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Retrospective

Page history last edited by RealEstateCafe 15 years, 3 months ago

How much progress have real estate consumers made in the past five years?  Use this 2002 retrospective to collect and contribute your thoughts on "Best of 2007" and "Worst of 2007" from the real estate consumer's perspective.

 

Consumers win some, lose some

Guest perspective:  (Bill Wendel, Real Estate Cafe, see mini-bio below)

Home buyer advocate gives industry middling score for 2002

 

(Similar version originally published in Banker & Tradesman, slightly edited version republished by Inman News and is shown below.)

 

Trends and events in real estate last year were a mixed success for home buyers and sellers, according to an informal group of real estate rebels who champion a consumer-centered view of the industry.

 

This group, of which I am a member, includes buyer-only agents, fee-for-service consultants, discount listing services, for-sale-by-owner publishers and a few anonymous e-commerce types. We've been written off by some as being no more than misdirected self-proclaimed consumer advocates whose views are upside down and backwards. But we view our own perspective as a competitive advantage.

 

We've put together what one industry leader called an "appropriately provocative" list of the most and least favorable developments in 2002 for real estate consumers.

 

The most favorable trends and developments were:

 

1. The lowest interest rates in 40 years stretched purchasing power for a record number of home buyers and the refinancing boom carried the post-9/11 economy.

 

2. The Federal Trade Commission's October hearing on barriers to e-commerce convinced the National Association of Realtors to make its proposed policies for virtual office Web sites known as VOWs more consumer-friendly.

 

3. Proposed legislation that would have implemented designated agency was withdrawn in Wisconsin.

 

4. The financial press from The Wall Street Journal to Consumer Reports and with Kiplinger's, SmartMoney and Fortune in between ran feature stories on the housing market bubble.

 

5. Some cities and states enacted laws and regulations to protect consumers from predatory lending practices.

 

6. The National Association of Exclusive Buyer Agents focused its convention on improving the profitability of buyer-only brokerages instead of infighting.

 

7. Some former Homestore execs were busted by the Securities and Exchange Commission and the U.S. Department of Justice for their involvement in the company's allegedly fraudulent accounting practices.

 

8. ForSaleByOwner.com, the leading FSBO Web site, rose to the fifth most-visited homes for-sale site overall, according to Alexa.com, in part because of the FSBO service's marketing agreement with Alta Vista and data sharing arrangement with Lycos.

 

9. A dual agency lawsuit in Alaska that awarded $200,000 in damages to one home buyer sent a wake-up call across the industry.

 

10. Housing markets across the country are peaking in terms of sales and price appreciation, ending an eight-year sellers' market in some regions.

 

11. The Consumer Federation of America after a long hiatus from real estate issued a study revealing that credit reporting errors and delays in implementing credit score reforms cost mortgage applicants an untold amount of money. This group first called the residential brokerage industry a "cartel" in 1991.

 

12. The National Association of Real Estate Consultants hosted its first annual convention, signaling that the fee-for-service movement has come of age.

 

13. Yahoo!'s alliances with eRealty and ZipRealty catapulted the real estate buyer rebate model into the mainstream.

 

14. Competition for listings, shrinking for-sale house inventories, rising house prices and discount brokerage models combined with the Internet and other factors continued to squeeze brokerage commissions. Falling prices could create even more downward pressure in 2003.

 

15. NAR seems to be getting serious about housing affordability and opportunity under the leadership of 2002 President Martin Edwards Jr. and 2003 President Cathy Whatley. Will the rank-and-file Realtors follow suit?

 

16. The U.S. Department of Housing and Urban Development is getting serious about consumer rights. An early statement about HUD's proposed revisions of the Real Estate Settlement Procedures Act (RESPA) estimated that consumers could save $10 billion annually!

 

17. The title insurance reform debate is heating up and even landed on page one of The Wall Street Journal.

 

18. Handheld and wireless technologies are taking real estate applications beyond the Web browser into the field where they belong. Although these devices for the most part are still in the hands of practitioners rather than consumers, there will be some stunning innovations in this area in 2003.

 

The least favorable trends and developments were:

 

1. The nation's record foreclosure rate is a loser for consumers, despite innovative workout solutions now widely used by Freddie Mac, Fannie Mae and private lenders. Even if Congress and President Bush acted immediately to extend unemployment insurance for 750,000 households, the foreclosure rate most likely would continue to rise.

 

2. Record low interest rates combined with billions of dollars flowing out of the stock market into real estate created an artificial spike in housing prices.

 

3. NAR's VOW policy attempted to restrict consumers' access to listing information, causing ZDNet to write a story, "Realtors to Internet: Drop dead."

 

4. After NAR took its battle against the banks into Congress, the Federal Reserve and U.S. Treasury decided to delay for one year before deciding whether banks can offer residential brokerage services.

 

5. NAR alleged that the FSBO rate is declining, despite the fact that ISoldMyHouse.com, a single FSBO Web site in Massachusetts, claimed in radio advertisements to have 10,000 for-sale homes. Some of the data appear to be stale, but the total still is more properties than the number found in the Boston Globe's online real estate section.

 

6. More promising real estate dot-coms failed or ran out of cash.

 

7. Industry consolidation has reduced consumer choice so much that three Coldwell Banker offices in Concord, Mass., are now located within 200 yards of one another on Main Street. Is that what NAR meant when it called its banks-out-of-brokerage bill the "Community Choice in Real Estate Act"?

 

8. The success of the agency lawsuit in Alaska has caused Realtor-dominated agency study committees to redraft agency and disclosure regulations in a number of states rather than redoubling their efforts to have members comply with the law.

 

9. The National Association of Exclusive Buyer Agents and its state-level counterparts missed an opportunity to champion consumers' rights in the VOW debate.

 

10. Post-9/11 anxieties, stock market losses, mold claims costs and other factors have created a crisis in homeowner's insurance that has delayed home sale closings in a number of states. Consumer advocates have formed a group to fight back and have captured media attention with stories of price gouging and blacklists of supposedly "uninsurable" homeowners.

 

11. Regulators in California are cracking down on FSBO Web sites.

 

12. Regulators in Texas tried to impose minimum service standards on listing-only brokerage services providers in that state.

 

13. Homes.com unsuccessfully attempted to cut off service to San Diego, Calif.-based discount brokerage HouseRebate.com because of pressure from full-fee listing Homes.com customers.

 

14. Consumer Union's call for an investigation of the real estate industry and creation of a real estate consumer bill of rights, both issued in May 2001 during the nonprofit group's Congressional testimony about banks as brokers, went unheeded (but is still echoing in some important places).

 

15. Many low-to-moderate-income first-time buyers who bought homes in 2002 with little or no money down will be the first to slide into negative equity if prices fall in their market. MIT economist William Wheaton predicted housing prices could fall 10 percent in Greater Boston during the next two years.

 

Bill Wendel is a pioneer of fee-for-service real estate brokerage and founder of The Real Estate Cafe. April 2003 will mark the 10th anniversary of "Consumer Revolution in Real Estate," a two-day national conference Wendel produced and hosted at the World Trade Center in Boston. The conference featured keynote speeches by Ralph Nader and Stephen Brobeck, executive director of the Consumer Federation of America. Wendel's RealEstateCafe Web site is under reconstruction.

 

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