Request for Comments "Real Estate Workshop" #00045

Submission Number:
Sissy Lappin
Initiative Name:
Request for Comments "Real Estate Workshop"
Who's Protecting the Homeowner? If the current system for buying and selling homes was scored on the basis of consumer fairness, the card would read Realtors: 100, Homeowners: 0. The system is broken, mired in bureaucracy, protected by the second largest lobbying group, the National Association of Realtors (NAR). -100% funded by real estate agents. Let's be honest; there is no consumer advocacy when it comes to the real estate industry. The internet has given transparency to consumers. In response to this new power, the real estate industry has created new businesses that prey on consumers. A few simple changes and enforcement of laws would go a long way in protecting the consumer. 1. Call for a Truth-in-Commission Disclosure Statement With the help of new technology and a new business model, we need a true commission cost disclosure like the Truth-in-Lending Disclosure Statement. The full commission and cost of selling a home must be disclosed in both percentage and as an estimated total dollar amount. Like the Truth-in-Lending Loan Estimate. With all the new commission models, the consumer has a hard time realizing the actual cost of selling a home. Redfin advertises a 1% rate so one might think there is only a 1% commission, but with the buyer's commission, it is 4%. Trelora's rate is $2500 plus a 3% commission to the buyer's agent. Purplebricks cites a $3200 rate plus a 2.5% commission to the buyer's agent. Others charge extra for lockboxes, signs, and brochures. Like the Truth-in-Lending Disclosure Statement provides, the list price should be used as the marker to calculate the commission along with a disclaimer stating that it may be higher or lower. 2. Enforce the Do Not Call Registry We must enforce the Do Not Call List -- for everyone. Real Estate is the only industry whose lists are not scrubbed to remove those opting out of telephone solicitation. Stockbrokers and insurance companies -- just to name a couple -- are required to crosscheck their lists with companies like Gryphon and remove any numbers before they conduct calls. Robo dialing is prospering in the real estate industry. You can read about it in a real estate phone dialer's blog. Real estate robocalling is a billion-dollar business. If you don't think this is an epidemic, go on YouTube where you can view 1000+ videos informing real estate agents on how to make unsolicited calls to homeowners. We could not find one video that referenced the Do Not Call list. Once again, deception has created another billion-dollar business Class action lawsuits are being filed to put a stop to this same abuse. 3. Misinforming Homeowners Another billion-dollar business has been created based on misleading the consumer about the listing agent. All listings should be required to post the correct listing agent and denote whether the homeowner is using an agent or is selling their home FSBO. Sellers and listing agents should not be allowed to be misrepresented and trick the consumer. 4. Truthful Consumer Information be Enforced John Wake, an economist and real estate agent studied the NAR's Profile of Home Buyers and Sellers. In the profile, NAR cited a study it conducted comparing the value of homes sold by agents to FSBO sales. The study concluded that homes sold with a real estate agent sold for more money. What he found in the fine print was this disclaimer "including mobile and manufactured homes," thus skewing the results in favor of agent-assisted home sales. "The disclaimer tells me they know they're being misleading." says Wake. "FSBOS TYPICALLY HAVE A LOWER MEDIAN SELLING PRICE: $208,700 COMPARED TO $235,000. THUS THE TYPICAL AGENT-ASSISTED HOME SALE TYPICALLY HAS A 13 PERCENT HIGHER SALES PRICE THAN THE TYPICAL FSBO SALE." -- NAR The study isn't the first time NAR has distributed inaccurate data. A few years ago, Corelogic found they had been caught fabricating home sales. A few simple changes would go a long way .