nationalized national MLS”) it would last less than 180 days. Every major broker and agent would simply withdraw from it. What would spring up in its place would be broker owned systems and state and local associations wouldn’t run them anymore. I don’t have to put my listings in MLS to sell them. In my area 5 – 6 companies could form an MLS that would – by itself be over half of all the listings here. How long do you think it would take to get all the little guys on board?
When the investors stop putting money into Redfin – Redfin will close its doors. It may take a few years but they will be going out of business. This is not to say that the discount model won’t work – or last. If you really want to go to work for a discount real estate company and want to never lie or “shade the truth”, try Help U Sell . They actually DO have really deep pockets (owned by a large insurance company), they’ve been around for decades and I have never seen them make false claims in any advertisement.
Fifth, I agree with Glenn regarding the MLS. I understand why you don’t agree. I understand that this interferes with the traditional REALTOR’s business, but in the long run, it is beneficial for the consumer. A public MLS will force REALTORS to do a top notch job for less money, or get out of the industry.Sixth, I like the FTC, but you don’t have to agree with me on this.
I don’t believe there is ANY way to force Realtors to do a top notch job. I like the goal but don’t believe it is achievable. Discount companies have been around since before I got into the real estate business in 1978 – they are not new. The ones who do a good job and provide a real service and run their companies with integrity (like Help U Sell, for example) last. The others don’t.
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Todd Tarson writes:
“Agents who are not completely honest and forthright in ALL of their dealings with the public and with each other do not deserve to have a license in the first place.”
Well, the truth is that ‘deserve’ has nothing to do with it. The ADRE does not do personality tests that coincide with the exam to obtain a license.I agree on your premise actually, but it is not reality today and too many members of the public are being damaged by the less than stellar agents that indeed exist and have a license to do this kind of business. Don’t believe me?? Get yourself on the Pro Standards Committee and sit on a few ethics hearings and reconsider.I’d never question you and how you handle your clients and business, but I’m promoting the idea to my potential clients that they really want me in their corner and their corner alone. They want an agent that will look after the needs of the client and not one that looks out for the wants of the agent or broker. This isn’t about the individual competent agent/broker… this is about the whole body of them and their affect on this industry in regards to the client.
Hey, I agree. I am NOT saying (nor do I believe) that single agency is “bad”. If given the option, I believe it is usually better. But I also trust myself and my judgment and am not worried about not doing the right thing – regardless of what the agency relationship is. Further, I believe that is also true for most of the people reading this right now. People who take the time to really educate themselves are people who care about the outcome – which would probably describe
about 98% of the people who will ever read any of this.
Here are some interesting stats: The current total number of active real estate licenses in Arizona is at an all time high: 92,652. Lets compare that to the population of the state; US Census (this will open an Excel spreadsheet). The total number is 5,939,292. Divide that number by 96,652 and you get 64.10. There is now – in the state of Arizona – one licensed agent for every 64 people. This number includes children. Take the children out and make it 18+ and that population number is 4,358,856. Divide by 92,652 and you get 47.05. One agent for every 47 people 18 and over, in the state. If the average turnover is 8% then (and all of the 18+ people owned a home – which they don’t) there would be 3.76 “theoretical sales” per year, per agent.
Here is some money for them:
Phil Hoover says:
Trevor ~
I can only assume that you are relatively new to real estate.
It is apparent that you lack even the most basic grasp of what it takes to run a real estate business.
In my 34+ years in real estate, I have seen many agents/brokers/companies come and go.
Many believed they could do it a litttle cheaper, charge less, and get rich in the process.
Most of them are gone; the rest are fighting over leftover scraps in the market.
In the end, it all comes down to whether the consumer wants the oats before or after they have gone through the horse.
Unless you live on a different planet than the rest of us, I must assume that you have to deal with the same economic basics as the rest of us.
In other words, in order to remain in business, you must make a profit after paying your overhead and taxes.
The simple truth is that you cannot survive if you are charging 4% and paying buyer agents a competitive fee for selling your listings.
And, you especially cannot survive with your present business model if you are on a commission split with John L. Scott.
You might be able to make it if you sell all of your listings yourself, but I have yet to meet an agent who can do that.
November 21, 2006 — 7:51 am
Anonymous Coward says:
The John L. Scott office on Canyon Road (where Trevor works) is notorious for “pulling a Redfin” of course back then we called it “pulling a John L. Scott”, that is to have other agents show your sales. As in: “You better sign a buyer agency agreement with them or they’ll pull a John L. Scott on you.”
These people just sit in their office and sell properties without showing them. Then they have their buyers go in and have the lising agent (top producing agents usually won’t show their listings w/o a buyer agreement) So these “buyers” find some other agent at the listing office, or just any agent they can find to show them the property.
Redfin didn’t invent this business model, they just stole it from John L. Scott. The Puyallup Canyon Road office is the only one who has this reputation. JLS needs to clean house.
November 21, 2006 — 9:39 am
Trevor Smith says:
Anonymous Coward… Thank you for at least acknowledging that you are one. I have never seen the experience you are referring to take place here at JLSPCR. (I guess I am not even really clear what you are saying, in the first place though.)
Russell Shaw –
1.)Your point about making the MLS public is a great one. I will contemplate that, and rethink my philosophy.
2.)I just plain think your wrong about Redfin, and I can’t imagine that we will be coming to a meeting of the minds anytime soon. My thought is this though… I don’t think Paul Allen’s Venture Capitalist Company, Vulcan Capital, would be investing in a company that is criminal or that will be shutting their doors anytime soon. I am taking a risk by applying Redfin… the same kind of risk as people who applied at Google did in 1998.
3.) Thank you for your objectivity regarding discount brokers. I think you are right about Help-U-Sell
Phil –
The reason my business model struggles in a traditional brokerage is because many traditional brokers are ripping agents off, becoming rich of their agents backs. The whole real estate industry needs a shake up, starting with the brokers. You can read my thoughts on this here: http://bluecollaragents.com/wordpress/?p=13
Phew… I think I answered most of the challenges. I think I want to take a break from blogging for a while and eat Turkey. Happy Thanksgiving everyone!
November 22, 2006 — 5:55 pm
Jay Reifert says:
Until buyers are fully mirandized–in other words, know that procuring cause exists, what it takes away from them…and then CONSENT to giving up their right to representation–nobody is ripping anyone off by stepping in at any point in the transaction.
Procuring cause is the ripoff. It is theft of buyer rights. A holdover from a time when buyers had no representation. A tool that NAR began tweaking, in a corrupt, racketeering, fashion…after buyer agency went mainstream. (Look at the post buyer agency changes to the Realtor? Code, including how the listing agent can now claim to be procuring cause.)
Do you actually think buyers would be going out and looking at property if they knew they were creating obligations by so doing?
If so, then why not just tell them? In fact, here’s a better idea…send the link below, and I’ll tell them:
http://www.real-reform.org/pcnoneba.pdf
Theft, pure and simple. That’s what undisclosed procuring cause represents. Theft.
Jay Reifert, Broker/Owner
Excel-Exclusive Buyer Agency
Madison, Wisconsin
true-agents@true-agent.com
November 26, 2006 — 7:36 pm
Trevor Smith says:
Jay,
You have some great points. I have never looked at this from this angle. Is this a nationwide issue or do the laws vary from state to state? Keep up the good work of being a consumer advocate. In the end people like you will be the winner in the real estate industry.
November 26, 2006 — 8:18 pm
Jay Reifert says:
Thank you for the kind words, Trevor. The Procuring Cause that is of importance, here, is Realtor? Procuring Cause, hereafter–in this post–PC. Although there is a legal doctrine of procuring cause, that isn’t the breed of which any of us speak, when talking about PC.
NAR hands down the guidelines on PC arbitrations, but it is up to each panel–very often composed of hard core PC trappers–to interpret the events which will determine who is actually PC in any given transaction.
When buyers had no option of buyer agency…when all agents represented the seller, PC had a valid place in the world of real estate.
Now, though, PC steals from buyers and buyer agents and it also steals from sellers and limited service brokers. (The latter is a story for another day, but goes like this–in brief–limited service seller sells property to [he thinks] unfettered buyer. Closing takes place. Agent comes out of nowhere, files PC case against limited service broker. Limited service broker, who had no clue about who had shown the property, loses the PC case and seventeen THOUSAND dollars. Too bad he only collected five hundred dollars in fee income.)
PC is bad for buyers. It is bad for buyer agents. It is bad for sellers, in that licensees may steer buyers away from homes that could generate PC claims. It is bad for limited service brokers.
PC is anticompetitive, in that its nondisclosure keeps buyers from making choices that could have saved them money, if they had only known of the importance of choosing an agent BEFORE they unwittingly obligated themselves.
I have a situation, right now, where a buyer has come to me after having found a home online which she then looked at with the listing agent. She had no idea that she was creating an obligation by meeting with the listing agent. (An agent who owes the seller the duty to seek the highest price at the best possible terms.)
After that viewing, she did what any number of prudent home buyers would do, and began researching process on the internet. As such, she discovered my site, and the concept of exclusive buyer agency.
While I will still offer her representation, subject to her willingness to help me try and break the chain of procuring cause, she stands to lose a couple thousand dollars in benefits I would have offered, had she not been trapped by PC.
Under normal circumstances, I would give this buyer discounts that could come close to two thousand dollars. However, given that I could be brought before a PC panel and lose the entire fee I would earn…I cannot–indeed, will not–give a client monies that would then, if I lost the PC case, come out of my own pocket. (In other words, I’m not going to do all of the important work, take on all the liability and then lose my fee AND give the buyer two thousand of my own dollars, besides.)
So, who potentially loses here? The buyer, who will likely pay more for the property than if I were involved and who loses the benefit of the discounts I would ordinarily provide.
I, of course, as a true buyer agent, lose, too, in that I may not get paid anything for what I do. And, if that happens enough times, then it becomes harder and harder to justify taking the risk.
And this is not an unusual event. It, or similar situations, happens hundreds of times–every day–across the good ol’ USA. It’s just that most licensees benefit from the trap, and therefore figure it all evens out.
Wonder what buyers are going to think, when they finally learn of this nifty little concept. Do you suppose consumer confidence in Realtors? will rise, or fall?
Oh, well…time to give my keyboard a rest. If anyone wants to really jump into the procuring cause thing, go to http://www.google.com and put the following in quotes, just like you see it here: “procuring cause””reifert” .
Not all that long ago, I was trying to get my procuring cause brochure to propagate across the usenet archive at Google Groups and ended up getting into some futile, but sometimes interesting, running gun battles with some hard core ordinary real estate agents.
Thanks again…
Jay Reifert, Broker/Owner
Excel-Exclusive Buyer Agency
Madison, Wisconsin
true-agents@true-agent.com
November 26, 2006 — 9:09 pm
Trevor Smith says:
Jay,
I have never run into an issue with this personally, but I know it exists. I think it is a problem that needs to be dealt with though. NAR is antiquated, and continues to pass antiquated policies. (but that is another issue)
I have recently created a new community for discount brokers called Blue Collar Agents. I think this would definitely be a worthy post on our Forum to get some discussion going. Your passion for this is clear. Its rare to find people who care about buyers like you. Keep up the good work.
November 26, 2006 — 9:25 pm