Controversial practices used by incumbents & innovators renew call for Real Estate Consumer Bill of Rights

Redfin_Switch

“Upstarts are beating incumbents at their own game” the headline shouted this morning in a leading #RETech news service; but within minutes, comments fired back with a screenshot raising questions about controversial business practices.

http://bit.ly/RETables

Privately, real estate consumer advocates have shared unrelated video with regulators documenting misrepresentations made by another real estate giant. With an FTC / DOJ workshop on anti-competitive business practices on June 5, the stakes are high in this incumbents vs #REStartUps battle – a potential $30 BILLION dollars annually in consumer savings.

If practices used by incumbents and startups are both raising questions, what’s the best way for ordinary consumers to decide who’s right and who’s wrong? Understand and assert your rights, consumer rights.

Against that backdrop, it is both ironic and appropriate that this controversy is unfolding on the 17th anniversary of the call for a Real Estate Consumer Bill of Rights. On May 1, 2001 a petition signed by 38 real estate consumer advocates was submitted to the Federal Reserve Board to form a Real Estate Consumer Alliance and draft a Real Estate Consumer Bill of Rights:

http://bit.ly/RECALL2001

The next day, an attorney for Consumer Union, the non-profit publisher of Consumer Reports, echoed the call asking “Are consumers being treated fairly by real estate brokers? Are commissions priced fairly?” in his testimony before the Committee on Financial Services Subcommittee on Financial Institutions and Consumer Credit.

As mega-brokers morph into data companies and Facebook failings underline the need to protect personal data and privacy, let’s use the anniversary to update the #REBillOfRights. Here’s a partial history of attempts to draft a real estate or homebuyer bill of rights, including one by Redfin, dating back to 1999:

http://bit.ly/REBillRights

While some may prefer to focus on playing defense against unfair and deceptive business practices, other innovators outside the real estate industry are eager to help consumers leverage new digital “superpowers” to manage their digital identity and save money. To join that open collaboration, visit #RE2020:

http://bit.ly/ConsREvRights

Join us virtually or in person at ImpactHub Boston’s Open Project Night, this evening at 50 Milk St in the Financial District, 6:00-8:30pm.

http://bit.ly/BosOPN_May2018

Related Articles

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.

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.

How far should consumer access to real estate data go?

How far should access to real estate data go in an e-commerce era when consumers expect access and transparency?  Web 2.0 functionality is already opening up new ways for consumers to manipulate real estate data to inform their own homebuying decisions.  For example, The Real Estate Cafe’s clients are using MLS data we provide them to create personalized Google Maps to value properties and make offers in ways that make HousingMaps.com look simplistic.  Should the real estate industry try to anticipate those needs and provide solutions, or should consumers be free to access housing data and innovate as they please?  Here’s what one future-oriented real estate consumer advocated proposed as the first article of a Real Estate Consumer Bill of Rights way back in 1999.  How would you update it for 2005 and beyond?

DRAFT REAL ESTATE CONSUMER BILL OF RIGHTS

Article 1. Right of information access without limitation
No consumer should be denied access to information sources just because that individual is not a real estate professional or because the real estate professional attempts to use membership in a trade association or a listing service as a condition of “representation”. To the extent information may be available, its access should not be denied except to lawfully protect the adverse party only.

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

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:

Monday, November 21, 2005 at 11:00 PM

Banks as Real Estate Brokers: The Consumer Perspective
RealtyTimes.com: April 30, 2001

This new generation of information technologies, new business models and new players will raise a wide variety of consumer issues. Without an organized consumer effort, the future of this trillion-dollar industry will be defined by two titans: NAR, which ranks No. 15 on Fortune magazine’s list of the most powerful lobbying groups; and ABA, which ranks No. 11.

As a counterbalance, a coalition of consumer groups could be formed to coauthor a long-overdue Real Estate Consumer Bill of Rights, both to correct ongoing problems and guide the industry’s evolution. This Real Estate Consumer Alliance, or RECALL, could include a variety of groups including CFA, Consumers Union (publishers of Consumer Reports), National Consumer Law Center, National Consumers League, American Council on Consumer Interests, Privacy Rights Clearinghouse, Electronic Privacy Information Center, Consumer Project on Technology, USPIRG and AARP. Because homebuyers and sellers have the most to gain – an average savings of $6,000 per transaction, according to the Wall Street Journal – RECALL could be self-funded through online donations from the anticipated $30 billion annually in savings. That kind of savings should be enough to wake the average consumer. But time is running out to wake the sleeping giant.

http://realtytimes.com/rtapages/20010430_view.htm

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