As expected, my latest Inman column brought out only wide agreement and headnodding. Positively sleepy comments section there. NOT. Go read it fast, or better yet, go be a subscriber so Inman can continue to pay me for my ramblings. (LOOK! A COMMERCIAL PITCH!)
First of all, I owe a word of thanks to everyone who responded over at Inman — especially to those who disagree and are taking my points apart. I guess I’m a Hegelian in the way I view progress: thesis, antithesis, synthesis.
In any event, I wanted to post a few responses on this blog since I want to carry the conversation beyond just Inman readers, and past the 24-hour paywall deadline.
Information Wants to be Free
There were a number of people who thought that I was simply nuts because I didn’t recognize that “the consumer demands a free flow of information” to quote Larry Whited, Sr.
This claim that “consumer demands a free flow of information” strikes me as a hypothesis at best. I’d like to see some evidence besides opinion surveys that mean not much at all.
As counter-example, if consumers indeed demand all the information all the time, then why do we still have no free finance website offering true real-time quotes? Yahoo, Google, CBSMarketWatch — and all of the other free sites — only give you stock information on various delays (15 minutes, 30 mins, etc.). And the consumer outrage is nowhere to be seen. If you want real-time data, you gotta sign up (! there’s that word!) and gasp, even pay, folks like E*Trade and Scotttrade.
If information wants to be free all the time, why is it that I have to pay to see my credit report? No consumer outrage there, and no services springing up offering you free credit reports 24×7. The existing “free credit report” sites are just marketing come-on’s; you get one per year, but gotta sign up for some subscription to get more, etc.
Carfax.com doesn’t offer information for free to the world; yet no consumer outrage. If anything, consumers are flocking to use that paid service every day.
Even in music, in the age of filesharing and bit torrent, Apple iTunes continues to churn out hundreds of millions of dollars in profits despite its obnoxious DRM system.
Are we still so sure that consumers “demand” a free flow of information?
If you are so sure, then I don’t understand this, from Larry Whited:
The real issue is that the large, last century, dinosaur, brokerage models want to force the consumer to be dependant on their VOW sites and by doing so force commission back to 7%. They need higher commission to support their inefficient antiquated business models.
They hope to accomplish this by crushing this century value brokerage models (virtual, low cost, full service) by not allowing their property address to display on the value brokers IDX sites. IDX is much less expensive to operate than a VOW and is vital to the growth of the value brokers.
Why would these new, efficient, showing all data brokerage who want to crush the last century, dinosaur brokerage models want so desperately to change the inefficient dopes who don’t get it? Just crush them then! If anything, I’d be out there saying, “Yeah, Rob’s right — hide all that data!” knowing that behind the scenes, I’m just killin’ them in competition.
If the consumer truly wants free information, they will show it by voting with their wallets, and what I asked for — actual data on financial impact of showing all of the data on the Internet vs. some of the data on the Internet — should be easily available. We should be able to see that listings with all of the data freely available sell for more than listings that require registration.
Perhaps the unspoken issue here for a great many realtors is not that “consumer demands a free flow of information” but that “consumer demands a free flow of information… that someone else controls” — that is to say, IDX. If you’re using someone else’s listings to fish for business, then yeah, I could see why you might feel pretty passionate about having all of the information available. It occurs to me that those who castigate listing agents for not putting all of the data “out there” are all in non-charity organizations trying to make a dollar.
On Fiduciary Duties
Bruce Hahn (no relation) wrote that non-fiduciary relationships exist in real estate:
There are also non-fiduciary relationships as well. For example I can list my home with a flat fee broker, who will put my home in the local MLS for a mutually agreeable fee, paid in advance. We both clearly understand in advance that this is a ministerial service only. That broker isn’t going to assist me in negotiating with a buyer or a buyers agent and doesn’t owe me any other fiduciary duties.
All I can say is, the state real estate board might beg to differ with said flat fee broker when he says, “Hey, I didn’t owe that dude any duties”. It’s hard to avoid fiduciary duties simply by saying so.
But if you could do this, just tell the consumer, “Hey, I’m not your fiduciary”, then by all means, every listing agent should tell the seller, “Hey, I’m not your fiduciary; just your selling agent.” Why face malpractice liability if you don’t have to?
So I suspect that realtors as fiduciaries is sort of the default reality.
Now, in response to Guy Wolcott, I agree that the fiduciary duty is written into the laws and regulations of various states. But let’s not be blind to the fact that the real estate boards are controlled by realtors. 🙂 If the industry wanted to change the rules, it can and it will.