{"id":5837,"date":"2019-11-23T08:42:49","date_gmt":"2019-11-23T13:42:49","guid":{"rendered":"https:\/\/dankrell.com\/blog\/?p=5837"},"modified":"2019-11-23T08:42:56","modified_gmt":"2019-11-23T13:42:56","slug":"real-estate-transparency","status":"publish","type":"post","link":"https:\/\/dankrell.com\/blog\/2019\/11\/23\/real-estate-transparency\/","title":{"rendered":"Real Estate Transparency"},"content":{"rendered":"\n
\"real<\/a>
10 Steps to Home Buying <\/figcaption><\/figure><\/div>\n\n\n\n

Ten years ago, I reported on the growing demand<\/a> of transparency in real estate.\u00a0 As you can imagine, mistrust of real estate agents <\/a>was at an all-time high after the housing market crash.\u00a0 At that time, home buyers and sellers felt betrayed by an industry that was perceived as keeping their cards close to their chest.\u00a0 However, times were changing and consumers demanded real estate transparency, especially from their agents.\u00a0 Home buyers and sellers not only want their agents to act in good faith<\/a>, but also want more information and communication during the transaction.\u00a0 <\/p>\n\n\n\n

Since then, the National Association of Realtors (nar.realtor) has been trying to mend their reputation.\u00a0 The 2015 DANGER Report <\/a>was intended to identify issues affecting the industry as well as provide a roadmap to the future.\u00a0 One of the major issues identified was agent competency and ethics.\u00a0 However, it was obvious that ethical Realtor behavior didn\u2019t guarantee competency. And vice-versa.\u00a0 The upshot of the Report was that many of the identified concerns were already known.\u00a0 Ironically, the identified issues and answers only prompted more questions.\u00a0 It was not known if and how the industry would provide real estate transparency. <\/p>\n\n\n\n

Fast forward to 2019, when the real estate industry\nis at a crossroads.  Earlier this year a\nclass-action law suit was filed that challenges how agent commissions are\npaid.  Also, earlier this year, the\nConsumer Federation of America (consumerfed.org) published the first in a\nseries of reports focused on \u201cthe lack of real estate agent transparency on\nrepresentation, compensation, and service.\u201d \nThe Consumer Federation of America (CFA) is described as an association\nof non-profit consumer organizations that was established in 1968 to advance\nthe consumer interest through research, advocacy, and education.<\/p>\n\n\n\n

The class-action suit filed in March<\/a>, if successful, has the potential to force a major change to the industry.\u00a0 Besides having the potential to change how agents are paid, it may force increased real estate transparency in agent compensation.\u00a0 Nevertheless, similar past challenges to the NAR and the real estate industry resulted in minimal (if any) change to how business is conducted.\u00a0 <\/p>\n\n\n\n

Serendipitously (or not), Stephen Brobeck\u2019s most recent CFA series report, \u201cHidden Real Estate Commissions: Consumer Costs and Improved Transparency<\/a><\/em>\u201dwas published this month (consumerfed.org).\u00a0 The report confirms consumers\u2019 \u201clack of understanding\u201d of commissions.\u00a0 It also points out how \u201cconcealment of commissions\u201d does harm to consumers.\u00a0 The report indicated that 70 percent of the agents surveyed charge six-percent commission.\u00a0 Commissions are mostly uniform, more so for buyer agent commissions.\u00a0 The report also indicates that there was a general rationale that buyer agents would not show property if the buyer agent compensation was below the average for the area.\u00a0 Of the agents surveyed, 73 percent indicated they won\u2019t negotiate their commission.\u00a0 It also calls attention to administrative fees of several hundred dollars, which is typically charged in addition to commission.\u00a0 <\/p>\n\n\n\n

The report concludes that the real estate industry must change its attitude about agent compensation, or risk eroding consumer trust.  Home buyers and sellers are savvy, and are increasingly sensitive to the role that commissions play in housing costs.  Home seller costs could be reduced if consumers compare commission rates and ask if they are negotiable.  Home buyers can also be helped if they are aware how their agent is paid, as well as knowing the offered buyer agent compensation on homes listed in the MLS.  <\/p>\n\n\n\n

Original article is published at https:\/\/dankrell.com\/blog\/2019\/11\/23\/real-estate-transparency\/<\/p>\n\n\n\n

By Dan Krell
Copyright\u00a9 2019<\/p>\n\n\n\n

If you like this post, do not copy; instead please:
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\"Protected<\/a><\/figure>\n\n\n\n

Disclaimer<\/a>.\n This article is not intended to provide nor should it be relied upon \nfor legal and financial advice. Readers should not rely solely on the \ninformation contained herein, as it does not purport to be comprehensive\n or render specific advice. Readers should consult with an attorney \nregarding local real estate laws and customs as they vary by state and \njurisdiction. Using this article without permission is a violation of \ncopyright laws.<\/p>\n","protected":false},"excerpt":{"rendered":"

Ten years ago, I reported on the growing demand of transparency in real estate.\u00a0 As you can imagine, mistrust of real estate agents was at an all-time high after the housing market crash.\u00a0 At that time, home buyers and sellers felt betrayed by an industry that was perceived as keeping their cards close to their … <\/p>\n

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