"Chipping Away at Realtors' Six Percent" Lesley Stahl - 60 Minutes May 13, 2007 ( http://www.cbsnews.com/stories/2007/05/11/60minutes/main2790865.shtml)
"Dear Fellow REALTOR®:
I am disappointed and dismayed at the biased story that 60 Minutes aired on Sunday evening. I want to let you know that we've been working to stay on top of this story.
One of the most difficult challenges we face is educating the news media about today's real estate industry. There's no better example than this 60 Minutes show. For more than a year, NAR worked with the producers who put the segment together and offered several spokespersons to be interviewed for the show, including myself. Yet, NAR's voice was strangely and noticeably absent from the segment though CBS gave time to two critics who disagree with our policies on the display of listings on the Internet.
At times, NAR and REALTORS® have often been the subject of less than accurate news coverage. Your association and its professional staff is making every effort to get the REALTOR® message out to the news media. The result is that only a fraction-less than five percent-of the vast news media we receive is negative.
We encourage all of you to contact CBS to voice your concerns -- maybe have some of your satisified customers do the same. Thank you for your support.
Pat V. Combs
President"
My Response -
CBS:
Ahh, another expose on those evil, wealthy, Realtors.
I support public access to MLS data because it is advantageous to both the consumer and to the real estate industry as a whole. It is unfortunate that there is such a disconnect between the media and the reality of the industry. The vast majority of MLS systems are already accessible to the public via a nearly limitless number of independent sites - including mine - all made available by the Realtors who have built the MLS systems and who pay for the operation and maintenance those systems. Each MLS is an independently owned company. Each was originally designed to share listings information among agents so as to improve service delivery to consumers - to make it easier for sellers to sell and for buyers to buy.
The system offered by Redfin is essentially a flat fee service - already common to this industry and already widely available. It, however, is not a free service nor inexpensive for the level of service provided. In most areas, there is at least one company that will be happy to list a home on their local MLS for a flat fee. But, as compared to the professional assistance provided by a flesh and blood Realtor, the Redfin fee for limited service seems reasonable. From what I see, I have no objection to their approach.
However, Redfin does not. "... display(s) for free" as you reported any more than any MLS displays for free. Redfin charges $3000. Most Realtors, providing the same level of minimum service, would be happy to accept $3000 as a listing side fee; but, most consumers want much more from Realtors than just a simple listing - they want hands on help. And remember, that $3000 is just on the listing side. Buyers today want their own representation, too - who will pay for that? Buyers today expect the sellers to cover the buyer's commission costs. Buyers understand that they need their own advocates. Agents for buyers do not work without compensation.
So, the total cost of using a service such as Redfin is likely very close to that of using a local company that is willing to provide the same level of limited services. There is nothing wrong with what Redfin offers; but, if you want more, expect to pay for more. Some companies offer limited service listings while others are always full service. You, as a consumer, already can freely choose the level of service you want. There is no 6% conspiracy. Let me say that again … there is NO 6% conspiracy.
A 6% commission is not, nor has it ever been, a “standard commission“. Certainly CBS realizes that an industry wide set commission rate would be illegal and in violation of Rico and anti-trust laws; thus, the 6% as a set commission DOES NOT exist. In my own market, I see 3%, 4%, 5%, and yes, 6% commissions - plus I see flat listing fees such as those highlighted by the segment. The consumer has many choices. "They charge a 6% commission..." as presented by your program as a standard fee is misleading at best.
Real estate is not a get rich quick business. It is tough, it is expensive, the commissions are competitive, and half of new agents fail to survive past the first year while over 90% are out of the business by their 5th year. It takes real work to get a home sold today. There is so much more involved than just listing - and the liability incurred by agents is huge.
Of the 1,200,000 realtors in the country, only 36,000 of them make more than $50,000 per year - that's just 3%. Realtors in the business for two years or less earned a median of $15,300 per year in 2006. Realtors with three to five years of experience earned $44,200. Of those 10% of Realtors who survive past 5 years, those with six to 15 years in the business earned $64,600. Finally, the heavy hitters with 16 or more years of experience earned a whopping $76,200. How does that compare to professionals of similar experience and attrition?
Yes, attacking Realtors sells well but it hurts consumers as well as Realtors. Give Realtors AND consumers a break - pick on an industry that is actually hurting consumers. There is no shortage of evil doers.
Chris DeLoach, MEd, MAT, ABR
Broker-in-Charge, House Plan Realty, LLC
Charleston, South Carolina
843-270-1272 Toll Free 877-773-9270
Chris@houseplanrealty.com
www.searchSChomes.com