Posted by nithi.vivatrat on June 23, 2009
Just now, I was about to press “publish” on a well-sourced post containing general, publicly-available news (nothing nasty) about a large brokerage company, but then I suddenly realized it could be misconstrued as a violation of Section 15 of the NAR Code of Ethics. It got me thinking — it’s interesting to be part of an industry which essentially has its own set of rules beyond standard state and federal laws, covering areas of behavior such as libel and non-competition. Is the implication that the same laws that govern behavior in other industries are not adequate? Can it be proven that these rules “improve behavior”? And do these rules benefit the consumer, as well as the industry participants?
I don’t have the answers to these questions, though I am forming my opinions — I just throw that out there for folks to think about.
Posted by nithi.vivatrat on May 27, 2009
As I talk to folks about the SmithAdams fee-for-service approach to real estate brokerage, I hear responses ranging from this:
“Way to go! It’s time to get rid of the commission model!”
to this:
“I don’t know – do you really think fee-for-service will replace commissions?”
To both, let me say this: hold your horses. We have no expectation that the fee-for-service model will completely replace the traditional commission model.
Why should there be only one way? You can hire an attorney on retainer or on contingency. We believe the same options should exist for real estate brokerage. No single way will be the right fit for everybody, so consumers should have choices.
That’s what SmithAdams is really about: giving consumers choice in real estate brokerage. No two consumers are identical — each person’s needs and wants are different. Consumers should be able to choose what services they need and are willing to pay for. If a consumer wants to pay based on a commission fee model, so be it. Likewise, if a consumer prefers a fee-for-service, pay-as-you-go model, that should be available too.
Here’s my long-term vision of a world of peaceful coexistence and competition between the two fee models. As more and more consumers opt for a fee-for-service approach, there will be more scrutiny of fees by consumers as well as demands for transparency. Commission-paid agents will need to better link their value-add to their fees. The good ones will have no difficulty doing so and will continue to thrive in this environment. The ones who cannot will eventually leave the profession. Over the long run, the overall quality of service to consumers should rise — whichever fee model an individual consumer chooses. Sounds like a good outcome to me. What do you think?
Posted by nithi.vivatrat on May 15, 2009
Some of you may have noticed that Christine Varney, Assistant Attorney General and head of the Justice Department’s Antitrust Division, made headlines in the past few days by clearly indicating the beginning of heightened antitrust enforcement. She also recently withdrew a Bush administration report that advocated less aggressive antitrust laws.
What you might have missed is the Justice Department’s announcement last week of a settlement with Consolidated Multiple Listing Service, Inc. (CMLS) of Columbia, SC. The Justice department argued that CMLS implemented anti-competitive restrictions such as prohibitions on home offices and “active involvement” requirements that would essentially rule out fee-for-service brokers who only charged for the specific services the consumer desired (a la SmithAdams). The result, according to the settlement: “Columbia-area home sellers [were] unable to hire brokers with innovative business models such as ‘fee-for-service’ brokers who would provide only the services the sellers desired at a lower cost than full service brokers typically charged.”
Fortunately for consumers, CMLS agreed to repeal these anti-competitive rules to settle the case. See the full text of the CMLS settlement here on the DoJ Antitrust Division web site.
Assistant Attorney General Varney commented in the DoJ press release:
“Today’s settlement will remove unlawful impediments to competition for real estate brokerage services in the Columbia area and will lead to more choices and lower brokerage fees for South Carolina consumers. For most Americans, purchasing a home is the most significant purchase of their life. This settlement demonstrates the Department of Justice’s continuing commitment to preserve competition in the real estate brokerage industry.”
Score another point for consumer choice.
