Author: Greg Swann (page 143 of 209)

by Greg Swann

Suburban Phoenix Real Estate Broker

Author website

This is me in today’s Arizona Republic (permanent link). This is familiar turf to readers here, but I’m wondering if consumers might invest more effort in contemplating the issue.

 
Questions answer why real estate license laws should be repealed

The idea of repealing real estate licensing laws continues to percolate in my email, and I’ve written more on the subject at BloodhoundBlog.com.

I think I can make understanding this issue easier. Give a look to these questions. If you answer them honestly, you will understand why the real estate licensing laws should be repealed — even though they won’t be.

In the absence of real estate licensing laws, are consumers more likely or less likely to investigate the education, qualifications and experience of prospective agents?

In the presence of real estate licensing laws, are new licensees more likely or less likely to equate their status as licensed real estate agents with better-educated, more-qualified, more-experienced agents?

Taking account that they make profits when they perform their functions well and suffer liabilities when they fail, do free-market oversight entities seem more likely or less likely to assure consumer protection than government bureaucracies?

The same question on a more practical level: When buying electrical equipment, if you could have either government regulation or oversight by the Underwriters Laboratories, but not both, which would you choose?

In the presence of real estate licensing laws, are free-market oversight entities focusing on real estate transactions more likely or less likely to come into existence?

In the presence of real estate licensing laws, are alternative business models — radically different from traditional real estate brokerages but offering consumers more choice and possibly substantial cash savings — more likely or less likely to come into existence?

In the presence of real estate licensing laws, are traditional real estate brokers more likely or less likely to try to outlaw alternative business models offering real estate brokerage services to consumers for reduced or even no compensation?

Is there any consumer interest that would not be better served by repealing the real estate licensing laws? Even if you wish to assert that the laws offer some benefits to consumers, can you argue that Read more

by Greg Swann

Suburban Phoenix Real Estate Broker

Author website

Mark Nadel‘s ground-breaking paper on traditional real estate commission models has been published in an abbreviated form in the Cornell Real Estate Review.

Nota bene: I embedded the wrong link for the Cornell version of the paper. It’s fixed now.

Technorati Tags: compensation for buyer representation, disintermediation, real estate, real estate marketing

by Greg Swann

Suburban Phoenix Real Estate Broker

Author website

When I walk into a supermarket, the first thing I look at are the floors. If they aren’t buffed to a blinding glow, I walk right back out. Why? Because if the manager isn’t staying on top of the floor maintenance, he isn’t staying on top of anything else, either. Without doubt, I am “protected” by vast armies of federal, state and local food cops, but it turns out that they are not willing to get food poisoning in my place. If I fail to guard my own self-interest, the courts might make me (or my heirs) whole — after-the-fact. But nothing can protect me if I won’t protect myself.

Surely you effect many similar sorts of “consumer protection” in your own behalf, possibly believing in your heart that the laws can protect you, yet exercising caution to protect yourself even so. But consider this: If, when selecting electrical equipment, you had to choose between oversight by government functionaries or the Underwriters Laboratories — but not both — which one would you choose?

If you said government, you can stop reading now. You’re hopeless. For those still with us, what we’re doing is exploring the implications of doing away with real estate licensing laws. And if that idea makes you shiver, you can settle down: No matter what I say, the real estate laws are not going to be repealed any time soon.

But imagine for a moment that your neighbor’s mother introduced an old friend to the FSBO seller up the street. This is brokerage, introducing buyer to seller. The principals are unrepresented, but they can do everything they need to do — in Arizona, at least — at the offices of a title company. Nothing unlawful has occurred — until grandma takes a finder’s fee from either the seller or the buyer.

At that point she is in violation of real estate licensing laws. She can connect buyers with sellers all day, every day — provided she does not get paid for doing so. The purpose of the real estate licensing laws is not to protect buyers and sellers from chatty grandmas, who Read more

by Greg Swann

Suburban Phoenix Real Estate Broker

Author website

My own personal experience with For-Sale-By-Owner sellers is pretty limited. I’ve never farmed them for listings, so I know nothing of that part of their lives. I’ve called a bunch of them to try to show their homes, but only once have I successfully gotten into one with my buyers. Mostly my experience consists of unreturned phone calls. Not a huge tragedy: The houses I’ve called on were almost always insanely over-priced. Actually, I have seen quite a few FSBOs — after they were listed by professionals and professionally-priced.

This has led me to believe that newspaper reporters live in a different universe. I’m pretty sure that most FSBO stories have unhappy endings, but you’d never guess that by reading the papers.

The New York Times coughs up another example today, this one based on a study done in Madison, Wisconsin. The story doesn’t concern FSBOs, but, rather, an alternative discount listing service, essentially an MLS-less real estate brokerage. The claim of the study is that sellers willing to sell into an artificially limited pool of buyers do as well or better than the sellers of Realtor-represented homes.

Is it true? Who knows? There’s not enough data to judge. Apparently the study measures sold homes. What about the homes that didn’t sell, or didn’t sell until they were listed by a Realtor? The authors of the study claim they were able to account for differences among properties, but this is simply an invitation to endless quibbling. In the end it doesn’t matter. Value is at once a matter of subjective perception and a practical, real-world trade-off. If you believe your time is best spent changing your own oil, you’re probably not my ideal client.

As you might expect, the study was done during the boom, when you couldn’t get a yard sign posted before the home sold. It is also reasonable to expect that newspapers all over the country will pick up the story, since it offers such amazingly bad advice in the current market.

More: Galen Ward speculates on agent skill sets, Glenn Kelman finds still another foot to shoot: Redfin is useless for Read more