- I just wonder why the report concluded that it must be collusion.

As the abstract reads, "One possible explanation for the success of real estate agents is collusion." In pursuit of that Possible, but hardly Definite explanation, they continue, "In this paper we first consider the mechanisms through which collusion might be sustained."

One possible explanation for my spelling skills is a caring fourth-grade teacher. In Pursuit of that, we can consider how that influence may be sustained. However, the credit for my spelling skills might be better placed with my spell-checking program.

Thanks Rockinblu,

No offense or anything like that was taken. I found the report very interesting and glad you pointed it out. I love the links you find they always make me stop and think. As I have told Dunes stop it, it makes my head hurt when I do! LOL.

Patrick,

Some of my favorite Realtors are in Cook, you being one of them. The link wasn't meant to be a slap in anyone's face. I think from your posts on Trulia we all respect your integrity and professionalism. However as large a county as Cook is, I wouldn't doubt that there are some pockets where some shenanigans are pulled, but again that argument was not the intent of the post..

My bad. I guess collusion is part of Antitrust.

"I would think that it may border more on Anti Trust violations."
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

Patrick,

The title of the paper is: Antitrust Implications of Home Seller Outcomes when using Flat-Fee Real Estate Agents

Very interesting (and entertaining) discussion.

However, as for actually "answering" Andrew's question, Jack has it just about right. The people who pay some company $250 or so just to get their home on the MLS know exactly what they're doing. And the company that provides that access makes it crystal clear that all the seller is receiving is that listing. If that's what someone wants, that's fine.

And maybe I've got an ethical blind spot, but I don't understand Andrew's concern. I work at one of the largest real estate companies in my area. It's not at all unusual for a home to be listed by an agent with that company, and to be sold by another agent with that company. Andrew worries that the agent or the firm will receive a commission only if it produces a buyer. Yes. So? The company's already made the $250 or so that it charged for putting the listing into the MLS. So long as there's full disclosure, what's the problem? And for $250 in today's market, it's difficult to imagine "a mutation where his listing agent is working against his sale to protect the listing for his own (possible future) sale." The listing agent (or the agent's company) made/earned $250 for putting the listing into the MLS. The deal's done.

Don't kill the messenger.
___________________________

Rockinblu,

That wasn't a complaint or criticism just an observation. Personally I don't care what companies charge or do. If that's what people want or choose then so be it. I just wonder why the report concluded that it must be collusion. I would think that it may border more on Anti Trust violations.

Patrick,

Don't kill the messenger. Undoubtedly there are problems in dealing with some flat-fee services just as there have been numerous reports of problems with full service agents on this forum. Some of the problems with flat-fee services that you mention are addressed in my infamous Trulia blog. The post of the link to Dunes where page 6 was referenced was meant to call attention to minimum service requirement statutes that states such as Illinois have adopted. I thought it was relevant given the nature of Andrew's post along with Dunes' adamant feelings of consumers being given a choice. Most open minded people would agree that laws such as these are anti-competitive, and big brother not really looking out for anyone other than who does the best job of lobbying. $$$$$

Hi Rockinblu,

You always find these interesting links.

Very interesting report with even more interesting conclusion. Why is it that collusion or boycotting must be the reason that Flat Fee brokers listings take longer to sell instead of the efforts of a full service broker.

A flat fee broker will put the listing in the computer and that's usually about it. They make the seller or buyer agent do the rest of the work.

A full service broker provides the exposure, advertising, advice etc. that gets a property sold.

I have dealt with many of these flat fee companies (I work in the Chicago area which is Cook County). It's not a matter of boycotting them (they usually pay out the average commission a buyers agent would get) as it is the fact that if you want to get anything done, you have to do the job that a listing agent should be doing on top of your job that you are doing for your buyer. We have very strict Dual Agency laws here and many times working with these discount brokers borders on Dual Agency.

Many Flat Fee services don't have keyboxes for agents to have access to the property and you have to set up a showing with the owner. Kinda hard to show a house when the seller is at work and your buyer wants to go see it.

Some of these companies also have their buyers call listing agents directly to see a house. The listing agent shows the house, and sometimes even writes the offer, and then they (the discount services) take claim to the buyer and want to get paid as the buyer agent.

Many times a buyer will have some of these Flat Fee company listings on their list of houses but since you can't get a hold of the seller or calls are not returned, these listings get put aside or even forgotten about. The buyers usually have a long list of houses and they move on to the ones they can see. This may have something to do with them taking longer to sell. Exposure and accessibility have a lot to do with houses selling. If you don't know it's out there or can't get in to see it, it becomes hard to sell it.

What would like to know is how many Flat Fee listed homes sell compared to full service broker listed homes.

Besides how can JR counter the fact that ( V'c (F) > O,Vnc (F) O, and W' (F) > O (F) ) ????? ; )
~~~~~~~~~~~

Hmm.. . let's see now. . . ought from ought equals ought. . . .
(Channelling Jethro Clampett)

Dunes,

LOLOLOLOLOLOLOLOLOLOL!!!!!!! Too, too funny. There, Trulia program. Hopefully I met the minimum answer length requirement this time.

Rockinblu

"Can't argue with what I don't know."

I do it all the time, would you like some tips?

Besides how can JR counter the fact that ( V'c (F) > O,Vnc (F) O, and W' (F) > O (F) ) ????? ; )

Obviously from these facts FSBOs will replace RE Agents sometime in the next 59 days and sell for three times the current market price.......lol

Math talks Nar walks, Dunes
PS..Rock now that Guy has exposed you as a undercover Realtor will you be sending me hate emails and pointing out I must have had a bad experience with an Agent to be so Anti-Agent?

J R,

Can't argue with what I don't know. I totally defer to you on your area. Speed reader? I don't know about you not being that. I guess all that math could have slowed you down a bit. I got lost before the first equation or whatever they call it. lol

What do you think I am, Rock, a speed reader?! :)

It's been my own experience in my area that the flat fee listings are much more overpriced across the board. Of course I must add that it is my opinion that most of the regular listings around here are also overpriced. Perhaps it is just a characteristic of my own location and the ineffectiveness of most agents here, or at least the disconnect from reality that some seem to have. Maybe in the 3 areas they sampled it is different, I am speaking from my own experience.

"IMO the "other possible explanation" is that flat fee listed homes, like FSBOs, usually start out overpriced."
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
J R,

Please read page 19. :)

Guy,

Thanks, but I really no nuthin. Most of the stuff I post has been stolen from others. I'll at least give you a wave as I go by as I'm on the h & b most everyday.

Thanks for the link, Rockinblu. I noticed this statement "Using data from three markets, we find that houses listed using flat-fee agents have longer expected times-to-sale than observably similar houses sold by full-commission agents, but ultimately sell for similar prices. These results are consistent with allegations that traditional agents steer clients away from flat-fee-listed homes, although we consider other possible explanations."

IMO the "other possible explanation" is that flat fee listed homes, like FSBOs, usually start out overpriced.

Oh, and Dunes. . .. thanks for the compliment! YOU get a thumbs up! :)

Uhhh.......Rockinblu..."non-pro".....riiiiiiiiiiiiiiiiiiiiiiiiiight. If you ain't no Realtor, then you study the business more than most brokers I know.

And just so you know, 78704 is the closest zip the bridge I live under. And winter is coming soon so make sure you throw an old coat over the railing for the less fortunate. My family will appreciate it.

Sorry to hijack the post Andrew....just couldn't let the "non-pro" deal go.

Dunes,

I agree with you on Guy. it's kind of funny that there's three of us on this page posting from 78704. Betina, Guy, and the last being the non-pro, me.

Rockinblu

Thanks for the link...Read thru it quickly and plan to read it more carefully tonight...Very interesting

Because we say we will? Putting aside the specifics of your complaint for a moment . . .
The whole idea of Professional Ethics is to establish a standard HIGHER than that which is legally required!
(Before y'all start, I want you to note that most legislatures have RAISED the legal requirements to meet NAR standards, rather than NAR establishing ethical standards that simply meet the legislative requirements).
So. Andrew Silfen is a Realtor (right?), and he specializes in residential, and someone comes by and offers him the listing for a tract of mining land. Ethically, Andrew must either refuse, or at the very least, partner with a broker who has expertise in this area of real estate.
Legally, if the client wants Andrew, Andrew can list the coal mine! Ethically, no, he can't!
------------------------------------------------------------------
Here in Washington State, FSBO-helper brokerages typically charge a small fee for (sometimes) a keybox, (sometimes) a sign, and a fax machine for notices to be sent to. They do not enter into an agency relationship, the broker does not represent the seller, and the broker usually doesn't do anything except provide access to the MLS. So many of the problems Andrew brings up are avoided, for better or worse.

Dunes,

You might be lnterested in the paper attached to the link below. Page 6 is very interesting.

http://home.uchicago.edu/~syverson/discountagentsantitrust.pdf

"We (real estate professionals)"

I think the public/consumer/client is the best source for determining who is a Real Estate Professional and I think self-proclamations of (I am the Professional) hold little value.....

People are not stupid because they do not have a Real Estate license, they have options (and should) they can decide (and should), they can get screwed (By a full service agent or a flat-fee service) and they do.......

A True Professional Agent, an honest Agent brings something extra to the table in the Service they provide and it definitely has value but not all consumers require full service and they should have options...Perhaps from Agents who are also Professional/honest but provide a different approach/choice of Services. (Unless you are saying there is no such thing as an honest/professional flat-fee service provider?)

Jack...Nice job, good comment

Guy..Been finding your views interesting and am glad you contribute here....

JR...Your honesty and pride in your Profession are unquestionable, I am always glad to see you..


PS..If anyone uses the "You get what you pay for" cliche, "I'll be back" and will rant incoherently and endlessly
about NAR ; )

Dunes

like every other product, buyers should be able to strip the different services. There should be a price for MLS listing and there should be a price for helping in marketing and pricing. By bundling it together, all that the agents have done is created a monopoly.

Intelligent buyers or sellers should have access to flat fee services and if they are indeed poor services, then redfin like companies will go bankrupt. If they are fairly priced they will survive.... Let the end customers decide.

Give them a choice.

And no one is being abandoned. When I sign up for a flat fee service, i know exactly what I am getting and what I am not getting. And I choose to pay for only the MLS listing and do not wish to buy the rest of the services. And I am happy to pay the flat fee for that.

JR....I presume you're right.

My statement is applicable to all states where agents must have a solid working knowledge of contracts, contract law, surveys, title commitments, etc. What states those might be, I'm not sure. But I do know our obligations of competence require this in Texas.

Guy: So then your previous comment was applicable in Texas but not NY.

J.R.

As I recall, it is mandatory for attorneys to be used in residential real estate transactions in New York, but they're seldom involved in respresenting either buyers or sellers in residential real estate transactions in Texas. By your statement, I will assume New York state laws have a much narrower definition of practicing law than Texas.

I can call 10 agents today and ask a question about a provision in our promulgated contract form, or contract law, or surveys, or title commitments, etc. and 9 of them won't have a clue what I'm asking them.
~~~~~~~~~~~~~~

I don't know how it is where you are but where I am answering those questions is the job of the attorney. I'd be accused to practicing law without a license.

I think we have a absolute dichotomy here.

First, let me say that I'm a free market kind of guy and therefore I'm a strong believer that consumers must take responsbility for their actions. If a consumer hires a flat fee broker with the understanding they are saving money and that consumer later gets left out in the cold, it it the consumers fault. It is no different than hiring a flat fee plumber or flat fee mechanic...the consumer is attempting to save money (and there is absolutely nothing wrong with this) and sometimes you get burned. It's a called gaining experience. If that consumer fails to read and / or understand their limited service contract, that consumer will learn a valuable lesson. If they feel they've been wronged, the seller should seek remedies under the law. If the current laws do not address the problem, anyone can work to get them changed. If the authorities choose not to address the wrongs, then so be it.

Next, you and I both recognize that the majority of the agents in our industry are paid much more than the value they bring to a transaction. They lack the essential knowledge and skills to effectively represent a seller or buyer. It's not any different with attorneys, CPA's, etc. I can call 10 agents today and ask a question about a provision in our promulgated contract form, or contract law, or surveys, or title commitments, etc. and 9 of them won't have a clue what I'm asking them.

I hope you would also agree that in good times and bad, it is only in theory that an agent will put a client's interest above their own. That is like mandating you love your client's family more than you love your family. It just won't happen because it's against the law of nature. When agents need money, very few can or will place their client's best interests above their own because it means the agent is putting their survival second to their client's survival. Sounds good in theory, but it just doesn't happen often. The only way agents will ever effectively overcome this dilemma is to live well below their means, stay debt free and have money in the bank. I can assure you, that will never happen either.

Finally, you ask why the policy makers not enforce the rules they make. Simple....money. State and national associations are numbers driven. They have employees and mortgages/rents to pay. If instead of having "image campaigns" the state and national associations had "education campaigns," they would slowly but surely dwindle their membership ranks which obviously would reduce their income. No "group" intentionally decreases their membership knowing it will ultimately destroy their organization. Have you ever heard NAR or your local association say "we have XXXX number of members with XXXX hours of ongoing education"? Never. They only proudly announce how many "members" they have. Members equals numbers equals survival.

It may sound as though I'm sour about these things. I'm not. I simply don't follow the industry thought process. I believe in being truthful is more important than being part of any group. I know I will be lambasted for making these statements, but honesty is my policy and always will be, even when it's not politically correct.

And one last thing...I do share your frustrations my friend.

I am not a fan of flat fee MLS companies. I do not blame someone for trying the FSBO route but dont sign something with a broker who does nothing to represent you.

Use craigslist, postlets etc. to market a home FSBO.

Most flat fee listings I see instruct people to call the homeowner. In these cases the "listing agent" doesn't do any representing at all, of buyers OR sellers. There are flat fee companies that actually show the home to buyers?