My Response to 60 Minutes' Segment from 5/13/2007
In a segment on CBS’ 60 Minutes show which aired on May 13, Leslie Stahl reported on the decreasing consumer need for traditional, full-service real estate agents. She interviewed the startup company, Redfin, a Seattle-based online flat fee brokerage that alleges its virtual agents are able to provide better customer service than the average Realtor at a fraction of the price. I find it extremely dissatisfying that 60 Minutes and Leslie Stahl hold such little regard for fair journalistic reporting that they failed to allow the National Association of Realtors (the nation’s largest trade association, not its governing body like 60 Minutes suggested) to represent its point of view. Many accusations and statements were made in this segment, all portraying to the consumer that full-service real estate brokerages are simply out to make more money, regardless of the impact on the consumer.
The reality is that while housing prices have increased in most markets in recent years, so has the cost of the real estate transaction. And no, the cost of the real estate transaction does not solely consist of “driving around to show properties, making a flyer and hosting an open house” as CBS and its RedFin client interviewees suggested. In fact, there are several other factors to the overall cost of a real estate transaction including: the increasing cost of Errors & Omissions insurance premiums (which is necessary in this litigious society), increasing gas prices and the increased cost of marketing properties with the growth of consumer needs and wide-range of marketing opportunities that exist, among other things.
In the segment on 60 Minutes RedFin talks extensively about how their business model saves the consumer money by charging a flat fee versus a traditional commission. However, are the sales associates who work for Redfin knowledgeable experts who are going to help a consumer properly stage a house or negotiate fiercely on their behalf? Many times over the years I have personally seen how discount agencies charge a low, flat rate but in the end the consumer is worse off because they got less for the house they sold, or paid more for the house they purchased because of shoddy representation.
My company and I are in full support of NAR’s logical explanations which address the inaccuracies as they were reported but I do think it is important to make one final point. Using a Realtor is the choice of the consumer – no one is, or ever will, force the consumer to choose or not to choose a full-service Realtor. My suggestion is that consumers shouldn’t treat hiring a Realtor any differently than hiring a lawyer, or accountant, or doctor or investment manager. Do you simply look for the cheapest option when hiring any of the aforementioned? Or, do you take the time to interview the people who are going to look out for your best interests, who are the most knowledgeable about their given field and who have the education and training background to ensure you get the results you want? Much like consumers have the choice between shopping at Wal-Mart, Macy’s or Nordstrom for clothes, they also have the choice of which route to take when buying or selling real estate. Each of the three may fit for different needs or consumer-types but people should be given the option. It seems to me that CBS chose to only highlight the “Wal-Mart” business model when they spoke exclusively with a company like RedFin.
At Realty Executives International we make it a priority to invest in finding the right broker/owners and the right Realtors who are ready to provide their clients with unsurpassed support, negotiation prowess, marketing skill and interpretation of information - more than you could possibly get on the internet. All of which enable the consumer to garner the best results.
Realty Executives has always stood by the point of view that it is our goal, and the goal of the industry, to compete on a level playing field – making it a better experience for both the consumer and the industry alike.
Ultimately, CBS has participated in doing the consumer a disservice by only reporting one side of a complex industry and that is unfortunate.
The reality is that while housing prices have increased in most markets in recent years, so has the cost of the real estate transaction. And no, the cost of the real estate transaction does not solely consist of “driving around to show properties, making a flyer and hosting an open house” as CBS and its RedFin client interviewees suggested. In fact, there are several other factors to the overall cost of a real estate transaction including: the increasing cost of Errors & Omissions insurance premiums (which is necessary in this litigious society), increasing gas prices and the increased cost of marketing properties with the growth of consumer needs and wide-range of marketing opportunities that exist, among other things.
In the segment on 60 Minutes RedFin talks extensively about how their business model saves the consumer money by charging a flat fee versus a traditional commission. However, are the sales associates who work for Redfin knowledgeable experts who are going to help a consumer properly stage a house or negotiate fiercely on their behalf? Many times over the years I have personally seen how discount agencies charge a low, flat rate but in the end the consumer is worse off because they got less for the house they sold, or paid more for the house they purchased because of shoddy representation.
My company and I are in full support of NAR’s logical explanations which address the inaccuracies as they were reported but I do think it is important to make one final point. Using a Realtor is the choice of the consumer – no one is, or ever will, force the consumer to choose or not to choose a full-service Realtor. My suggestion is that consumers shouldn’t treat hiring a Realtor any differently than hiring a lawyer, or accountant, or doctor or investment manager. Do you simply look for the cheapest option when hiring any of the aforementioned? Or, do you take the time to interview the people who are going to look out for your best interests, who are the most knowledgeable about their given field and who have the education and training background to ensure you get the results you want? Much like consumers have the choice between shopping at Wal-Mart, Macy’s or Nordstrom for clothes, they also have the choice of which route to take when buying or selling real estate. Each of the three may fit for different needs or consumer-types but people should be given the option. It seems to me that CBS chose to only highlight the “Wal-Mart” business model when they spoke exclusively with a company like RedFin.
At Realty Executives International we make it a priority to invest in finding the right broker/owners and the right Realtors who are ready to provide their clients with unsurpassed support, negotiation prowess, marketing skill and interpretation of information - more than you could possibly get on the internet. All of which enable the consumer to garner the best results.
Realty Executives has always stood by the point of view that it is our goal, and the goal of the industry, to compete on a level playing field – making it a better experience for both the consumer and the industry alike.
Ultimately, CBS has participated in doing the consumer a disservice by only reporting one side of a complex industry and that is unfortunate.
posted by Realty Executives Int'l at 4:07 PM
3 Comments:
I agree that the segment on 60 Minutes was one-sided. They aired something that they thought would generate attention, and ultimately, revenue from advertisers.
I have yet to see any response which includes how Realtors are held to higher standard of practice by the Code of Ethics (COE). The COE helps to provide a set of standards for the protection of the consumer, the broker, and the agent. Each local board utilizes a process that allows a complaint against a Realtor to be heard through a panel of their peers. I have been a member of the Professional Standards Panel since 2000, and I have sat on both Ethics Compaint and Arbitration panels. The COE was the foundation of most state laws.
The commitment by all its members to abide by the Code of Ethics is not forced from any local or state governments, but rather from a commitment to promote our professionalism. I'm sure that if CBS had included our commitment to professionalism, their revenue might not have been as high; but it does point out that each member must do a better job at communicating our commitment to professionalism.
I completely agree. When the consumer treats price as the single most important aspect in the choice of a real estate consultant, trouble may follow. If a limited service physician or attorney solicited my services, I would first look into their background, experience, customer satisfaction, etc. before I chose them based on price. I hope consumers can begin to view us under the same lens.
Excellent commentary on the 60 minutes piece. I'm so tired of people thinking that all I do is take a listing, make a flyer & make a sale - I work harder than most people I know to provide a service to people I care about. My customers can reach me at two different offices, by cell phone, email or at my home. If they have a problem, concern, or question, I'm there for them. When a customer wants answers, they don't want a virtual office with a virtual sales person. Everyone wants someone real to deal with when they need help. To my customers, I AM that person.
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