DOJ and NAR – so what?

Have you seen this article in the Washington Post?

Justice Department officials and others who have tracked the case said the agreement will result in more choices and better service for consumers, as well as lower costs because of competition over commissions. Many online firms offer savings because they provide limited services.

To start –

1) What business does the government have in regulating free enterprise?

2) Nothing is preventing others from starting their own MLS.

3) I’d like to know how much this investigation/suit/settlement cost the taxpayers.

4) Those who think the Realtor business isn’t competitive doesn’t know what they’re talking about.

Download the proposed settlement here (and actually read it!)

The Real Estate Bloggers write what I was thinking:

The amazing thing about monopoly and governmental lawsuits against companies over the issues of technology is that by the time the slow gears of justice run their course, the battle has long been over.

This is the case of the NAR. The opening of the MLS systems to online and virtual real estate companies has long been over. The bigger battle will be the viability of maintaining an expensive MLS in the age of Trulias and Zillows.

Zillow and Trulia and Cyberhomes and Roost, etc. didn’t exist in 2004.

And the XBroker wrote the headline I wish I’d written – DOJ vs NAR Lawsuit Turned Into an Exercise in Irrelevancy

Where will we go from here? Realtors will keep competing, buyers will keep searching online, sellers will still think that print advertising works (it does, but not to sell houses), and technology will continue to change at a pace much faster than behemoths like the NAR or the incompetents within our federal government can handle.

Innovation was just fine before the government stepped in, thank you.

Next up – the DOJ should go after Google for having the most dominant search engine.

——————

More coverage:

Agent Genius

Joe at Sellsius provides a legal perspective

An MLS perspective by Michael Wurzer

Bloodhound

Redfin

The original article appeared on Jim Duncan’s blog, RealCentralVA.com and has been republished here at VARBuzz by request.

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25 Responses to DOJ and NAR – so what?

  1. Jim, Ssssssshhhhh about the DOJ going after Google. I guarantee that is where they are going next and I am afraid they will screw things up. Google has become too popular and successful and “must be stopped” by our guardians in the Federal Government. The only reason they came after NAR was that the real estate market was so hot. Now that it has cooled, the public no longer cares – ah, the politics of public opinion.

  2. Jim, while I don’t have a specific comment about your blog, I do have something I have to get off my chest on this topic. Why would NAR say the settlement is a “win-win” for consumers (as if the settlement is what NAR hoped the outcome would be). To the lay person (and me) it’s very disingenuous on NAR’s part. After all, if I got a traffic ticket, but then settled it out of court before my trial date, I wouldn’t hold a press conference saying my settlement was a “win win”. I would be remiss if I didn’t acknowledge I shouldn’t have been speeding.

    And I’m apparently not the only person who thinks this. Below is a blog posting from Jeff Nolan, a well known venture capitalist. I feel it’s this type of “corporate save face” attitude that gets us REALTORS into trouble with consumers because they feel that there is a lack of trust, when the reality is that trust is one of the few assets we have in our business and must be carefully guarded. – DROdio

    Date: May 28, 2008 11:20:50 AM EDT
    Subject: Big Barrier Removed for Online Real Estate Brokers
    Source: Venture Chronicles
    Author: Jeff

    The trade group, which represents 1.2 million residential and commercial brokers, called the settlement “a win-win” for its industry and consumers.

    “Today I can say with clear knowledge … that the real estate industry is dynamic, entrepreneurial and fiercely competitive,” said NAR President Richard Gaylord in a statement.
    [From Online real estate agents get equality with traditional brokers – USATODAY.com]

    The National Association of Realtors reached a settlement, which has to be approved by a judge, to end anticompetitive activities that constrained online real estate services and brokers. I was actually a little shocked to learn that there are over 1,000 listing services, of which 80% operate under the auspices of NAB guidelines.

    In reading the story in USA Today I was struck by the quote from the NAB above; am I to surmise that the old system was in fact a win-lose one and not really that dynamic, entrepreneurial or competitive? Yeah, it seems that way.

  3. Jim Rake says:

    First – For those of us that didn’t catch yesterday’s Post article – thanks. It’s an important issue for us to pay attention to. Believe NAR’s “win-win” response was the only one they could possibly have – it’s all about PR.
    Secondly, thanks for the links, Sellsius seldom disappoints. Lastly – don’t know about DOJ and Google…I’d be a bit more concerned if I were Zillow. While not a VOW, DOJ’s reach has a tendency to “creep”, and Zillow’s “freedom” may, at some point, be found to be infringing upon the seller’s rights. At the end of the day, I’d have to agree with Jim – the market tends to sort things out long before the Feds get into gear.

  4. David says:

    Yup, the market already settled the issue. I like the comment about how much taxpayer money went into this lawsuit.

  5. Jim R, Zillow is too small potatoes for the DOJ. Heck, Zillow is probably not even making a profit yet. Zillow’s goal, or measure of success, should be to find thenselves in the crosshairs of the DOJ. As Donald Trump says, and I paraphrase (badly), “if you are not getting sued, you are not successful.” Zillow is not there yet.

  6. Jim Rake says:

    Dave – good point, but Zillow’s piece of the pie seems to be growing, and don’t think there are plans on contracting. Don’t think it’ll happen tomorrow. Like so many other actions by DOJ, when there’s enough screaming, they’ll listen.

  7. I don’t recall who made this comment on the many, many related posts, but this wasn’t a win-win, in that our taxes paid for the DOJ part and unfortunately member’s dues has to be paid to defend against this issue.

    I’d really like to see DOJ get more invested in the oil companies. Now that I would happily support my taxes being used for! :)

  8. Bob Jurgensen says:

    Ah, TRUST! THAT is what it is all about, always has been and always will. Zillow and others like them offer some limited value, in terms of quick data (which can be found and assessed more accurately by a real person WHO KNOWS THAT THEY ARE DOING (and can be TRUSTED!) No web site will ever replace a honest, hard working and dedicated agent who works 6 or 7 days a week, morning, noon and nights – weekeneds included, providing REAL service and a lockbox access.

    What this industry needs is about a zillion % more professionalism, mandates for higher education and competency (experience!) in terms of licensure: WHAT ABOUT NEW AGENTS being required to serve three years as an apprentice under the superivision of a licensed broker or associate broker (on their team, for example!) and not being allowed to put anything in their name or get paid anything more than a reasonable percentage until they prove their competency and get THEIR broker’s license! NOW THAT MIGHT WORK! And weed out all these weekend warriors who THINK they are a real estate agent because they got paid a lot of money for a deal, suddenly they are egomaniacs… hot shots. Big deal! I’ve met more morons in this business than in any other business I have ever been involved in… two weeks in a classroom and they turn you lose on the public – it’s insane. But states must love those penalty revenues because they sure don’t want to make any changes!

  9. Bob – here here! Agreed 100%. Our industry needs to accept responsibility for the breach of trust it’s created in the public domain and rebuild that trust. Until we do that, it’ll always be realtors vs. the press & public. – DROdio

  10. Bob Jurgensen says:

    Bottom line? Algorithms will never replace TRUST when it comes to selling someone’s most prized possession – something so personal and so significant, financially and emotionally – sorry, Zillow and others that follow – not to mention Redfin – sure there are people who will use them but the vast majority of buyers and sellers need true guidance, honest advice, someone who puts THEM first – not the commission.

    Until state licensing agencies and local, state and national get their priorities straight, i.e., their addictions to dues and fees and learn to put the PUBLIC first – and quit handing out real estate licenses like candy on Halloween night – nothing will ever change. Brokerage licensure USED TO MEAN SOMETHING – not anymore apparently… professional designations USED TO MEAN SOMETHING – not any more. Ask an agent with 1-2 years experience what the requirements are for licensure as an associate broker, or what GRI or CRS stands for and you will get a blank look – in other words: “just give me my check” – don’t get me wrong, money is good and nice but it’s not my first priority – my philosphy is simple: if I do a great job and OVER DELIVER (and perhaps under promise!) my dividends will pay back for many years in terms of referrals and repeat business… few new agents even grasp that concept. Sad – so, so sad. Want proof? Our board has lost over 1000 (out of just over 3000) agents in the past year or so – in 2005 we had only 1300 agents! Where did they all go? They left because NOW YOU HAVE TO WORK to make a sale… bizarre as that may seem, that is the way it used to be.

    Wake up DPOR, NAR, VAR, et al – it’s time for a reality check – double the dues, double the continuing ed and make sure no agent can operate alone until they are licensed as an associate broker – minimum 3 years as an apprentice – nothing goes int their name until the day DPOR delivers that AB license to their door… that will drive 90% of this deadwood out of this business in a hurry. I was a RE/MAX agent for ten years – and I can tell you, it was professional and selective – not any more! Can you fog a mirror? You are an agent and better yet, you can now go to a 100% company and effectively inflict your incompetence on the general public in mass. Hey, they paid their dues and their licensing fees, right? They must be entitled.

    What a mess!

  11. Bob,

    I agree with “some” of this. I can tell you that I and some others that I know, were very competent within the first year to year in a half, but it took a great deal of effort and constant training.

    I see that you’ve listed DPOR, VAR, NAR, et al in here and I certainly agree that they have some influence into this, but these entities simply carryout existing laws. The elected officials set policy and licensing standards.

    I think the real issue here is none of the above, but rather the Broker’s responsibility to not allow untrained or incompetent agents to be servicing clients.

    Franchises have little to do with the issue at all. I don’t think that an agent working for company XYZ is more capable – unless the Broker has stricter policies and better education.

    It truly has been my experience that the further from pre-licensing the agent gets the less interest they have in their own development and education and many “experienced” brokers knowledge about current trends and evolving regulations is very much lacking. Would you like to know the number of Principal and Managing Brokers who have no idea that they have an additional 8 hour requirement to renew their licensed and then very loudly complain that they shouldn’t have to take the training!?!?!

    Legislation should not be an obstacle to competition. The market has dictated the survivors and will continue to do so.

    Professionalism is personal issue. Are there things that legislatively could be done? YES – eliminating single agent dual-agency is a huge one on my list. Increasing education requirements and TESTING to ensure that you actually retained information from continuing education is another consideration.
    I have eleven “designations” and a broker’s license. Those letters do not make me a superior agent. I am an instructor in almost everything one could imagine and I will tell you that having a broker’s license or designations has little to do with the level of professionalism of the person.

    I worked hard at my training so that I best represent my clients before going to work for the association. Frankly, in my first year; I retained and knew more about real estate law than a majority of the agents out there regardless of their level of experience. By my 18th month I actually had attorneys (notice plural) from our area calling me about where to find information….

    We agree that there are many things that can be done to enhance public perception and good client service – but here’s what I’ll leave with: It doesn’t matter at all how much legislation or how many Code of Ethics Articles are added, if agents who are aware of violations, continue complain but take no action to report these issues.

    From my standpoint as a staff member, I routinely hear about some agent who has thumbed their nose at an issue; but when the reporter is asked to put it in writing, they do not.

    I feel that experience yields wisdom, but does not always equate to a better agent. It always come down to the person’s ability to care about their client and combine, knowledge, wisdom and caring to reach the consumer’s goals with the best protections.

  12. How the heck did we get from NAR / DOJ to here?

  13. If you guys want to talk about professionalism, you should read my post on Bloodhoundblog that I wrote during the last VAR strat plan meeting. http://www.bloodhoundrealty.com/BloodhoundBlog/?p=2979

  14. Folks — I’ve watched this conversation evolve today with mixed emotions. As VAR’s CEO, it’s important to me that we allow free and open — meaning, uncensored — discussion on this blog. However, comments or conversation that 1) even hint at disparaging a member firm or franchise or business model, or 2) that could be construed as anti-competitive, will not be tolerated. I believe some comments above cross the line on #1 and come too close to #2 for my comfort level (though I’m not an attorney). Further comments in that vein will be excised.

    Don’t take this to mean that one’s comments on this blog can’t be critical of VAR or NAR or the real estate profession in general. We’re all for open, frank, and opinionated discussion, and I’ll be the first to acknowledge that there’s much to be critical of (as well as much to be proud of). But let’s keep it civil and respectful of ALL the members of our association community.

    ‘Nuf said…I hope.

  15. Bob Jurgensen says:

    Matthew,

    I would agree this has vered a bit off course from the NAR/DOJ topic BUT honestly, it’s at least related to the subject matter of trust and responsibility…

    Regardless, I apologize for taking this to a difference plane, that was not really my intent – just venting I guess.

    I could not agree with you more that it is, indeed, the broker’s responsibility to insure their agents are competent and well trained BUT honestly, do you really think the brokers of some of these mom and pop’s really, truly care? Have you dealt with some of their agents? (I am not saying there are not some professionals good agents at these companies but they are often far and few between!)

    In the end, it’s all about bucks for most brokers. Many could care less as evidenced by their response to problems, when they do occur. I understand this is not about franchises or just new agents and in fact many new agents are very diligent and responsible… I don’t mean to paint with a broad brush here, but still, come on – this business is way too easy to get into, allows far too much freedom on the part of “junior” agents, who are often ill prepared to properly serve their client’s best interest. I constantly find myself trying to teach these agents a few things – some are receptive but most could care less – “just send me my commission.”

    And certainly professional designations and higher levels of licensure don’t guarantee competency and integrity… but they can’t hurt and do serve to at least better educate the agents vs “nothing” – which is what most have today. When I got in this business, some 25 years ago, being a CRS in the office meant: higher splits, discounted E&O, recognition and respect – now it means almost nothing, diluted by the fact that most agents don’t feel it is even necessary to have a CRS or a GRI designation (most of the other designations are on line courses, a few hours or a one day seminar – but hey, they can’t hurt!)

    While I agree with most of what you say, the truth is that if not legislated, there will never be meaningful changes to this profession. I mean Appraisers have apprenticeships – why don’t we? Even Home Inspectors have apprenticeships for crying out loud. But not us – we have agents that go to two weeks of class, march into their new office and the broker, in most cases, turns ’em loose if not immediately, within a couple of deals, they are off and running by themselves with almost no meaningful supervision or “real world” training or mentoring. Just “go get those bucks hot shot!”

    I know we are not at the same level of “professional” as lawyers, doctors or even Indian Chiefs, but couldn’t we just try to increase the standards a bit more to enhance our stature and perception by and for the public? After all, we are working for the public, buying or selling what is likely their single largest asset in their lifetime – isn’t that important enough to want our profession to seek a higher moral ground here?

    Off my soapbox – and sorry about the diversion from the main topic, but it all sort of comes full circle to the real problem being a total lack of professionalism in our business on the part of the vast majority of agents. AND NOW WE HAVE ONLINE AGENTS WHO HAVE VIRTUALLY NO REAL WORLD EXPERIENCE, sitting behind a PC somewhere in CA, write code and answering emails. I think the public will weigh in on that and for most of these companies, it will end in failure. Nothing like “trust” that is earned. At the very least a hybrid product of service will prevail. The current system created this mess – however other states have Broker ONLY licensure and have seen dramatic enhancements in agent “quality”… and far less complaints by the public. Perhaps Virginia needs to take note and come out of the dark ages. Lem Marshall once said to me: “Virgina real estate laws are, for the most part, still rooted in the 1950’s when they were first implemented by law. Until recently, there were no minimum educational requirements – just the need to be able to read at the 6th grade level. Now I ask you, writing contracts for “others” (which only our profession does, other than lawyers!) – don’t you think we need higher standards? Of course we do! And I am sure you would agree.

  16. Bob Jurgensen says:

    Scott,

    Continue to put your head in the sand if you wish but nothing said by me is anything close to being able to be construed as as disparaging to any particular firm or franchise, nor anti-competitive – geezzz! And I resent the insinuation. In fact your comments are EXACTLY the problem here – CEO of VAR or another Realtor, matters not to me. But I agree with one thing YOU said “there’s much to be critical of…”

    Excise that!

  17. Scott Rogers says:

    Bob said:
    “…nothing said by me is anything close to being able to be construed as as disparaging to any particular firm or franchise, nor anti-competitive…”

    But Bob also anticompetitively said:
    “And weed out all these weekend warriors who THINK they are a real estate agent because they got paid a lot of money for a deal, suddenly they are egomaniacs… hot shots.”

    And Bob also anticompetitively said:
    “Wake up DPOR, NAR, VAR, et al – it’s time for a reality check – double the dues, double the continuing ed and make sure no agent can operate alone until they are licensed as an associate broker – minimum 3 years as an apprentice – nothing goes int their name until the day DPOR delivers that AB license to their door… that will drive 90% of this deadwood out of this business in a hurry.”

    And Bob also disparagingly said:
    “I was a RE/MAX agent for ten years – and I can tell you, it was professional and selective – not any more! Can you fog a mirror? You are an agent and better yet, you can now go to a 100% company and effectively inflict your incompetence on the general public in mass. Hey, they paid their dues and their licensing fees, right? They must be entitled.”

    And Bob also anticompetitively and disparingly said:
    “AND NOW WE HAVE ONLINE AGENTS WHO HAVE VIRTUALLY NO REAL WORLD EXPERIENCE, sitting behind a PC somewhere in CA, write code and answering emails.”

    Bob, don’t get me wrong, I love the passion that you bring to this dialogue, but I think the debate can be just as spirited and engaging if we leave the disparaging and anticompetitive parts out.

    Just a thought…

  18. Bob Jurgensen says:

    Well, Scott (both Scott’s?) – last time I checked my copy of the US Constitution it guaranteed us FREEDOM OF SPEECH… and your comments just serve to prove that you don’t truly understand the anti-trust laws – I never once discussed commissions or the use of the MLS system nor said anything that could be even remotely construed as anti-competitive or to conspire to do anything except improve our image and professionalism in the eyes of the public we all serve. Obviously you are not an attorney or you would know that. Paranoid misperceptions of the anti-trust laws are part of our problem, apparently – few even understand it!

    A fact is a fact! Accusations of being anti-competitive when all I said was our business often doesn’t properly train or license agents to a higher standard is anti-competitive?? Come on… and I won’t even dignify YOUR disparaging comments regarding what you consider disparaging…

    MY FINAL COMMENT? A blog is supposed to be a place for open, fluid, candid and meaningful discussion. If you intend to censor or restrict comments, make false assumptions and attempt to mislead others with disinformation, I suspect most subscribers to this blog will see right past your accusations as I can’t even phathom a professional agent who truly loves and cares about this business, not agreeing with most if not all of what I had to say. But because we are so overly concerned about hurting someone’s feelings and apparently aren’t allowed to critize anything about our profession, for fear of being “anti-competitive” including some agents who work on the edge of integrity OR “business models” that don’t offer anything close to a higher level of service than we offer now – well, it’s a sad, sad day for the real estate profession when one cannot have an open discussion about such issues without fear of being accused of being “anti-competitive.” NOTHING COULD BE FURTHER FROM THE TRUTH. I love the competitive nature of this business – in fact I thrive on it, every S I N G L E day.

    My passion on this subject IS very real – and anyone who knows me understands my critisms are well intended and only directed at a more professional atmosphere for us all AND THE PUBLIC – a better image (by the public and among ourselves) for us as professionals versus what we have now.

    I live in America, Scott(s) – not some third world country where they attempt to restrict speech, free thought and open dialog. You should consider moving there too.

  19. Bob — I don’t doubt your passion and perspectives are out of the best intent for our industry and the public. And I am certainly glad you utilize your freedom of speech — it makes for interesting, if spirited conversation.

    I pointed out what I did because you said “…nothing said by me is anything close to being able to be construed as as disparaging to any particular firm or franchise, nor anti-competitive…”

    That certainly wasn’t true, as I construed it as such. :)

    You said “If you intend to censor or restrict comments, make false assumptions and attempt to mislead others with disinformation…”

    I don’t think it’s anyone’s intent to censor or restrict comments — but let’s find out — keep commenting with passion!

  20. Bob Jurgensen says:

    “Further comments in that vein will be excised” to me, shows intent to “censor or restrict” – and THAT is wrong in this open forum. We can all disagree, but common sense and perspective have a balancing point – your perspective, as staff, may be different than my “in the trenches” perspective but we all should have the same, common goal: to promote professionalism and integrity in our overall business model, to both serve the public AND preserve our necessity to the transaction.

    If the public senses they cannot trust their agent or that agents are not putting their own best interest first, they will seek other ways to conduct business and leave us all, in the end, on the side of the road, like road-kill. As a profession, we are slowly shooting ourselves in the foot – evenually that will lead to bleeding to death. WE MUST FIND WAYS TO PROMOTE MORE PROFESSIONALISM IN THIS INDUSTRY to both rid ourselves of the persona of being”just a salesperson” and to add true value to our services to the serve the public good. That is all I was (and am) trying to say here.

    Scott, I have served as a Director on the BOD of our local board, Grievence Committee, Hearings and Arbitrations panels and many other roles in our organization over the past 24+ years. Most of those same folks that severed with me all have one thing in common – to improve our professional image and better serve the public, which, in the end, benefits us all.

  21. Bob said: “WE MUST FIND WAYS TO PROMOTE MORE PROFESSIONALISM IN THIS INDUSTRY to both rid ourselves of the persona of being”just a salesperson” and to add true value to our services to the serve the public good.”

    I agree completely! Thanks for clarifying! What local association are you a part of? Have there been any local initiatives that you have seen work well for accomplishing that goal? I know that is a goal of my local association (Harrisonburg/Rockingham) as well.

  22. Dave Phillips says:

    Bob,
    I appreciate passionate discussion, but the Scott’s are correct on this one. You do have a right to free speech and are free to post whatever you want on your OWN blog. Allowing you to add even the slightest bit of anti-trust risk to the VAR blog would be neglecting Scott’s duty as CEO.

  23. Bob — I don’t disagree with you on a single thing you point out about the profession, from inadequate education standards to occasionally abominable unprofessionalism. VAR continues to work on addressing both. My head is certainly not in the sand on those issues.

    What’s offensive was/is your tone and disparaging comments toward a specific franchise and your suggestion (did I misunderstand?) that VAR should actively be doing things that will urge some members to get out of the business. I didn’t say in my comment that your comments were anticompetitive, but I did suggest they might come close. Just my opinion; I’m entitled to it, as you are to yours.

    My bigger point is: What is it about written online communication that makes otherwise gracious and kind individuals say things with a stridency and pugnacity that they’d never use in person?

    Go ahead, be opinionated; that’s what this forum is for. But also be a bit gentler, and give some credit for what we’re trying to do, rather than accuse us of being oblivious to the problems in the profession.

    I’ll hush now.

  24. Bob Jurgensen says:

    Ok, my comment about one particular franchise was probably ill advised (using the name) BUT having been a member of that organization for some ten years, I feel entitled to voice my opinion. They were merely an example of the changes, good or bad, that have come about in recent years in our industry.

    To address what is is that makes written communications so much different than verbal ones is the fact that the reader perceives and puts THEIR OWN inflection (and tone) into the interpretation – versus verbal, where you can pick up the the tone and inflection of the person making the statement – who hasn’t had an email perceived as curt and impolite that wasn’t intended and could have been changed completely by adding a simple smiley :-) after the comment?

    Dave, I very much respect Scott Brunner’s position as CEO and guardian of the profession, however the needs of our industry are changing rapidly – in my opinion, we are falling behind and the only hope we have is to have open and persuasive dialong – with no choke-holds. Opinions are just that – policy, well, that’s another thing altogether. These are opinions, good or bad… and therefore NOTHING in my dialog could even be remotely construed as anti-competitive – to the contrary, I think we all welcome honest, above board and level playing fields when it comes to competition.

    I’m done with this blog however…

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