BLOODHOUNDBLOG.COM

There’s always something to howl about

Transparency — Newest Weapon Of The PC Crowd

Transparency in real estate brokerage has gone from a truly noble concept to a weapon sometimes lethally wielded by the PC crowd. Most notably bullies coming forth claiming to possess Holy Script describing transparency, no doubt salvaged from what must be the third tablet lost by Moses on his way back down the mountain.

Transparency is honest dealing from a basis of rock ribbed integrity — nothing more and nothing less. The rest is self righteous dung.

I dare you to demand to know what your dentist, doctor, CPA, attorney et. al. are netting from fees they charge you for their services. What a joke — a bad joke, but a joke nonetheless. Who do these buncha Kumbaya, hand-holding yahoos think they’re kiddin’ anyway? Transparency my ass. They want information their parents/grandparents would’ve had the good manners never to seek in the first place. Why? Cuz it’s none of their damn business and they knew it. Of course that begs the question that so much of what they ask for is wholly irrelevant.

When shopping for a doctor, what’s important to you? Is it ultimately expertise, experience, cost, or how much he’s netting? Do you divide there fees by the time spent with you? When you read that, doesn’t it come off as a stoopid question on its face? Dunno about you, but when deciding upon a service provider I look first and foremost for results. (Oops, there I go again, lobbying for a business world based upon merit.) If there’s more than one provider on that short list, then we get down to a more detailed examination — comparing the aforementioned, here’s that pesky word again — RESULTS.

My favorite uncle just had successful minor (oxymoron?) heart surgery. He’s a pretty smart guy, one of the smartest I’ve ever met in person. Please tell me without stuttering or launching a personal attack, how knowing his surgeon’s profit margin, or any info like that, would’ve aided him in deciding who was gonna repair his heart? And pretty please, don’t bring me the usual weak crappola about ‘how can you compare real estate brokerage to heart surgery’. They’re both services, they’re both expensive, and they’re both more important than 90% of the decisions most folks make in their lives.

Let’s be specific now and talk about so-called transparency in real estate.

You wanna know my private business? You better carry my DNA and/or share my name — and even then it’s barely 50/50 you’ll get an answer. It’s known as my business, cuz it’s, well, my business. When does it become yours? I’ll be the judge of that 100% of the time. There, did I make myself understood? If you’re my client I owe you my very best effort, given with the utmost honesty and integrity.

Ultimately my clients, and my fellow brokers/agents, if they’d endeavor to grow a spine, get to know what I’m willing to divulge. Don’t get all froggy, I give up plenty of info to my clients.

They hear point by point exactly what I’m gonna do to put their property into escrow and close it. They can ask questions about anything I may recommend they do or refrain from doing until they’re completely satisfied. They can ask me what I charge and why. They can ask me what I net too, they just won’t ever get an answer.

All that said, is there a place for ‘transparency’ in real estate brokerage? Of course there is.

If an agent is getting paid by related services (legally of course) it should be volunteered to the client, not disclosed as an answer to a question. Our policy has been to eschew any pay from management firms, etc. so as to avoid even the appearance of evil. If there’s a referral coming from another brokerage, that is immediately disclosed.

Everyone knows what I’m being paid, and everyone makes up their own mind it’s worth it — or not. Do I negotiate? Yeah, about once a decade or so. Here’s what I charge, I’m an open book as to what you’ll get in return, take your best shot — but that’s what I charge. Did I start out doing that? No way. I earned that by producing the desired results over the long haul.

How many hours I work to produce the results for which I was hired is a false issue. I’ve made $5,000 an hour and $1.50 an hour. Back to our heart surgeon. $10,000+ for 90 minutes? Yeah, that’s the fee? You want the work done, or not? Next. :)

What a consumer agrees to pay their real estate agent is, in reality based upon the level of difficulty it’d take for them to replace that particular agent. Owners sell properties themselves all the time. Brokers discount their services too. Geez, sounds like a free market to me. Those who can deliver quality RESULTS quickly and reliably are the prize for which consumers are searching. Treat them with honesty based upon unyielding integrity and you’ve passed the transparency test.

What I object to is the implied contention by the Transparency Police that part of a free market includes an attitude of entitlement which by definition (theirs) says I hafta pull my pants down and say Mother May I in order to be considered appropriately transparent. When pigs fly.

Sack up people.

Related posts:
  • Being a Trust-Player
  • Weapons of Mass Instruction
  • Reasons to be cheerful, Part 2.9.5: Carrying a concealed firearm is the first step to reclaiming responsibility for your own self-defense.

  • 79 comments

    79 Comments so far

    1. Ken brand May 28th, 2009 8:41 pm

      So…how much do you net on each transaction? Ahhhhhaaaahhhhaaaa. Just kidd’n. I’m with you. Here’s the deal, love it or leave.

      I have to say, you’re rollin MMA my man. Red Dragons!

    2. Jeff Brown May 28th, 2009 8:44 pm

      Much appreciated, Ken. Very much.

    3. Erion Shehaj May 28th, 2009 8:56 pm

      Thank you!

    4. Erion Shehaj May 28th, 2009 8:57 pm

      Thanks, Jeff. Congestion’s gone from all the laughter :-)

    5. Dan Connolly May 28th, 2009 9:09 pm

      I think the people who are screaming for transparency the loudest are the ones who are most insecure about their own self worth. I suspect that they actually believe that there isn’t a measurable difference from one agent to another, and that somehow we are paid by the hour for busy work. The idea seems to be that we’d better have a really long list of things that we do to get the house sold…or we are somehow taking advantage of someone.

      What I find kind of funny is the idea that there is supposed to be some kind of moral high ground to their approach. There seems to be a kind of religious zealotry that preaches “their way is the only way”.

    6. Jeff Brown May 28th, 2009 9:19 pm

      Erion — Glad to hear it. Hope you’re feelin’ better.

    7. Jeff Brown May 28th, 2009 9:22 pm

      Dan — Your thoughts remind me of what Grandpa used to tell me, when I’d get riled up during a ‘debate’.

      He’d say, “Point weak, shout loud?” ‘Nuff said.

    8. James Malanowski May 28th, 2009 9:55 pm

      Thank you. I’ve been expressing this for what seems like years now and I’m glad I’m finally not the only one.

      Every time I hear the “T” word I throw up in my mouth a little.

      Honesty, trustworthiness, yes. All day long. For clients, customers, and colleagues.

      If you want to know how much money I pocket at the end of a transaction you’d better marry me or become my accountant. Or you can invest in my business and share the long hours and expenses.

      The thing about this business is that there is very little that is cookie-cutter. Every deal is different. The level of intensity – of both time and money – varies for each. Sometimes we come out ahead … Sometimes we’re taking it in the shorts. If I’m doing my job, my client will never know where I stand because I’m sacking up and getting the deal done for them.

      There is so much crap that I deal with every day that no one save for me and my wife will ever know because it’s all part of the job. It’s what we get paid for. I have to deal with the whining imbeciles and lying fools … In the end, my client shouldn’t have to know or care because that is what we get paid for.

      I don’t want to know what anyone had for breakfast … Why should anyone care about me? As long as I’m doing my job and closing your deal what else do you need to know?

    9. Jeff Brown May 28th, 2009 10:02 pm

      James — You have the heart of a lion.

    10. James Malanowski May 28th, 2009 10:07 pm

      And my throat is soar from the roaring! :)

      Bless you for posting what seems to be the minority opinion nowadays.

      Thanks for allowing me to vent … Feel better now.

    11. Greg Swann May 28th, 2009 10:12 pm

      Straw-man fallacy. Honest debate on the internet takes the form of in-context quotations of the argument in dispute followed by persuasively valid disputation. Whatever shoe it is that is pinching you is not in evidence. If it were, we might discover what it is you are objecting to. You do have a whole shoestore full of sworn enemies of whatever it is you’re fighting, so, once it comes into view, whatever it might be, sparks will surely fly.

    12. Lani Rosales May 28th, 2009 10:12 pm

      Viva free market capitalism!

      We maintain that “transparency” is a buzz word abused by techies playing Realtors starting five years ago when they were in their first round of VC funding and desperately needed quick public attention (what better way than to piss off 1.4 million independent business people aka Realtors?)…

      …now, it’s finally revealed as a PR ploy. When is transparency critical? With governmental agencies, trade associations and religious groups, but NOT with my bank account, thankyouverymuch.

      Good one, Jeff and good catching up via the oldest communication tool I own short of a pencil!

    13. Jeff Brown May 28th, 2009 10:13 pm

      James — It’s my contention you and I are in the vast majority. The bullies are just louder is all.

    14. Jeff Brown May 28th, 2009 10:19 pm

      Greg — There’s no pinching going on The clear understanding of those commenting speaks for itself. They know crappola when they read/hear it.Transparency IS the straw-man in my opinion.

    15. Jeff Brown May 28th, 2009 10:27 pm

      Lani — Much of transparency’s so-called doctrine reminds me of 1984 double-talk, gibberish.

      It’s generally used to either intimidate or outright bully.

      It’s time those 1.4 million Realtors set the record straight on their definition of the concept.

      Thanks, Lani.

    16. Greg Swann May 28th, 2009 10:40 pm

      Again: “Honest debate on the internet takes the form of in-context quotations of the argument in dispute followed by persuasively valid disputation.”

      No one has taken the position you are arguing against. The position I took on buyer’s agents disclosing and negotiating their compensation is unassailable. If you won’t quote it, I will.

      At the other end of the pay scale, exactly how much due diligence and zeal can I afford to expend on a $50,000 homestead, if my compensation is to be $1,500 — or even less — at close of escrow. That might sound like a lot of money to a buyer, but our monthly nut, the amount we need to earn each month to keep the doors open, is many multiples of that amount. I could sell ten $50,000 houses a month, 120 houses a year — a lot of houses — and finish the year broke.

      This is broken, broken at both ends of the buyer’s agent’s pay scale. Even in that sweet spot between, say $175,000 and $350,000, a percentage-based commission still doesn’t make sense. One house can take fifteen hours of my time, the next can take 150 hours. And the incentives are still misaligned.

      Misaligned in both directions, it is worth noting: Buyer’s agents are acting contrary to their own interests when they negotiate the purchase price downward — and god bless ‘em for doing it anyway. But buyers have no cash at risk in the shopping process, and therefore they have no incentive to limit their searches to a reasonable number of homes in a reasonable span of time. Other pricing plans — and there is no limit to how many we could think up — would make much better economic sense for both the agent and the buyer.

      As it happens, for the $800,000 hacienda, I’m rebating back all but $5,000 of the buyer’s agent’s commission to the buyers. This was an idea we came up with about 30 months ago, and it went nowhere at warp speed. Buyers simply did not care that, as in this case, they could save $19,000 at close of escrow. That’s a savings of $41,008 over 30 years, but absolutely nobody cared.

      I’m actually doing two houses at a $5,000 flat fee right now, and I’ll do them all day for buyers smart enough to ask the question sellers never, ever fail to ask: “How much do you charge?” There is usually more work for me to do than the buyers anticipate, but, practically speaking, no more than we would end up doing for a $3,000 paycheck on a $100,000 tract home. But on the other hand, because we have openly acknowledged the elephant in the room — the buyer’s agent’s compensation — I can take this kind of buyer though everything, teaching them how to guard their interests every step of the way.

      “An educated consumer is our best customer.” This is a motto to live by. What I’m really writing about is supplanting the National Association of Realtors, but this is how we will effect that seemingly impossible task. We have to do right by our clients, even when that might seem to be damaging to our own short-term pecuniary interests, and we have to train our clients to see and seek and insist upon better representation — at prices that align our interests with theirs. Even if we can’t get rid of the co-broke today, we don’t have to perpetuate its twisted, anti-consumer consequences.

      Does that mean you won’t end up selling $50,000 houses for 2.5%? You probably will, alas — although it never hurts to raise the subject of compensation with buyers who can afford to pay for what they’re getting. But when you’re dealing with that $500,000 buyer you can look ‘em in the eye and say, “Fair is fair, and $5,000 is more than fair for the amount of work I’m doing on this house. Why don’t you use the balance of my commission to update the kitchen?”

      If you think that this kind of thinking is for suckers — good. We know that our business is built — and will grow — on delivering better value to our clients — a better quality of real estate representation at a better price. The more we can educate consumers — our own clients and the marketplace at large — the more difficult it will be for the anti-consumer policies of the NAR to persist. True capitalism — the mutually-voluntary exchange of values for values — is the only effective antidote to criminality in the marketplace.

      If you want to supplant the NAR for good and all, here’s a good way to start the process: Instead of waiting for your clients to ask, “How much do you charge?” — a question they may never think to ask — go ahead and shoot the elephant in the room: “Before we get too carried away looking at houses, can we talk a little bit about my compensation?”

      At a minimum, you will find out who you are dealing with right away — giving you the chance to forebear to work with people who are only going to cause you problems later.

      Beyond that, that language or something like it is the ultimate qualifying question. Any sort of stalling or sputtering, in response, is proof positive that you’re not working with a motivated prospect.

      But the beautiful thing about being completely honest, completely transparent and completely forthcoming about your compensation is that you will forge a much deeper, much more trusting, much more cooperative relationship with your buyers from that moment forward. The unspoken secret has been given voice, and now you are both on the same side. You’ve taken a wary, temporary affiliation and turned it into a lifelong association — replete with repeat transactions and referrals — and possibly even a lifelong friendship.

      I put a tremendous amount of thought and effort into the arguments I make here. I will not be casually maligned. If you think you can do some damage to my actual argument, fire away. If you’d rather play to the crowd by beating up on imaginary bogeymen, I will be more than happy, as here, to expose exactly what is going on.

    17. Marlow Harris May 29th, 2009 1:42 am

      It appears that more than one person thinks this diatribe was directed towards them. My take was that this post was directed more towards those companies and individual who maintain that Realtors are overpaid and whose brand depends upon flat rate fees, discounts and rebates. These folks who continually trumpet “transparency” in interviews and newspaper quotes would hardly get any airtime if the same people didn’t throw others in the real estate game under the bus. By continually harping on their “transparency”, it is only a short leap from “We are transparent, they are not” to “We are transparent, they are obfuscating the truth, fabricating lies, hiding facts and keeping secrets”.

      When one company chooses to make their platform “Transparency” then it only follow course that if we’re not on their team, then we are opaque, shady, dishonest and less than truthful.

      Their advertising tactics are in and of themselves less-than-transparent and designed to demonize anyone who is not on their team.

    18. Kevin Schmidtchen May 29th, 2009 2:31 am

      Great article and fun to read. People all over this world act strangely when it comes to money. I think most people that are afraid of paying for services are afraid of money in general…afraid to make it and afraid to spend it. Just my thoughts.

    19. Ann Cummings May 29th, 2009 3:38 am

      Jeff – hooray for you for writing this post. Like others here, I am really sick of some of those who espouse ‘transparency’ the way some do. It really does seem like it’s just the bullies trying to ram that down everyone’s throat – for what purpose? As Lani said, it’s today’s ‘buzzword’ that’s being abused.

      Most of us who are good at getting the job done for our clients, whether they’re buyers or sellers, explain very clearly to them what we do and how we do it. That ‘transparency’ is owed to those clients, in my opinion. Those who yell about it really make me wonder how thumping their chests about it all over the place has really made them any better at their own jobs, how it has really caused them to serve their own clients any better than they already were, or weren’t.

      James’ comment is right on the mark. And your reply back to Lani – “double talk, gibberish” – that’s what it comes across as from most doing the chest-thumping.

    20. Joe Loomer May 29th, 2009 4:03 am

      Great post Jeff.
      One of the worst leaders I ever “served” under in my Navy days was a Command Master Chief who insisted on “Transparency” – allowing First Class Petty Officers (E6) to attend what we call a “Murder Board.” This is the lock-the-doors, knock-down-drag-out NAVY CHIEFS ONLY battle for who in the commmand at the gets what evaluation rankings.

      The Master Chief wanted his PO1s to get a taste of what happens in the SACRED Chiefs Mess and see how we actually ranked our Sailors. Now, without getting too “transparent” about what ACTUALLY happens in a Chiefs Mess, let me just say that a Navy Chief is a God – Selected, Tested, Initiated. Murder Boards involve cussing like a Sailor, fist-fights, sharp objects, caffeine by the gallon, and bedpans in the corners (no one leaves the room). We battle hard for OUR Sailors. Then we all go have several beers and sing Kumbaya.

      For a White Hat (E6 and below in the Navy) to enter the Mess and experience that Murder Board was very bad juju indeed.

      Morale sucked for a year after that expirement. Then we got a new Master Chief. He told the Skipper and the Chiefs (and more importantly, the White Hats) – what goes on in MY Mess, stays in MY Mess – unless we’re breaking Navy Regulations or the law, it’s none of your G-Damn business. That’s all the transparency I ever cared to experience.

      “What should I say about life? That it’s long and abhors transparence.” – Joseph Brodsky

      Navy Chief, Navy Pride

    21. Teri Lussier May 29th, 2009 4:55 am

      Geez. Not only late to the party, I didn’t even know there was a party.

      Jeff, I have to say that while I was reading your post, I kept thinking that a link or quote would be helpful to those of us who don’t get out much. And then after reading all the comments, I see I’m possibly the only clueless reader.

      Still, since I’ve never put Greg Swann and the term “PC” together, I’m not convinced your are referring to his post, some clarification- a link or quote- would be helpful?

    22. Mark Green May 29th, 2009 5:37 am

      This will probably be an unpopular take, but I think the larger issue lies beneath.

      >I dare you to demand to know what your dentist, doctor, CPA, attorney et. al. are netting from fees they charge you for their services.

      We are not conditioned to question these types of professionals’ revenue streams. Do you notice a common thread between them all? Inherently, we know that each of these professions have significant barriers to entry and tremendous education requirements.

      Realtors and mortgage folk have a common problem: what is the barrier to entry to practice either profession? In GA, so long as you’re not a convicted felon, you can work for most any mortgage broker upon the completion of a background check. There seem to be a million “part time” Realtors here in GA – all you really have to do is complete a course, pay your NAR fee and voila, you are among the ranks of the Real Estate professional.

      With so many uneducated and untrained mortgage and real estate professionals running around, it’s inevitable that consumers will experience a transaction causing them to question what they paid for. They’ll tell a friend, or 20, that they got “ripped off”.

      There’s a simple solution – raise the freaking bar and begin weeding out those who otherwise wouldn’t belong in your fraternity. Raise the overall baseline of professionalism and competency. With that, you’ll see less dissatisfied customers and I’d argue… less questioning about commissions.

    23. Greg Swann May 29th, 2009 6:21 am

      >> I dare you to demand to know what your dentist, doctor, CPA, attorney et. al. are netting from fees they charge you for their services.

      The form of the claim is specious in any case. Every professional practitioner will be very forthcoming about what, when and how he is to be paid. Each one will itemize his charges line by line on his invoice. Most buyers discover what they’re paying for “their” Realtor when they see the HUD-1 — far too late to do anything about it.

    24. Greg Swann May 29th, 2009 6:25 am

      > It appears that more than one person thinks this diatribe was directed towards them.

      Let’s stipulate that and then let’s see links or quotations from the actual argument(s) in dispute. I know of no one who is making the claims Jeff is trying to shout down.

    25. Ken brand May 29th, 2009 6:46 am

      The post is crystal clear to me. I understand what Jeff’s say’n.

      IMHO I think a post can be inspired by any number of things….it’s not always necessary to call someone “out” or “point fingers” or “personalize” the issue. After all, the issue isn’t about a single person, it’s a general mindset or philosophy.

      The issue itself is crystal clear,as if Jeff’s perspective.

    26. Ann Cummings May 29th, 2009 6:53 am

      When I read this post, I didn’t make the leap that Jeff was talking about any one person or any one post. Any one out and about on the internet reading real estate material can’t help but run into people on soapboxes about ‘transparency’, and it was all of those lumped together and no one in particular that I took this post to be relating to.

    27. Ken brand May 29th, 2009 7:01 am

      Oh. And sometimes a blog post isn’t a debate or a fight or slam, or directed at anyone, it’s directed at an idea or concept or mindset.

      All our sellers know what we charge before they see the HUD 1. We write the amount of the fee in the Listing Agreement and there’s an Estimate of Proceeds provided. If the Buyer’s is being charged they know beforehand as well.

      I went to the dentist last week to have a Crown replaced. I have insurance. The fee was $579. They told me before they did the work. I did not ask to see an itemized statement showing the cost of materials, rent, insurance, salaries, marketing, legal, gas & lights, birthday club cake fund, etc. Nor did I ask them what their “net” was.

      The statement read. New Crown – $579.00 Pretty simple. Oddly, there was an irate customer ahead of me who was arguing about their bill and things that had been added that they hadn’t been told about before. So much for “every” professional being forthcoming. I agree “every” should and we certainly should provide the “gross fee” figure. The “net amount” is personal and private.

    28. Teri Lussier May 29th, 2009 7:01 am

      >it’s a general mindset or philosophy.

      Where? What? For whom?

      >The post is crystal clear to me.

      And I wanna be right there with ya, Ken.

    29. Greg Swann May 29th, 2009 7:22 am

      > I did not ask to see an itemized statement showing the cost of materials, rent, insurance, salaries, marketing, legal, gas & lights, birthday club cake fund, etc. Nor did I ask them what their “net” was.

      Nor is anyone asking that of you. If you dispute this, produce the evidence. If you can’t, have the grace to admit it.

      > it’s a general mindset or philosophy.

      Which should make it remarkably easy to document.

      The original post was a straw-man argument — an Obama-like attack against a position no one has taken. The subsequent celebration and the conjectural defenses of the celebrants read to me like the reflexive defenses of mediocrity that Realtors, sadly, are too well known for.

    30. Thomas Johnson May 29th, 2009 7:51 am

      I don’t have enough brain cells in this dinosaur brain to think about all this and skinning cats at the same time.

      It took all my brain cells and the help of some very smart folks 5 months to get an IDX feed functioning out of our non-transparent Inman Man Of The Year run MLS!

      I am grateful for those in the kennel who can ponder the imponderable and articulate it for those of us in the brontosaurus crowd.

    31. Doug Francis May 29th, 2009 7:55 am

      I have worked for $4,500/hour on one deal, and another for $100/hour in the same Vienna neighborhood. In fact, I have given tons of time to certain clients who have yet to yield any income. It’s a tough business with a high turnover and divorce rate.

      Real estate sales is only for those who can ride out the DT’s until they get their next fix (yes, junkies). Is that being transparent enough?

      Now I need to get to work selling homes.

    32. Marlow Harris May 29th, 2009 8:12 am

      You want an example? There are thousands. There’s even a blog called “Transparent Real Estate”, so the phrase has definitely entered the lexicon.
      http://transparentre.com/2007/05/13/redfin-meets-tv-watching-america.aspx

    33. Mark Brian May 29th, 2009 8:31 am

      All the transparency needed is on the HUD 1 regarding who is getting what from the money in a real estate transaction. What is netted by the individual agent is no one’s business since it is dependent on the confidential agreement between the agent and their company regarding commissions earned by that agent.

    34. Greg Swann May 29th, 2009 8:53 am

      > There’s even a blog called “Transparent Real Estate”

      Oh, excellent, Marlow! You cite as an example of transparency a vendor who posts undisclosed reviews of his own clients’ products. Now shoot the other foot!

    35. Thomas Johnson May 29th, 2009 8:56 am

      Mark: You are correct. As opposed to Greg’s hypothetical itemized bill for surgery which is prepared after the patient is closed up and in recovery, in our world, if the itemized charges are unacceptable to either party, they can elect to not consummate the transaction, subject to the constraints and penalties of the contract which was executed by the parties. Of course, it would cause inconvenience, but not quite the inconvenience of undoing a surgery which had overcharges.

    36. Marlow Harris May 29th, 2009 8:59 am

      Greg, that’s not the point.

      Some of your readers seem to have never heard “transparent” and “real estate” uttered in the same breath. I was merely providing an example for those who seem truly puzzled about Jeff Brown’s’ post.

    37. Greg Swann May 29th, 2009 9:03 am

      > All the transparency needed is on the HUD 1 regarding who is getting what from the money in a real estate transaction.

      So if you were a typical buyer, you would not want to know that “your” agent is getting a 12% sales commission from a new home builder until your choice boils down to “swallow hard and sign” or “walk away on the earnest deposit”? This is the way you like to be treated by salespeople?

      > What is netted by the individual agent

      is a canard. Not at issue. A ruse. A decoy. By now, well-poisoning. The question I asked is the one that matters with respect to buyer’s agent’s compensation. Do you prefer to wait until the very last minute to find out you’ve been taken for a ride — or would you rather know in time to choose an alternative course of action?

      It’s worth remembering that consumers — the people we work for, the ones who already don’t trust us — avidly read this weblog.

    38. Marlow Harris May 29th, 2009 9:13 am

      This whole argument wouldn’t even be necessary if every agent used a Buyers Agency Agreement as religously as they use a Seller’s Listing Agreement. All commissions, payments and fees are disclosed upfront and Agents duties are clearly spelled out upfront.

    39. Greg Swann May 29th, 2009 10:52 am

      > This whole argument wouldn’t even be necessary if every agent used a Buyers Agency Agreement as religously as they use a Seller’s Listing Agreement.

      I agree, although buyers need more disclosure than sellers, since buyers do not believe they are paying for anything.

      (Note: We got hit again from about 9:15 to 10:45 MST. If you’ve been trying to get in, I can’t swear today’s battle is all the way finished.)

    40. Jeff Brown May 29th, 2009 11:08 am

      For the record, the post had nobody in mind. Also, I believe everyone can be as transparent as they choose. If you choose to be more transparent than the next guy, so be it.

      Ken — You said: Oh. And sometimes a blog post isn’t a debate or a fight or slam, or directed at anyone, it’s directed at an idea or concept or mindset.

      Can’t say it any better.

      The discussion is interesting. I stand by my words.

    41. Greg Swann May 29th, 2009 11:16 am

      > I stand by my words.

      How about you back them up with the sources of your consternation? I don’t believe there are any, but I will be delighted to be proved wrong. Will you please produce quotations from or links to the sources of information you are objecting to?

      Others are invited to join in. Not characterizations of your general impressions, but actual quotations or links to published information. That’s not too much to ask, is it?

    42. Michael Cook May 29th, 2009 11:38 am

      Jeff,

      I fall on Greg’s side here. Your entire post is illogical and unreasonable from a consumer standpoint. No one cares about a realtors profit margin, but they DO care about the fact that they all seem to charge 6%, whether they got their license yesterday or 20 years ago, whether they do 2 minutes or 6 months worth of work.

      I do appreciate they way realtors will doggedly defend their greatness and their entitlement, putting themselves in the same category as Heart Surgeons, Dentists and the like. Greg was kind to at the very least address your arguments in philisophical terms.

      People care about the value of the service they receive, not profit margins. The value my heart surgeon provides is significantly greater than my New York City realtor, who probably made the same amount of money for showing me 6 units and recommending a lawyer for the “details and closing.” She was a very high priced tour guide and not a great one. Do I care about her margin, nope, but I do care that she got 3% of a transaction and added about 0.0001% of value. That is your big miss and that is why people like Heart Surgeons and dont like realtors. Taking that same money to a Heart Surgeon would have been a bargin.

      Prove your worth does not mean open up your books. I dont care if you make 1% profit or 100% profit, I care that you give me $100k worth of services if you are going to charge me $100k. Period, end of story. If it costs you $1 for that or $99,999 or $200k, I dont care.

      This is the heart of economics. Not sure what courses you were taking, but supply and demand have nothing to do with costs. You provide me a good at the price you think is fair for your efforts and if I feel like I get that amount of value we have a match. No two suppliers have the same costs, nor do any two buyers get the same value. Thats what makes a market.

      A surprising miss from you Mr. Brown. And shame on some other very smart people here for not questioning this earlier and louder. Second time if a few days I am agreeing with Greg here, it makes me very nervous.

    43. Greg Swann May 29th, 2009 12:03 pm

      > Second time if a few days I am agreeing with Greg here, it makes me very nervous.

      I actually laughed out loud. Bless you, sir.

    44. Jeff Brown May 29th, 2009 12:06 pm

      Michael — None of the points you say I ‘missed’ are addressed in the post. At least not the one I wrote. :)

      Have a good one.

    45. Michael Cook May 29th, 2009 12:33 pm

      Lest in your years, you forget your recent writings, here is a reminder:

      “I dare you to demand to know what your dentist, doctor, CPA, attorney et. al. are netting from fees they charge you for their services. What a joke — a bad joke, but a joke nonetheless.”

      This seems to be your thesis, which I submit consumers dont care about based on my previous comments. In this statement you imply that for some reason consumers would demand to know what you net from your fees, which they clearly do not (or at least should not).

      “What I object to is the implied contention by the Transparency Police that part of a free market includes an attitude of entitlement which by definition (theirs) says I hafta pull my pants down and say Mother May I in order to be considered appropriately transparent. When pigs fly.”

      Personal attack warning… They is stupid. Pricing is about supply and demand not costs. If you cant provide a service at a costs that someone will pay, then you simply wont provide the service.

      Proving your worth is more than getting a job done. Its about the value you are proving to your client. I can sell my house, just like you can sell my house. Prove to me that paying you 6% is worth it, dont prove to me that it costs you 5% because I will never care. If you do 5 minutes worth of work, doing something I could have done myself, but because of the NAR or some stupid law, I am not allowed to, you are not proving your worth, but rather adding to the brooding distrust and dislike most consumers feel for real estate agents.

      Back to my example of my realtor in New York. I didnt use her because she added some magical value, I used her because I could not get into see any listings without her. Stupid realtor monopolies kept me from doing my own diligence and they literally robbed me of 3%. Sure, she got the job done, but I simply felt screwed by yet another realtor.

      “They can ask me what I net too, they just won’t ever get an answer.”

      Anyone asking this question is stupid. I would bet this question gets asked by 1 in every 100 customers at best. Consumers dont care what you net, they care about what they get for their money.

    46. Michael Cook May 29th, 2009 12:35 pm

      Speaking of value, someone really should invent spelling and grammer check for these comments. Sorry for my haste in typing.

    47. Jeff Brown May 29th, 2009 12:41 pm

      Again Michael, you’re inferring things my words didn’t convey. That’s alright, as you can take what you wish. I know what I meant, and nothing you address makes any sense whatsoever to me, as I didn’t write with those intentions.

      As far as asking agents/brokers their net, I took that nugget from a recent post on another site specifically. And yes, asking that question of an agent is indeed stupid.

      I’m the last guy to say anything about spelling. :)

    48. Matthew Hardy May 29th, 2009 12:54 pm

      Some transparency drum-bangers are folks who are not very good at getting the actual job done, so they become expert at meaninglessness.

      Transparency is for glass. I’ve never met one person I could actually see through. However, I have unfortunately met too many people who, in bleak contradiction to their stentorian proclamations of righteousness, are proven unworthy of their own standards.

      People want to supplant new words for old words and have new definitions that they can own and so be better. A new ethos is born! We invented it and labeled it and we own it – now tow the line!

      @ Lani “transparency” is a buzz word abused

      Amen sis-tuh.

      > you and I are in the vast majority. The bullies are just louder is all.

      And hope arises!

      Once again, leave it to the man with no hair to set the world straight.

      So there. If you agree with Jeff, you’re mediocre.

      I used to hang around political stuff in Annapolis and D.C. and found there were many who could debate a wrong-headed position so skillfully to utterly decimate their opponent. Don’t get me wrong; I’m not against supporting documentation, it is, however, true that, as a debating tactic, it can be a clever way to obfuscate the obtuse.

      > Transparency… has gone from a truly noble concept to a weapon

      A marketing weapon. A political weapon.

      Read: I am more transparent than my competitor; than my opponent. They are not – and I can cite examples ad nauseum how they are not. So, do business with me, not my competitor. Cast your vote for me, not my opponent. Battle won – and don’t ever question me about it.

    49. James Malanowski May 29th, 2009 12:58 pm

      Wow, this poked at some open sores.

      My original take on the post was the overuse and the misuse of the word “transparency” and how the term is being used to force agents into dropping their drawers for the world. The comments seem to have gone down a different path.

      I don’t think Jeff was ever implying that we should hide our fees from our clients. Not only impossible, but if you are looking for repeat business, a very bad idea.

      Now here’s the flip-side of that. As a listing agent my fees are in writing and negotiated with my client but as a buyer’s agent, unless they have a written contract with me they have not hired me and are not entitled to have any say regarding what I am making on the transaction.

      In the traditional commission-based pay structure, I am being paid my the seller’s agent out of his fee. If that is $1.00 or $10,000 so be it. If I am doing my job I have assisted the buyer purchase a home of their choosing and done all in my power to make sure the closing is smooth and successful. As a REALTOR we are supposed to put our clients before ourselves and the compensation is secondary.

      I personally believe that this system is potentially bad for the buyer since each one of us do this to put bread on the table and it’s nice to have some butter for that bread. If I was a buyer I’d like to be certain that the one who is supposed to be working for me is actually doing so and looking out for my bottom-line and not his.

      The only way to do this is to have the buyer pay their own agent directly and that way there is no underlying concern of where the agent’s loyalty lies.

      Again, this seems to be a conversation for a completely different post as I didn’t think that Jeff was addressing this issue but was addressing the people using the “T” word as billy-club and trying to bash everyone that doesn’t crap in front of a window over the head with it.

    50. Jeff Brown May 29th, 2009 1:21 pm

      James — >My original take on the post was the overuse and the misuse of the word “transparency” and how the term is being used to force agents into dropping their drawers for the world. The comments seem to have gone down a different path.

      Pretty much — but that’s BHB, and it’s never bad to bat around topics unrelated to the post if readers are interested.

    51. James Malanowski May 29th, 2009 3:22 pm

      Agreed … It just makes it hard to follow the conversation when it shoots off in so many different directions! :)

      Also, it sucks when people start riding your ass for something that wasn’t said.

    52. Jeff Brown May 29th, 2009 3:25 pm

      James — grin

      This is BHB, no sissies need apply. :)

    53. James Malanowski May 29th, 2009 3:27 pm

      Hey, I’m always up for a good fight. It’s the pointless ones that drive me nuts.

      Congrats on a post that raised so many hackles!

    54. Brad Rachielles May 29th, 2009 6:09 pm

      It appears that transparency and clarity should work equally. Too many are totally confused either by what was or what was not said. Where is Russell Shaw when you need him?

    55. Greg Swann May 29th, 2009 7:07 pm

      > My original take on the post was the overuse and the misuse of the word “transparency” and how the term is being used to force agents into dropping their drawers for the world.

      And you can either document this or you can’t. So far, you have not, not even a little.

      I have two theories:

      The first is that there is a roving gang of rogue mimes out there silently unpantsing Realtors, but only in private. This would explain why none of you can produce even a scintilla of evidence for the vicious crimes you say are being committed against you incessantly.

      The second is that this entire post and much of the comments thread is a straw-man, just as I said last night. No one is unpantsing you, no one is demanding to know your net compensation, no one is bullying you — unless bullying you means holding you the the standards of behavior appropriate to a human being. No one is PC. And no one — not anyone anywhere — has written anything even remotely like the caricature of transparency you — collectively — have presented here — and then pretended to recognize!

      What this was was a union meeting, an ugly pantomime of phony bravado directed at imaginary villains, coupled with rousing attaboy celebrations of indolence, avarice and the cloying appeal of the thinly-veiled smear. It was the kind of crap I expect to see at Agent Shortbus or Sellsius, not here. Poor Matthew Hardy was so afraid people might not catch on that he had to go and get himself soused for lunch and then puke his resentments all over everyone. There is nothing to be proud of here.

      Meanwhile, in the midst of this and everything else my day brought me, I identified, engaged and killed our recent attacker dead, dead, dead. I felt dirty all day, like Hank Rearden on Thanksgiving, and I would rather not think that my efforts are going to create a megaphone to be used to attack the values that make human life possible. It’s not hard to guess what I will do if I decide that is the case.

      An honest man admits it when he’s wrong, Jeff. A leader worth following doesn’t lead people into error — no matter how desperately they might want to be led there. You knew you were wrong when you saw this:

      The idea seems to be that we’d better have a really long list of things that we do to get the house sold…or we are somehow taking advantage of someone.

      You had a choice to make there, and you deliberately took the wrong side. You can do what you can to make it right now, or you can bluster some more. But you have my word that I will never, ever be in the mediocrity business.

    56. Dan Connolly May 29th, 2009 8:53 pm

      Greg,
      I just came back to this post and fianlly read all of the comments. What I thought Jeff was talking originally, about was the premise that was being discussed the day before on another blog (the one that you call agent shortbus), where a poster was suggesting that the clients should have a right to know what we net from each transaction.

      I didn’t think he was talking was about you or anything you stand for. For the record, I have always read and admired your writing and your approach to the business. Yet now I find myself quoted in your last comment, and clearly you were personally insulted by what I said. For that, I am very sorry.

      I really wasn’t talking about you, and the last thing I would do is come into your house and spit on your carpet. I have been in business for 25 years and am an avid reader of real estate blogs and forums. I have heard many people over the years suggest that real estate agents are not worth the fees that they charge.

      While I have never had a problem with the different approaches and models, (discount brokers, buyer’s rebates etc,) I have had a problem with people who suggest that one approach is more morally correct than another.

      I will frequently spend hundreds and hundreds of hours with clients who never buy or clients who never sell. I talk people out of buying houses on a daily basis, and never try to talk anyone in to anything. Because I will do what ever it takes to help the client get what’s best for them even if it means no sale, then I believe when an easy one comes with virtually no effort for a big commission, I have earned it.

      Again, it was not about anything you have ever said, and I have probably read most of your posts for the last several years.

    57. Jeff Brown May 29th, 2009 9:00 pm

      I have nothing to defend. I decide what’s right and wrong for me, not anyone else. I’m right here, and most folks in my view would agree.

      Much of the so-called thread here has been based upon inference rather than what I said and meant.

      I stand by what I’ve said. I’ll take my ‘mediocrity’ any day. This has descended into the land of silliness.

      Everyone have a great weekend.

    58. Dan Connolly May 29th, 2009 9:32 pm

      Greg,
      If you want, I will post a link to the exact post (and Jeff was a commenter in that thread) where the discussion was about transparency and how much an agent nets from a transaction, earlier that day.

    59. Greg Swann May 29th, 2009 10:10 pm

      > Yet now I find myself quoted in your last comment, and clearly you were personally insulted by what I said.

      No, I wasn’t. I have the hide of an armadillo. My apologies to you, though for misunderstanding what you were saying.

    60. Greg Swann May 29th, 2009 10:16 pm

      > I’m right here, and most folks in my view would agree.

      No, I think you’re wildly wrong, but you have my apologies in any case. The more honest practitioners disclose, the more obviously the crooked and inept among us will stand out. The real issue is not even transparency but information asymetry and velocity of data propagation. We’re headed into a world your pappy wouldn’t recognize.

    61. Greg Swann May 29th, 2009 10:39 pm

      > If you want, I will post a link to the exact post (and Jeff was a commenter in that thread) where the discussion was about transparency and how much an agent nets from a transaction, earlier that day.

      I went and found it. I swear, you can’t make this shit up.

      Second, I don’t have any huge objections to these questions:

      • How much do you actually net for selling my house?
      • Do you get paid more when another agent from your office represents the other side of the transaction?
      • Why do you pick one home inspector over another?
      • Do you receive any benefits if I use your company’s lender, title company, etc.

      These are precisely the kinds of questions educated consumers should be asking, and they’re precisely the kinds of issues smart Realtors should be raising without having to be asked. Every one of these issues is an excellent opportunity for hard-headed nail-’em-down salesmanship. We shouldn’t just welcome the hard issues, we should embrace them.

      But: First: The post itself is vendorslut spam. Zappos is an advertiser on Agent Shortbus. The transparency question that matters — and you had better know it matters to the search engines — is this one: “Why are you posting undisclosed paid reviews of your advertisers’ products?”

      Thanks for hanging in there, Dan. You made my night.

    62. Teri Lussier May 30th, 2009 5:17 am

      Thank you Dan for boldly offering to go where no one else was willing.

      >The real issue is not even transparency but information asymetry and velocity of data propagation.

      This is so true, and most of us don’t understand what that means. I certainly can’t comprehend it completely.

      It’s not going to matter if you agree with the questions or not. Sooner than you think, people will not have to ask the questions because someone somewhere will have provided the answers and our part of our job will be to verify those answers.

      We will be asked to explain and make sense of information from multiple sources. Yes, you do that now, but it’s going to be more information, from more sources.

      Transparency. Yeah, we think we can control, or are in control, of what information gets shared, but we are not. We might, today, for now, be able to prolong the process, but very very soon all barriers to information will be gone.

      Instead of asking “how transparent do I want to be”, perhaps we can ask ourselves “how do we take the vast amount of open information and still serve clients to their best interest”?

    63. Jim Duncan May 30th, 2009 5:44 am

      Somewhat off-topic, but …

      When shopping for a doctor, what’s important to you? Is it ultimately expertise, experience, cost, or how much he’s netting?

      The difference here is that nobody in the medical profession knows how much anything costs. I’ve asked. The answer to my question, “how much does an MRI cost” was “between two and ten thousand dollars.”

      Realtors have the choice to disclose our fees/expenses. Doctors,nurses,office admins, etc. have no clue.

      The medical profession is an irrelevant comparison to real estate.

    64. kevin pellatiro May 30th, 2009 6:06 am

      Mark Green – great points.
      Michael Cook – thank you.

      Jeff Brown – Really??

      “They want information their parents/grandparents would’ve had the good manners never to seek in the first place. Why? Cuz it’s none of their damn business and they knew it.”
      …Or because their access to innards of the industry were like that of their exposure to the market – through a broker and his book. This smacks of market / information control.

      “When shopping for a doctor, what’s important to you?”
      …The answers to my questions. They are different than those I would suggest for an agent, but we asked for this treatment in the generations that led up to placing our gross income on the hud-1 as MINIMUM safety requirement for OUR OWN CLIENTS protection.

      Consequences come – let‘s stop screwing people (with less information) over.

      Are you really so pissed that they ask you? Or is it that they start out holding your answer on the same level as unscrupulous, untrained, burn-&-turn agents? Me too.

      Can we stop sniveling about how talent costs money, and just show worth? Then unabashedly charge for it? We work hard, we work smart, we charge for it. Wouldn’t that actually be transparent AND fair?

    65. kevin pellatiro May 30th, 2009 6:10 am

      Greg, need some help here if you might lend your time:

      This sounds like simple truth to me…
      True capitalism — the mutually-voluntary exchange of values for values — is the only effective antidote to criminality in the marketplace.

      This sounds like complete naivete…
      But the beautiful thing about being completely honest, completely transparent and completely forthcoming about your compensation is that you will forge a much deeper, much more trusting, much more cooperative relationship with your buyers from that moment forward.

      Am I missing the ideal in this assumption, or is your world better than the one I get to play in (grin)?

    66. Greg Swann May 30th, 2009 6:41 am

      Quickly for now, not alone because it’s Saturday:

      > information asymetry

      MIBOR is a dumbass distraction. Why doesn’t your IDX system include closed transactions? Buyers are deprived of precisely the information they need to price to the market. There are many other examples of information asymetry in the process.

      > velocity of data propagation

      Sale Pending for how much? It’s recorded in the MLS system. Why isn’t it reported? In every other financial market, bid and ask prices are reported continuously in real time. Again, there are many other ways that material facts are withheld from buyers to the the advantage of sellers.

    67. Mark Green May 30th, 2009 7:29 am

      Kevin P. thanks for the shout out. It’s insane how this thread has meandered so far off topic. What the hell are we talking about a shoe company and vendorsluts for?

      To me, the problem remains crystal clear. Clients are asking “How much am I gonna pay for this muffler?” and some of your answers are “None of your GD business and others say “Well I’m glad you asked kind sir.”

      Either way, the question is here to stay, so get used to the idea. The killer thing about the dialogue is that it all derives into salesmanship and good ole’ fashioned “overcoming objections”. I wish not to rehash my original take, but therein lies the solution for those of you who’d like to find a way to condition consumers to focus on the service and not the cost.

    68. Mark Madsen May 30th, 2009 2:33 pm

      Wow, I’m surprised I haven’t read any responses from mortgage brokers yet.

      Transparency is good when you can show what an interest rate pays (YSP).

      I’d probably be fine with disclosing a net figure for a client if they were ok with me breaking it down to my hourly rate as well.

      Office, annual licensing, continued education, total monthly credit report / DU charges, office, salaries…

      We recently created a full net income report for a bank we were planning on setting up a branch with. After all of the figures came in, based on avg monthly loan volume, we literally had to make a minimum of .875% per loan just to keep the lights on.

      Considering most agents and clients think that a 1% origination fee (with a par rate) is negotiable, I’d way rather move to a flat fee model.

      With the way HR1728 is shaking up, it looks like banks (not brokers) will be the only ones left in the mortgage and real estate industry who get to hide stuff from clients.

    69. Greg Dallaire May 30th, 2009 4:59 pm

      Jeff,

      This is my first chance to read one of your posts and post on Bloodhound. I look forward to reading more of your thoughtful blog posts.

      I completely agree with you that it’s none of our clients business about what we will be netting. It’s very clear what we charge when someone enlist’s our services.

      You mentioned that you always disclose up front if there is a referral fee. That is excellent transparency and you should be commeneded for that.
      Your professionalism really shines through a difficult topic to tackle.

    70. Dan Sullivan May 30th, 2009 5:24 pm

      In response to Greg’s post:

      “> velocity of data propagation

      Sale Pending for how much? It’s recorded in the MLS system. Why isn’t it reported? In every other financial market, bid and ask prices are reported continuously in real time. Again, there are many other ways that material facts are withheld from buyers to the the advantage of sellers.”

      Greg;

      I wholeheartedly agree with you that data on sold properties should be available to everyone. One of my greatest frustrations with the MLS is that they won’t allow me to share the data that matters the most to people.

      But releasing the data on pending sales would be a huge disservice to the sellers if the contract doesn’t get to closing. Pending offers don’t mean a thing if they don’t close. The general data is irrelevant unless you know every minute detail of the contract, and making it public would hurt almost every seller that had to re-activate a listing after having it under contract.

      As someone that works harder for their sellers than anyone I have come across, I’m surprised that you would advocate that pending sale information should be public.

    71. Brian Brady May 30th, 2009 5:29 pm

      “With the way HR1728 is shaking up, it looks like banks (not brokers) will be the only ones left in the mortgage and real estate industry who get to hide stuff from clients.”

      Which is a great reason to use a professional mortgage broker. A mortgage broker is the only mortgage origination relationship that offers a consumer the best shot at some sort of fiduciary obligation

    72. Jeff Brown May 30th, 2009 7:05 pm

      Greg Dallaire — Thanks much — your thoughts are appreciated big time.

    73. Russell Shaw May 30th, 2009 9:26 pm

      Well I would like you to appreciate my thoughts big time too, Jeff. I totally agree with you.

    74. [...] tonight  I was reading  Jeff Brown’s latest post (and most of the 100 or so comments that were bound to ensue) when finally, the ideal segue hit [...]

    75. Joe Loomer May 31st, 2009 6:49 am

      @Greg – don’t you feel including the contract price in the public MLS for Pending properties could damage a Buyer’s position? Would it not incite folks to present higher offers on certain properties as “back ups?” Then the less reputable would do everything in their power to derail the existing agreement.

      Our MLS does not require a contract price input when changing properties from Active to Pending.

      Navy Chief, Navy Pride

    76. Jeff Brown May 31st, 2009 9:52 am

      You know I appreciate it Russ, big time.

    77. Cheryl Johnson June 1st, 2009 10:05 am

      I’ve been reading this conversation with great interest for the past few days, and all I can say is “Boy, am I relieved”…

      Here I was worrying “transparency” meant that if the buyer said the seller was an idiotic A-Hole I was obliged to pass that information on.

      :-)

    78. Sue Zanzonico June 3rd, 2009 6:54 pm

      I too am relieved. I often have clients ask me about my commission. Many people think we make 6% everytime we sell a house. I explain how it works at a high level buyers agent/sellers agent…negotiated percentage from agency, but never go any further. Thats fair.

    79. [...] as real estate agents are learning about short sales, bank owned properties, and transparency, mortgage originators have a full-time job keeping up with industry news so that we can lead our [...]