ActiveRain is a real estate network that I participate in with other industry professionals. Some interesting discussions occur there about many different industry topics. The most recent one…are Realtors partially responsible for the mess we are in today?
The source of the debate was a Fox News broadcast with the CEO of Coldwell Banker.
The interviewer’s questions were valid questions, I thought. I was not impressed with the answers given by Jim Gillespie, so I just wanted to give my take.
1) If Realtors want to be seen as advisers and get paid as such shouldn’t they have some responsibility in this mess? Mortgage brokers, banks, the media, etc are all getting blamed…why not agents? Why aren’t agents being criticized?
We are all responsible. The current economic mess is not just about housing…it is about excess. People used their homes like ATMs to purchase cars, boats, vacations, and stuff. 70% of the American economy was about consumption. Housing is only a portion of our current economic woes. So no, real estate agents agent’s as a group are not to blame for the current economy.
Did some agents give some home buyers really bad advice. Yes. Did some real estate agents not advise some clients about the direction of the market? Yes. You can’t force someone to do something they don’t want to do. People wanted to buy homes and agents helped them do that. The question really being asked is whose responsibility is it to teach people how to budget and save? Should real estate agents help home buyers learn to budget?
You tell me.
2) Both Realtors legally represent the seller, and buyers don’t realize this.
The interviewer was completely mistaken about how agents are legally paid and the CEO of Coldwell Banker did not help in this matter. Buyer agents at least here in Salem Oregon, for the most part, are not paid by the seller. They are paid by the listing agent. This is an important distinction. The seller has a legal contract for representation with the listing agent. As part of that, they agree to pay a fee to the listing agent alone. The listing agent then sets up a legal contract to share their money with a buyer agent. The buyer agent has no legal connection to the seller. While it does seem like a matter of semantics, it is an important matter of semantics. It is why you should not see commissions changed in a real estate contract here in Salem Oregon. They are not part of the contract between buyer and seller, but between real estate agents.
What the CEO is talking about is dual agency where the buyer and seller are represented by the same principal broker. Most transactions are not dual agency transactions and I don’t do dual agency anyway.
Anyway…I just wanted to throw out my thoughts on this in case any of you watched the segment. I’d love to hear your thoughts on how you think agents should be advising clients. I know I talk with my first-time buyers are budgeting, maintenance, utility costs and such, but in the end it is their money.
Should agents be doing more to convince homeowners to live within their means?