It's been a hard struggle to avoid the furor caused by last week's 60 Minutes episode on CBS television. I knew it was going to be on. I'd heard flap about it prior to the airing. Someone must have gotten a preview because word got around in the REALTOR® community that the program wasn't going to positively portray REALTORS®.
It seems some people don't have a life. . . or maybe the real estate market has slowed sufficiently that they have too much time on their hands to ruminate over bad press! I didn't bother to watch it. I was too busy getting marketing pieces prepared for one of my listings. Suffice it to say, the segment has created as big a flap in the real estate world as Zillow did at its inception. Real estate eyeballs have bugged out and developed a definite need for Visine.
Finally, I caved in and went to the CBS site to watch the re-run . . . er, I mean the CBS News Video! As usual misinformation was conveyed, but that usually happens. My overall impression was that someone at CBS must have stock in Redfin, as it seemed the entire piece was a large infomercial for that discount brokerage.
Sacrosanct is a big word and of all ways to use it, Lesley Stahl used it to describe real estate commissions. Whether the public knows it or not, real estate commissions are not sacrosanct! They are negotiable! Always! Evidently Lesley Stahl doesn't know that.
Nor does she know that commissions have changed over time. When I started in real estate, a common commission was 7%. Note I said common, not THE commission was 7%. Even back in the day, commissions were negotiable! There were higher and lower commissions than 7% as well, but a frequently published commission was 7%.
Today, 7% is rarely seen in the St. Paul real estate market. And it takes a lot more work to market a property now than it did years ago. Staging has to be done. Internet exposure is created. Mailings go out. Domains are purchased and single property websites are created just for that house. Virtual tours are designed. Hours more are spent negotiating for inspections. Often more than one purchase agreement is written before a buyer sticks with one. Hours more are spent touring houses. But the "common" commission has decreased as house prices have escalated.
The Redfin real estate agent who felt guilty about spending 5 hours on a transaction for a house she never saw and for which she received thousands in commission, works differently than I do. Writing an offer for a home buyer on a house without seeing it myself is a recipe for disaster. What if there was an obvious defect that an experienced real estate agent would see but an inexperienced home buyer might not? Why was she not spending more time with the client? Five hours! Even the young couple I showed only one house to got more than 5 hours of my time. We spent many hours in the inspection process, the negotiation, getting the title work process started, advising, copying paperwork, investigating workmen, etc. Hand holding is part of the service provided by a real estate agent.
As to Redfin. There will always be people who bargain hunt and people who are willing to pay extra to get top-notch quality service. Most of my St. Paul real estate clients are willing to pay for someone who truly looks out for their best interests. The pool of real estate clients is big enough that we can all service the home buyers and home sellers in the manner we choose and get paid accordingly.
Someone else can develop bloodshot eyes worrying about the competition! I'm going to just get to work!
The show was one-sided indeed. Leslie's demonstrations of RedFi n's listing fee was very misleading. By saying they charge $3000 for a listing, but never mentioning a co-op fee, indicated RedFi n was willing to take other fees when selling a house but not offer them. Guess Redfi n listings much get sold "in-house." For a PRE-paid price of $3000 I certainly would want the most exposure possible!
Funnier yet was the "when you purchase RedFi n's package you get access to properties on the market and the neighorhood statistics." How cool of RedFi n to charge for something (up front) that we Realtors have been proving (for free until close) for years!!
Posted by: Kristal Kraft | May 22, 2007 at 06:36 AM
You once again hit it right on the head, Bonnie. Commissions are never set in stone. And while the brokerage of the day in that piece has agents sitting at computers while their clients go looking for homes on our own, we are out working with clients so they don't have to do it by themselves. I agree, we will all just keep working and not worry about some hour long infomercial. Although I used to love the Jane Fonda treadmill infomercials...but I digress :-)
Posted by: Carole Cohen | May 22, 2007 at 05:20 AM
The 60 Minutes piece was so one-sided, it sickened me. Personally, I think reporters use words like "sacrosanct" for their impact, not because it's the most descriptive. I also wouldn't call the piece "news" since it's so full of spin and she was unbelievably UN-objective. I've lost all respect for Leslie Stahl.
Posted by: Leanne Paynter | May 22, 2007 at 05:13 AM