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Discussion: (5 comments)

  1. There is one additional point that was left out.
    Once the house is foreclosed on, or put in a short-sale, the house goes back on the market. The agents then get another commission when it is then sold again.
    Agents have an incentive to have over leveraged people buy houses. They can make a commission on the house far sooner than they would have. The same house gets turned over far more frequently tan if a stable buyer had purchased it.

  2. Mr. Pinto is right, of course, and he used to be one of the enablers.

  3. The NAR is funded by real estate agents! They are the 4th largest lobbying group. They lobbied were banks must use real estate agents on all foreclosures.
    However the days of the realtor are rapidly coming to an end. 30% less in just 5 years. Not even stockbrokers or travel agents died this fast.

    According to the National Association of Realtors own survey (you have to pay $150 and be a member to get a copy!), only 22% of all homes are sold using the “traditional brokerage model” (aka: the full commission service). That is down from 24% in 2011. Why? Because home values dropped and homeowners had to find an alternative. They learned they could either do it with a discount firm or on their own.

    We now have websites like Zillow, which is ranked the #1 most searched real estate website. The MLS has become out-of-date. Purchase contracts are available at your local Office Max or online. There is a Kinkos/Fed Ex on every corner. And a custom sign is just a few clicks away.
    The real estate industry forgot that the cost of a real estate commission was now usually more than the homeowners have in equity. In this market, the commission structure deserved a good examination under a microscope and it is being challenged. It is no longer “just part of the deal.” Agents were the only ones walking away from the closing with a check. In the last five years, I’ve watched the real estate industry stuck in its antiquated anti-consumer methods, while companies like Zillow, Simple and Sold, and Redfin are changing the real estate industry at lightning speed.

    The real estate revolution is upon us. Never before have the barriers to being able to buy and sell your home been so small. With the cost of homes in the current market, never before has the opportunity been so substantial.

  4. Jay Weiser

    Following up on Thermo’s post and Ed’s point about chain-reaction sales, not only does the NAR want to suck as many marginal buyers into the marketplace as possible, but they want to encourage those marginal buyers to flip their houses as often as possible. If serious down payments are required, then borrowers need to keep coming up with more cash as they flip their way up — not easy for those with weak credit. If near-100% financing is available for weak-credit borrowers, they can keep flipping their way up and generating more commissions. As the Angel Clarence told the original subprime lender, George Bailey, “With every government-financed housing sting, the NAR’s cash register rings.” Or something like that.

  5. Rosie Tighe

    “For 90 years the NAR (and its predecessor organization) has supported expanding the government’s role in housing finance”

    As long as that role didn’t involve financing homes for minorities in the suburbs or financing homes in minority neighborhoods…

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