This morning, a columnist in the Boston Globe offered an opinion entitled, Four hard truths about housing. Assuming the conversation is open to crowdsourcing, readers are invited to elaborate on (or debate) a 5th hard truth:
Some in the residential brokerage industry exhibit behavior, that in aggregate, has cartel-like implications, including:
1. Near uniformity in a two-sided brokerage commission which the public believes is bloated if not obsolete;
2. Changing the law to paper over conflicts of interest so counterfeit buyer agents (aka designated buyer agents) generate in-house sales and double pay days;
3. Sensationalizing bidding wars so they become self-perpetuating, creating a frenzied housing market driven by fear rather than prudent decision making; and
4. Hyping “low inventory” while simultaneously limiting supply by hiding inventory through a practice known as pocket listings, or the new more alluring name — “whisper listings.” Bottom line, same as designated agency — collect both sides of the commission, a practice know as “double dipping.”
What impact do these self-serving practices have on individual transactions, household budgets, the advice given to “clients,” and the common good? Runaway bidding wars in Cambridge during 4Q2013 raise those questions and more. There one in five homes sold for $50K or more over asking price; similarly more than one in five bidding wars saw prices soar 10% or more over asking price through a BLIND bidding process.
In an era of transparency where ingredients are routinely listed on grocery products, can we at least agree that homebuyers should make informed offers and know the truth about competing bids, including whether they are from straw bidders or phantom buyers?
In the spirit of innovation that characterizes both the academic and start-up community, hope others realize they it would NOT be difficult to begin doing something about this 5th hard truth. Let’s start sooner — even before the Spring housing market — rather than later, and invite stakeholders to consider Cambridge as a case study / learning lab for corrective action and a new open, transparent real estate eco-system.
For more info, read and share our recent blog post: Will runaway bidding wars create real estate refugees in Cambridge? What would MLK do?
CALL TO ACTION: Please let us know if you’d like to participate in a visioning exercise, see reVRM-Minifesto in this “game changing” slideshow which has been watched by more than 2,200 people!