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Tennessee, Oregon, and the State of Real Estate

By: Jeff Kempe, JeffreyKempe.com, Post Archive, RSS Feed
Posted: Sunday, May 27th, 2007, 8:23 pm MST
Category: Disintermediation,Enduring Interest,General,Real Estate,Redfin.com

This started as a reply to Greg’s post on the Tennessee legislature, which apparently insists going backward is the new going forward. But then I had The Conversation, and it’s developed into a post of its own.

Involved is someone I respect, a friend, a mentor, perhaps the one person more responsible for getting me into real estate than anyone. In the business over twenty years, he knows RE law better than most principal brokers, and has helped me enormously in the first three years I’ve been around.

Oregon is one of the eleven states that has a “Thou shalt not share commission!” law, passed at least fifteen years ago, notwithstanding Glenn Kelman’s Sixty Minutes inference that it was all about him. I wanted to know why it was passed in the first place: Assuming consumer protection against graft or corruption, I couldn’t figure out how that worked. The answer dumbfounded me:

“That protects us, our commissions. I’m glad it’s there.”

Oh, dear. Thank you for the candor. Elaborate?

“Look, I know you’re a free market kind of guy, but there’s nothing wrong with laws protecting us from consumers. People try to hack away at my commission every day on the listing side. This prevents the same kind of hacking on the buying side.”

Wait. Aren’t you worth the commission you charge? “Of course. That’s my point.” Then when someone asks you to cut your commission, what’s wrong with: No. Why do you need a law, especially a law that reinforces the public perception that we’re all self absorbed troglodytes?

“Twenty years ago, before the internet, we didn’t have that reputation. Now 80% of transactions don’t even really need a buyer’s agent.”

Say what?

It went on, defensively and testily. The internet’s the problem, we’re the victims. When I brought up separating buyer commission from listing commission, he said he hoped he was well out of the business before that happened.

It’s occurred to me: his opinion isn’t an anomaly; as I said here the biggest problem we face as an industry is our industry. I can’t begin to get my mind around treating clients as adversaries, but the “Buyers are liars!” meme is constant. (I’ve run into it only once in three years, when I gently suggested she find new representation.) A seriously uncomfortable percentage of our peers think doing it the same way it’s always been done is the only way, that it’s us vs them, that suggesting anything else is heresy. By definition, according to my friend, I’m a pariah.

I only know this: it’s not twenty years ago. And it never will be again.

 
The divorced real estate commission file: This is an organic compendium of weblog posts and internet-based articles arguing for and against the idea of divorcing the residential real estate commission — eliminating the co-brokerage compensation from the listing agreement, with buyers contracting for and arranging compensation for their own representation. One way this might be effected: Lenders could permit buyers to expense representation on the HUD-1 form as sellers do now. The entries collected here represent the full gamut of opinions on what may be the most important issue facing Realtors today. To submit additional posts or articles for inclusion on this list, fill out the form at this link.

Related posts:
  • Oregon voters tell High Earners and Businesses to GET OUT! Where will they go?
  • Could anything be sleazier than Redfin CEO Glenn Kelman? How about the Tennessee Association of Realtors?
  • Make no mistake, without the thoughtful, dispassionate accuracy of professional journalists, the world itself would crumble

    • 2 comments

    2 Comments so far

    1. Mary Beth Hurtado & Elliott Lewis June 25th, 2007 8:25 am

      Yes we have to change with the “times”

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