A Phil Hall Op-Ed: Ever since the National Association of Realtors (NAR) announced its $418 million settlement to settle the charges raised in the Sitzer/Burnett case, there has been a flood of bizarre articles, interviews and opinion pieces in the mainstream media blaming real estate professionals for the problems facing the American housing market. The depth and scope of the ignorance on display is fascinating for all the wrong reasons – it provides a cruel display of information gatekeepers who are failing in their duties to educate the general public.
Readers of this site are already aware of the Wall Street Journal’s scurrilous opinion column that stated the commissions earned by real estate professionals amounted to “a rigged game that pads their pockets at the expense of consumers.” The Journal’s editors also claimed that “empirical evidence also shows that buyer brokers steer clients away from homes whose sellers paid them less than 2.5% to 3%” – of course, the Journal’s editors never bothered to share this evidence.
Other media outlets are just as outrageous. Bloomberg’s Conor Sen put his name to a piece titled “Squeezing Realtors Is Just What the Housing Market Needs.” According to Sen, “Commissions are in a state of flux, but one immediate outcome should be increased transactions that will get the property market moving again.”
Moving again? Last week, NAR reported that existing home sales during February spiked by 9.5% from January to a seasonally adjusted annual rate of 4.38 million, while RE/MAX reported home sales in February recorded a 17% upswing from January and a 2.3% uptick from one year earlier. The market is very much in motion without the need to squeeze realtors.
Things aren’t much better at the New York Times, where opinion columnist Peter Coy published “A Big Step Toward a Fairer Housing Market.” According to Coy, “Realtors’ commission practices have long been anticompetitive.” Coy also declared, “The history of the real estate industry’s efforts to prop up commissions is long and inglorious” – obviously, Coy believes that people with commission-fueled jobs should be ashamed of themselves for wanting to make a good living.
“The combined commission paid to agents for buyers and sellers is typically 5 percent to 6 percent, compared with below 2 percent in Britain, the Netherlands and Sweden, among other countries,” Coy added – which is irrelevant considering those countries are considerably smaller and their housing markets are significantly different at multiple levels when compared to the American environment.
Over at Yahoo Finance, Seana Smith took credit for something called “Realtor commission change delivers a boon to homebuilders, a blow to real estate platforms.” I was a little surprised to learn that the NAR settlement will help builders, but the article carries a single quote from National Association of Home Builders CEO Jim Tobin that said, “As commissions come down, I hope we will see costs to builders come down as well. That translates into lower home prices for consumers.”
Sadly, Smith never bothered to ask Tobin a follow up question regarding which costs to builders will be coming down thanks to the NAR settlement – are we talking about the price of building materials, the wages paid to construction workers, permitting costs, insurance, taxes, or is there something else that is specifically tied to realtor commissions that makes it so expensive to build a new home?
Smith’s article also quotes KBW analyst Ryan Tomasello, who declared, “This will reshape the housing market in the greatest fashion we’ve seen in over 50 years.” Oh, please, where do they find these people?
And then there is Washington Post opinion columnist Megan McArdle, whose piece “We’ll soon find out the true value of real estate agents” is littered which such witticisms as “Arguably, the value of brokerage services has been dropping since NAR was founded in 1908” and “Many sellers find their brokers by getting recommendations from friends, which probably selects for amiability, rather than skill.” Seriously, these people are getting paid to write this stuff?
Within the journalism world, there is a great deal of introspective bafflement regarding why so many people have stopped paying attention to mainstream media outlets. When you take the time to read the nonsense that is being published today, it is easy to understand why readership is dwindling and the mainstream media is not being taken seriously anymore.
Phil Hall is editor of Weekly Real Estate News. He can be reached at [email protected].
;
I really appreciate this piece and it’s needed. The misinformation out there is head spinning. To see once considered reputable news sources putting out editorials that are complete bile is disgusting. I noticed a banker on X the other day going off on how greedy and lazy Realtors are. Because we charge a $12,000 fee for a $500,000 home sale and from that our brokerage costs, taxes, overhead costs, insurance, marketing costs, all kinds of fees, we make a percent of profit just like other industries. The whole fee does not go to our profit – it is how we make a living and that banker’s industry for the same $500,000 house charges $18,600 a year in interest, every year for 30 years until $558,000 in interest charges have been paid, not including a dime of principal or equity for the seller. But yeah, look over there at the Realtors.
I want to point out that the attorneys that file these lawsuits are getting a percentage from the outcome, just like we are. In most cases, the attorney will make more than any of the plaintiffs in any of the cases. If making a percentage of the outcome is wrong, then it is hypocritical if the attorneys that file the cases.
After almost 40 years of being in the real estate business working for brokers, builders, and developers I am still dumbfounded by the media and attorneys’ lack of knowledge of how the business works. The NAR doesn’t set commissions, nor do I or my broker, builder, or developer. The commission is “set” by a discussion between the realtor and seller. The buyer’s agent is no longer only obligated to receive a “set” co-broke fee as per MLS. Now, the buyer and buyer broker can “set” a fee with a buyer’s broker agreement. Therefore, NAR, myself, my broker, a builder, and a developer can no longer set buyers’ agent fees. So, the long dispute as to who pays the commission will be resolved. The buyer’s agent fee is no longer on the seller’s side of the closing sheet. It will now be on the buyer’s side and the buyer can finally be correct that they pay the commission, for their representative.
I am glad that the problem is now solved. I am sure that the buyers will now feel much better about any “set” fee since they are paying for it.
P.S. Maybe the attorneys and media should go after the computer industry next. It’s the computer industry’s fault that the print media is a dying entity. This is of course due to the use of computer websites for news and real estate information. No longer is the real estate section of the print media filled with ads by real estate businesses. Our “local” paper’s Sunday real estate section is down to 3-4 pages from 3 regular advertisers. 95% of the buyers use the computer for their search for real estate. The media has a set fee, a subscription, to buy a publication. Yet, I don’t get to negotiate the price as a buyer. Now as the numbers of readers drop, they are raising their prices to read these print publications. Other than the Post Office, I don’t know of any other business that can raise rates because of declining revenues.
It fits with most news articles today: Clickbait. Maybe somebody needs to re-evaluate the value of reporters.
This is to expected. Any time there is a controversial issue, various organizations of all kinds use the situation to bang their drums and use the situation as an opportunity to expound their viewpoints. Invariably there are lies, half truths and polemics on social media. One needs to reflect on the situation and think back to when real estate appraisers (I’m one of those), Wall St. brokers and many, many other industries and trade groups have been beaten up over the years. Although of course it is important to put the truth out there and counteract what is being said. Presumably NAR and other agent orgs are using professional PR consultants to assist.
However as we know NOT everyone pays attention to the war going on within the real estate and consumer group “industries” . As the old adage goes, today’s news is tomorrow’s fish wrapper. This too shall pass. My guess is that the average home owner/buyer will take note and there will be changes that the realtors have to deal with, but the bulk of the nonsense will be forgotten. Startling misleading headlines catch eyeballs. That is what keeps the media in business. The way for individual agents to deal with it is with their clients and prospects on a personal level.
Lawyers often get 30% of an award fee. How much are the lawyers getting from the NAR Settlement fee?
The media loves sensationalism. Biased reports and “fake news” abound. Maybe brokers should start working for the media?
If it bleeds it reads! This is the way media outlets try to increase their viewership and pick up more advertisers. Maybe we should we need to reduce the income these outlets are making from their advertisers and lower the costs across the board for all these products that they make money from and escalate costs to the consumer. There is no logic except their desire to try to increase readership which we all know has fallen tremendously over the years.
It is easy to write this off as clickbait or sensationalism, but it is more serious than that. Before working as a Realtor, I was in public relations and worked directly with the press. These headlines and comments do effect people’s opinions. Seriously. I’ve been noticing this tone shift over the past year and have been alerting colleagues ever since that this will have serious ramifications. The situation has accelerated and gotten so much worse. You can see this in the things that friends and family might be saying or asking about (even while they defend you). But you can really see it in the commissions that are already dropping to lower levels. Another reason why I decided last fall to leave the industry after 16 years and running a brokerage. I’m not interested in this fight. I want to help my clients to buy and sell homes–not defend my role, my value and my industry. I do not miss it one bit. I’m now a technical writer in the growing AI field and get to work at home on my own schedule and love it. And the pay is great and consistent. But–seriously–do not underestimate the effect of articles like this hitting all the time right now. You may think you are a seasoned professional who can run a great business because you’re a baller and a grinder who makes things happen, but you will suffer professionally and economically in the coming year or two. Everything I saw coming starting early last year has come through–sooner and in a bigger degree than I expected. I’m not trying to scare you, just telling you to step outside of your perspective and see things from the POV of a regular person (Especially a regular person who feels they might have an advantage to save thousands of dollars).
Infiltrators acting as experts spreading lies, marginalizing anyone who has a counter point, liars (media) are setting a narrative & then ridiculing or censoring anyone who has an opposing view then crying about free speech, projecting, these liars have poisoned many professions & they are paid well for it. It’s one big plan. Those in education , science, medical fields livelihoods have been disrupted, thx to covid & climate change. Now the real estate industry & realtors are being attacked, demonized. We are in an information war, we are in the midst of the great reset. Those who believe in individual freedom, truth & justice can only hope the liars house of cards will soon crumble under its own weight of deceit & corruption. NAR has been infiltrated; every institution & organization has been tainted by leftists. USA is in controlled demolition, homeownership aka the American Dream is being wiped out. That’s what this is about, they do it in incremental steps!
My bona fides: I have been listing and selling real estate since 1976.
Home ownership has customarily created a certain amount of wealth for sellers; this has enabled sellers to pay both sides of our fees, whereas buyers, especially first time homebuyers, do not have the financial wear-with-all to compensate their agents.
Never in all these years, which include 23 years of branch management, have I seen an agent exclude a home based upon a reduced buyer broker payout. A
Nor have I been aware of a buyer’s agent pressuring their client to overpay for a home so there will earn a higher commission. not once. Frankly, the dollar differential would be minimal but the loss of trust would be huge.
Buyer (and seller) representation is taken very seriously in my profession. We take good care of our buyers and/or sellers, depending on whom we represent. This is a proverbial tempest in a teapot.
Realtors need a different organization representing their voice right now. All of these comments being shared in venues only being read by other Realtors are resulting in an echo chamber. Industry leaders need to band together to make a short-term consortium for an aggressive press presence talking about how we really work and how wrong NAR is. The industry can no longer rely on NAR and the local associations to represent their best interests.
A recent article stated that realtors average income is $44,000-$58,000 per year – wow, we are really getting super rich off all these commissions we are making!