60 Minutes from a Consumer

By
Services for Real Estate Pros with Whitecomb.com, LLC

After seeing last night's segment on CBS' "60 Minutes", I thought I would post something about what I (and possibly other consumers) took away from it. While the segment may have been good timing in terms of technology utilization in the real estate industry, it also was poorly done. Here are few things I, as a consumer, got out of the segment:

1. The headline title and image were completely inaccurate: You mean to tell me the only thing 60 Minutes could up with is an image of a gold "6%"? As most consumers and realtors know, commissions are completely negotiable on both fronts and often are revised to meet the needs of the seller and the realtor. To be honest, the image and opening banter from Leslie Stahl seemed to detract away from the real story. Unfortunately, many consumers could have been easily swayed by simply watching 1 minute of this segment. The case study regarding eRealty hurt the segment in my opinion and would make me as a consumer think twice before using such an online service. The person they interviewed seemed to only have a bitter response in going defunct. I hate to think that there are laws to avoid fair competition in some states, but I hope they are there to protect the consumers.

2. Could 60 Minutes have picked a worse spokesperson?: Just like all media, segments are usually swayed to one side and this was simply the best example. If they were going to pick that one agent, they should have also interviewed a few others. The woman they interviewed was very "uppity" in my opinion and simply disregarded anything less than 6%. That only fueled the rest of the segment to go in one direction. Simply stating that "If it's less than 6%, I'm not your agent" is rude and one of the poorest decisions ever made by this person. I'm sure she was put under the gun and being interviewed on national television is nerve-wracking in itself, but she should done her homework and been ready for the questions asked. I'm sure she is a hard-worker and puts in more than she receives per transaction, but once again, from a consumer point-of-view, it only favored the rest of the segment. All you heard was  "6%" the whole time and nothing was really mentioned about negotiating commissions. I've heard this phrase before and it is really a true aspect a consumer must think of during the process: "It's not what you save, its what you net.."

3. Where was your Association?: I hope realtors who belong to NAR do not pay that much to be a member or are now wondering what the benefits are for joining. Everything that consumers hear in the media about real estate is bad news. Houses on the market forever, foreclosures at an all time high, and grim predictions for the future. The industry gets a headline spot on one of the highest-viewed television programs in the nation and the leading association representing the industry is nowhere to be found, except for a picture of their headquarters and a copy of the lawsuit being filed against them. Not one spokesperson was interviewed. I'm not sure if any contact was made to NAR for their side of the story, however, you would think someone at NAR would make some sort of emphasis to be interviewed. I went to their website today to see if they had anything on it regarding the segment and there was nothing. No response or comment from any executive level person at the association. Funny, but the first thing you see on the site is an image regarding "How technology can help your business." You would think they would take at least 10 minutes to address the 15 minute segment.

4. Is it really that easy?: While Redfin and the selected consumers made it sound like a 1-2-3 deal, they should have interviewed other consumers, especially FSBO consumers, who've been through very different situations. Correct me if I am wrong, but isn't it true that only about 12 percent of consumers actually sell their home via FSBO? That's a low number if you ask me and quite a risk in selling your biggest investment. The people they interviewed at Redfin seemed to be a bit shady if you ask me. Just seeing the woman they interviewed who seemed to be reading off a cue card would make a consumer like me nervous in dealing with such a service. Not to mention that the agents working in the office looked like day traders vs. real estate agents out and about doing actual work. It might just be me, but there is a HUGE intangible factor in working hand and hand with someone in such a transaction. Every realtor I have worked with (good or bad) has always been present in all facets of the transaction and onsite at the home to give their feedback regarding the sale or purchase. It would make me a tad nervous conducting everything over the phone or over email.

5. Math is always easy and sometimes heavily swayed: Thanks for the drawing on the dry erase board, but it's much more than what it appeared to be. Let's face it, realtor commissions are expensive and something no consumer wants to pay and is often the first negative vibe used against the industry. People pay commission's everyday, but it always seems that when it comes to real estate, it's like a bloody rugby game. People are providing a service and should be paid accordingly for their time. There are so many intangibles involved that consumers often overlook the facts and feel as if they are having their wallets/purses taken away from them right under their nose. Believe me, I used to feel this way and have totally changed my opinion on the issue. Unfortunately, 60 Minutes used the "simple" math equation and a bad agent example to prove their desired point. If you're a consumer and hate paying commissions think of it this way: Imagine being a baseball fan and always seeing that dreaded player that hits .215 on the season and rides the bench all year only to be paid a whopping $1 million dollars a year. Then the guy comes into a big game and gets the winning hit to win the World Series. People quickly forget and change their opinions in all of 2 minutes. I'm not trying to compare real estate to professional baseball, but many good realtors do tons of things on the backend that most consumers never see on a day-to-day basis and quickly disregard. No one ever speaks about a seamless and quick buy or sell process, you only hear about the bad ones.  Go ahead and try to sell your house on your own, but make sure you keep that business card of the agent you spoke to in case you need to get them on board after it's too late.

While the segment was heavily one-sided, it did interlude into a good discussion about the future of the industry (at least in my opinion). Twenty years ago, consumers dearly depended on an agent to handle the buying or selling of a home. Today though, consumers (like me) are using the Internet to gain information and knowledge and are doing their own research. A good example of this is Zillow (although hotly debated) and Craigslist. Even eBay allows for conducting real estate transactions online. Consumers are gaining more insight about the industry and are using that knowledge before they even get involved in selling/buying a home. Besides the Internet, just watch HGTV for a few hours. There is tons of information out there for consumers to retrieve and unfortunately, it makes it seem very easy to conduct a transaction. Realtors need to use such conduits to provide the general public with their own side of the story regarding the actual services and intangibles they provide to a consumer.

Fifteen years ago, people were afraid to use email. The thought of everyone using a cell phone was simply ridiculous. Today we depend on these items. Same goes for online banking and any other ecommerce  transaction done online, but consumers have adjusted and made use of these ideas to be more efficient in their everyday lives.

Hopefully, realtors and the industry can effectively use the Internet and communicate to the general public about the services they provide and make the industry have a better appearance. More education for consumers would simply stress the importance of using a realtor for making the biggest investment in their lives. Hopefully the segment by 60 Minutes didn't do too much damage from the consumer's point-of-view.

While it may be the road the industry is headed down, I would hate to think that my next realtor would be in an office, behind a computer, and wearing a phone head set when conducting the biggest transaction in my life.

 

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60 minutes
leslie stahl
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Rainer
78,125
<i>Mike Stankewich, MBA, e-PRO - ZipRealty, Inc.</i>
ZipRealty, Inc.

WOW, you spent a lot of time writing this.  It is an excellent article and addresses the issues very well.

Thanks for this post.

May 14, 2007 11:24 AM
Rainmaker
325,189
Jeff R. Geoghan
Marketing VP & Real Estate Agent Trainer
Coldwell Banker Select Professionals

Great to see you're still posting!  I've really enjoyed hearing your thoughts.

As an industry pro and also a self-taught IT geek I always keep one eye on the internet companies and wonder what's going to break that market open.  Consumers are obviously willing to try the internet/FSBO approach for the perceived savings (hey, I'm an intractible DIY'r myself) but I don't see a feasible marriage of the new and the "old" yet, which  may make the difference.

In a recent AR discussion on the merits of Zillow, I commented that I still see the "boots on the ground" approach of the local professional being the best alternative.  You can figure out a price using algorithms, but it won't take into account (and NEVER will) the feel & intangibles that make each house unique.  It's not just about square footage and zip codes.   

Regarding 60 minutes, I need to keep reminding myself that newspapers and new shows don't exist to share truth - they exist to sell newspapers.  The "6% scandal" is hot right now, so some editor thought up a way to get ratings for a segment by playing it.  A complete, fair treatment isn't likely.

Regarding NAR, I agree that it makes me edgy that they were AWOL - but I wonder if that wasn't also part of the editor's vision for the piece.  

Great post. 

May 14, 2007 11:34 AM
Rainmaker
223,559
Laurie Mindnich
Excellent points, clearly stated.  Thank you for the input.
May 14, 2007 11:35 AM
Rainmaker
371,472
Leigh Brown
Broker/Owner - Charlotte NC
RE/MAX Executive Realty
I'm so glad you decided NOT to leave AR!  This is an excellent rebuttal and beautiful coming from a consumer.  You should email this to 60m@cbsnews.com.
May 14, 2007 11:37 AM
Ambassador
506,647
Jason Sardi
Your Agent for Life
Auto & Home & Life Insurance throughout North Carolina
Very well done and you make a lot of good points.  A very educated and well written article.  The future is indeed out there on the net....though the intangible benefit of personal touch is timeless.
May 14, 2007 11:37 AM
Rainmaker
194,219
Mike Montague
"Who Moves You?"
sales representative : Keller Williams Experience Realty

For the record:

If you bought a home for $100,000 in 1970, it was the equivalent of $514,948.50 in 2006 dollars. This is pretty much on par with overall inflation. If average commission rates remained constant over that time (which they have not – they have gone down), Realtor income per trade would have grown at no greater pace than the cost of living. Net result = no real value raise in pay over 35 years. Try to put that past any Union in the US, I dare you. 

 In 1970 real estate commission rates over 6% were the norm. Today’s average rate is slowly dropping and runs between 5% and 6% across Canada and the US. The net real value income Realtors earn per trade is dropping. Commission rates are not fixed and fluctuate based upon the demands of the consumer just like home prices do.

 The cost of licensing for a Realtor was around $200 in 1970 and is closer to $5000 today. Brokers carried all liability in 1970 and agents paid little or no expenses. Today’s Realtor is personally liable in a transaction, pays desk fees board fees, office fees, long distance fees, printing fees, insurance, ongoing educational expenses and more on into the thousands of dollars each year. Add to that, internet fees, cell phone expenses, marketing expenses and on and on. There is no pension plan no medical plan or any company benefits built into the job. 80% of graduates leave the business of Real Estate in the first two years mainly due to the high cost involved. I wonder how Leslie is making out compared to 1970 and who she might call when she needs to trade her seven figure NYC digs?

May 14, 2007 12:47 PM
Rainer
38,586
Darren Kittleson
CRB, CDPE-Madison, WI
Keller Williams Realty/MAPS Coaching

Great response.  My comment after watching the piece was "who is Redfin's PR firm".  What amazed me is 1 "new" business model, operating in 1 city in the US, garnered such attention last night.  They must have an amazing PR firm in order to get that to happen.

Thanks for your very well thought out posting.  I agree with your statements. 

May 14, 2007 05:53 PM
Rainmaker
201,028
Stephanie Edwards-Musa
knitwit at thred UP
thredUP.com
Thank you again for taking time to write this today.  We are glad to hear the consumer side of it.  It is posts like this that help us grow as professionals and understand our clients point of view.
May 14, 2007 10:10 PM
Anonymous #9
Anonymous
Jane Savage

60 minutes is full of it....where do you get off..telling the President of Iran what our President said?  If we have a nucclear war...it will be started by some idiot reporter...probably on 60 minutes....Also I live in So. California and there are no marijuana stores that I have ever heard of....In fact, I had a friend who was dying of stomach cancer and could'nt eat...the only help she could get was marijuana....unfortunately, she had a friend who had to find a drug dealer in a seedy area (like they have probably in any city)....who owns this station???Bush....What the hell happend to Dan Rather, he was the only honest and real newsperson...

I don't know where is will go...I could'nt send an email on the 60 minutes web site....I'll never watch your program again..and will tell all my fiends....Jane Savage, Long Beach, CA

September 23, 2007 10:18 PM
Rainmaker
1,346,089
Andrew Mooers
Northern Maine Real Estate-Aroostook County Broker
MOOERS REALTY
Enjoyed your post! Thanks for the time to give the run down of the 60 minutes piece.  I had missed it but feel like I just watched it!  I would not say all media sways a story however. I was new director of a radio station in Bangor Maine before 28 years of being a real estate broker. Good reporters try to get the gist of the entire story, keep it balanced and don't use the platform as a means to make a personal statement thru an interviewee that shares the broadcasters personal agenda.  What is hard is to take an unknown subject, spend the time needed to learn the industry now and the history of where it has been and is going..and boil it down to a 10 minute complete story that is balanced.
December 31, 2007 08:58 PM
Anonymous
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Rainer
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D. Comber

Whitecomb Dot Com
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