Call for Real Estate Consumer Bill of Rights: 5th Anniversary

BillofrightsFive years ago this week, a coalition of leading real estate consumer advocates nationwide — including buyer agents, fee-for-service consultants, and for sale by owner publishers — cosigned an petition calling for a Real Estate Consumer Bill of Rights which Consumer Union, publishers of Consumer Reports, echoed in their testimony in Congressional hearings on banks as brokers:

"We also call on Congress to hold hearings on the real estate marketplace. …Are consumers being treated fairly by real estate brokers? Are commissions priced fairly?" asked Consumers Union legislative counsel Frank Torres during testimony May 2nd before the U.S. House of Representative’s Committee on Financial Services Subcommittee on Financial Institutions and Consumer Credit.

"Perhaps what we should be talking about is a Real estate Consumer Bill of Rights."

Bloggers, consumer advocates, and real estate innovators — not to mention the US Department of Justice and Federal Trade Commission — are renewing investigations into competition in real estate with a new urgency fueled, in part, by discrimination against flat-fee MLS listing services and their customers, plus industry-supported efforts to establish minimum levels of service for brokerages in an increasing number of states.

Homeowners trying to sell "for sale by owner" also face subtle and overt forms of discrimination, as do homebuyers using alternative real estate business models.  If you’ve been a victim, we’d like to hear from you privately at RECafe@mac.com. 

Congressional hearings or not, doesn’t it make sense — as it did five year ago — to ask regulators and other public officials to begin talking about a long-overdue Real Estate Consumer Bill of Rights?  Last October, The Real Estate Cafe began blogging about individual articles, and would be glad to restart that discussion before the National Association of Realtors Midyear Legislative Meetings in Washington, DC, May 15-20, 2006.  We invite your comment below; on our record a podcast line:  617-876-2117; or if you’re really interested in getting involved, our wiki.

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Call for Real Estate Consumer Bill of Rights expanding?

Hearthatcall
Glad to read that fellow real estate innovators are blogging about a real estate consumer bill of rights and that a CNN reporter may be working on a story.  Given that, maybe it would be worthwhile for readers to collaborate on a short history of efforts to create a Real Estate Consumer Bill of Rights.  Since everyone in Boston is talking about the "Rolling Rally" today for the World Champion Red Sox, hope you don’t mind if I use a baseball metaphor to categorize time:

1st Inning:  To my knowledge, Erle Rawlins, a buyer agent / consumer advocate in Dallas, Texas wrote the first draft of a real estate consumer bill of rights in 1999.  A working draft is currently online on The Real Estate Cafe’s wiki.  Our goal is to invite the public to comment and coauthor on the wiki.

2nd Inning:  Two years later, in May 2001, a coalition of leading real estate
consumer advocates nationwide — including buyer agents,
fee-for-service consultants, and for sale by owner publishers —
cosigned a petition calling for a Real Estate Consumer Bill of Rights
which Consumer Union, publishers of Consumer Reports, echoed in their
testimony in Congressional hearings on banks as brokers:

"We
also call on Congress to hold hearings on the real estate marketplace.
…Are consumers being treated fairly by real estate brokers? Are
commissions priced fairly?" asked Consumers Union legislative counsel
Frank Torres during testimony May 2nd before the U.S. House of
Representative’s Committee on Financial Services Subcommittee on
Financial Institutions and Consumer Credit.

"Perhaps what we should be talking about is a Real estate Consumer Bill of Rights."

3rd Inning:  Note sure of the dates, by my recollection is that some government
agencies began discussing a borrower’s bill of rights.  Here’s a link
to one version by the Mortgage Bankers Association published on their website, StopMortgageFraud.com, copyright 2002.  (Your comments and links to other borrower’s bill of rights are most welcome.) 

4th Inning:  In May 2006, The Real Estate Cafe reminded fellow real estate consumer advocates that it had been five years
since the call for Real Estate Consumer Bill of Rights had been heard
in Congressional testimony.  That was six months after we initially blogged about the topic.

5th Inning:  To my knowledge, Redfin released their version of a real estate consumer bill of rights about seven months ago, on or around April 2, 2007.  Personally, I was pleased to see Redfin expand talk about creating a real estate consumer bill of rights and encourage others to separate the need for consumer protection from their critique of Redfin. 

6th inning:  The call for a real estate consumer was greeted enthusiastically in informal conversations at a workshop on mortgages and lending hosted by the Congressman Barney Frank (D-MA), Chairman of the House Committee on Financial Services at the Federal Reserve Bank in Boston on Friday, October 26, 2007.

Where will those private conversations with legal and consumer advocacy groups lead?  I hope there will be a growing recognition that a Real Estate Consumer Bill of Rights is long overdue and more timely than ever.  Whether you are a homebuyer, seller, or professional, we’d love to know what you would like to see included in a Real Estate Consumer Bill of Rights.  As written in the past, I’d love to see real estate commissions separated.  This short video / slide show, created nearly two years ago, bullet points 10 mega-trends leading towards that tipping point.

Do home buyers and sellers have the right to free choice without fear of discrimination?

In a democracy that values personal and economic freedom, doesn’t this third point of the proposed Real Estate Consumer Bill of Rights seem obvious (or to quote the Declaration of Independence, "to be self-evident")?

DRAFT REAL ESTATE CONSUMER BILL OF RIGHTS

3. Right to be respected as an individual. 
Consumers of real estate services vary as to particular real estate
needs. There should be no difference in the way an individual is
treated by a real estate professional especially if that individual
chooses not to be represented or chooses to use a real estate
professional whose services offered may be different in custom or
practice from other real estate professionals.

To the contrary, real estate consumers who exercise their right to choose "alternative" real estate service providers, like new flat-fee MLS listing services, run the risk of discrimination.  The same is too often true if they list their own properties "for sale by owner."  Those are the kind of the complaints that the United States Department of Justice and Federal Trade Commission are likely to hear on October 25th when they host their public hearing on anti-competitive trade practices in the residential real estate industry.  If you’ve been a victim of this kind of discrimination, we’d like to hear about it.  Exercise your own free speech by (1) posting your comment below, (2) sending a private email to recafe@mac.com, (3) recording a message by calling The Real Estate Cafe at 617-876-2117;

Or best of all, exercise your freedom of speech AND assembly by (4) logging onto Essembly.com to nominate your own idea for the proposed Real Estate Consumer Bill of Rights using the discussion boards there for home buyers and home sellers.  We look forward to hearing from you!

Real Estate Consumer Bill of Rights

BorrowersbillofrightsYesterday, news outlets in Boston began reporting that Massachusetts legislators had introduced the first Cell Phone Bill of Rights in the nation.  (A simple Google search seems to challenge that, as a similar bill was introduced in California a year and a half ago; but that’s a side point.) 

The $2 trillion dollar a year question is:  "Why is it that consumer advocates and legislators in progressive states like Massachusetts and California can rally around feel good legislation, like MASSPirg’s Cell Phone Users’ Bill of rights, but neither state has been a first mover on a Real Estate Consumer Bill of Rights?"  To my knowledge, no real estate consumer bill of rights exists at the state or federal level, despite Consumer Union’s (non profit publisher of Consumer Reports) calls for one 4.5 years ago in Congressional hearings on banks entering the real estate brokerage business. 

Shouldn’t real estate consumers be free to choose based on informed consent?

Surveys conducted by the real estate industry over the past decade repeatedly find that some consumers want the convenience of one-stop shopping.  In response, real estate consumer advocates advise consumers to look carefully at the trade-off between time-saving convenience and cost, and to protect their right to make free, informed choices.  That’s the goal of this second article of a proposed Real
Estate Consumer Bill of Rights.  Initially drafted in 1999, how would you update it for 2005 and beyond?  If federal regulations were finally changed to allow banks to provide residential brokerage services, would this language need to be expanded? 

DRAFT REAL ESTATE CONSUMER BILL OF RIGHTS

2. Right not to be coerced into using products or service providers.
No consumer should be forced, without the consumer’s full informed
consent, into using any particular service or product. Consumers should
especially be cautioned where the real estate professional may, by
office policy, be required to act as a dual representative or shift
services without the consumer’s full informed consent. Consumers have
the right NOT to use real estate brokerage services and to “self-represent” if so determined by the consumer.

As written in an earlier blog post entitled, Cell phone bill of rights? Why not real estate?, The Real Estate Cafe will:

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