Never before has the national media so collectively and relentlessly criticized and denigrated a profession as it has the real estate industry recently. Since Realty Times began noticing the trend in 2002, magazines and newspapers like USA Today (Sept.22, 2002, May 11, 2005), ComputerWorld (Oct.2, 2002), The Wall Street Journal (November 2003, May 11-2005), Forbes (August 2004), Time Magazine (January 31, 2005), The New Republic (May 2, 2005,) and the Washington Post (May 17, 2005,) have reported stories that paint the real estate industry as a "cartel" bent on protecting "fees" and "stifling competition."

What the media appears to want is to have an active role in forcing real estate brokers to lower their commissions and give up more control to the consumer. They want to turn the MLS into a public utility.

And they're getting plenty of help, in the form of leaks, plants, and snitches from the Department of Justice (DOJ), publicly-held lead companies, and small independent brokers.

The media has run scathing editorials, ignored input from key sources including the National Association of Realtors (NAR), leading franchise organizations, and yours truly, and has routinely implied that Realtors are overpaid.

The national media mis-reports basic facts about how the real estate industry operates, especially when opposing points of view threaten to weaken their stories.

One fact that is mentioned over and over is that the real estate industry is a racket that protects standard six percent commissions, when we all know that real estate commissions can't be standard because they are all over the place -- from three percent to over seven percent. In addition, agents can negotiate commissions on a deal-by-deal basis, so all we really have to enumerate is an average and that comes to about 5.1 percent, according to some industry pundits. That's nearly a full percentage point below the six percent that the media screams is too high.

Another fact that is mentioned endlessly is that the Internet should have squeezed costs out of the real estate transaction by now, as it did for other middle-men industries such as stock brokerage and travel agency. But stocks and airline tickets are a commodity where one share or ticket is the same as the next. Homes are unique and require individual marketing strategies. These stories drone on as if the Internet itself is a broker, when in reality it is an advertising medium that has added another layer of costs for Realtors.

Travel agents and stock brokers were disintermediated by third-party companies in a virtual environment. It should be no surprise that once that competitive advantage was met, they began to tack booking fees back on to the total. Yes, airline tickets have dropped, but so has service. If you like feeling your knees under your chin, brown-bagging your lunch and wondering whether your flight is going to be canceled because it isn't full, then lower fees are great.

So all that happened is that a lot of small individual business owners were put out of business by larger players that ended up cutting service and raising prices. And, that's progress according to the new age business advocates of the media.

What's most disturbing is the growing viciousness of the editorials. Just last week, a Wall Street Journal reporter wrote a story called "The Realtor Racket" in which he argues for commissions to come down. "State legislatures and real estate commissions -- which happen to be populated by Realtors -- are enacting laws that make price competition illegal," he rails. "This means Americans are paying about $20 billion a year more for real estate services -- or about $3,000 on an average priced home -- than are home buyers in other nations."

The media fails to consider that the Realtor bears the marketing costs of selling a home at considerable risk up-front, in essence providing a short-term unsecured loan for the seller. Would banks provide unsecured loans at three to six percent, and incur liability costs on top of that? Not on your life. Realtor incomes have routinely been catalogued by the NAR as less than most professionals make, including teachers. In fact, after business expenses, the typical Realtor, including broker-owners, makes about $41,000 annually. That's hardly price-gouging for service providers who average a 48-hour work week.

Realtors can't even catch a break when they are paying millions for exposure. Jay Leno, host of The Tonight Show, recently poked fun at Realtors by calling them "liars." The NAR took umbrage and has asked NBC executives to take a little sensitivity training. NAR has been an advertiser on NBC since 1998 and "The Tonight Show" since 2002. In addition, the NAR advertises on "The Today Show," where two recent segments were very unflattering to Realtors, again causing NAR personnel to fire off complaints.

Where is this vitriol coming from? Is the media piling on like little kids in a fight because they mostly live on the coasts where real estate is so pricey, they can barely find apartment rentals, much less affordable homes to buy? Or is there something more sinister at work?

There is some evidence of a government agenda here. Systematically, since 2002, the Federal Trade Commission, Justice Department and Rep. Mike Oxley, R-Ohio, chair of the Financial Services Committee which oversees banks, have hounded the NAR and its members over such issues as minimum service standards, referral fees and other kickbacks to consumers, and online listing policies. Ignoring explanations for keeping rules or installing new rules, these regulators intend to use competitive complaints against the industry to pull off a land grab.

The beneficiary will be banks. The strategy is to take the real estate industry away from state oversight and give it to banks where it will be under federal oversight. The end game is to cover the costs of this transaction with a federal transfer tax, a new line item on every transaction closing, and to reroute the riches of homeowners back into federal tax coffers.

Little do they know, but the media is sitting on the story of a decade, but instead they are lulled by exclusives and insider information into playing the fool. Their job is to raise public alarm against Realtors so that the land grab can take place. Under federal oversight, banks and legislators will be heroes. And with a mortally wounded NAR, there will be no one on Capital Hill to stop the government from taking back homeowner benefits such as the mortgage interest rate deduction and the generous capital gains after only two years of owner-occupancy.

Evidence that this will all come true is slim, but the signs are there, if the industry wants to pay attention.

During the NAR's mid-year conference back in May, the DOJ, which has been investigating the NAR's Internet data-sharing policies, informed the NAR that the department would meet with them and move ahead with a lawsuit if the trade organization didn't act to modify its virtual office data-sharing policy. An hour later, NAR spokesperson Steve Cook was called by WSJ reporter James Hagerty. The next day, Hagerty published a story in which he wrote, "The Justice Department has threatened to file a suit to block a proposed move by the National Association of Realtors that would erect a new barrier to upstart brokerage firms that rely heavily on the Web to reach customers. Any brokerage firm that is a member of a local multiple-listing service, or MLS, has access to the listings provided to that service by all other members."

When Realty Times called the DOJ, they not only denied there was a leak, they denied that a meeting like that would ever be made public. The DOJ met with the NAR two days later, and the NAR, after receiving guidelines from the DOJ as to what would satisfy their concerns, announced that they would revise the Internet data display policy around a hybrid of virtual office Websites and Internet Data Display or broker reciprocity.

So the media was certainly effective as leverage. It told the NAR loudly and clearly that the DOJ has the upper hand.

How else is the added media pressure impacting the industry? Not in sales.

Real estate sales where Realtors participate are approaching an annualized rate of seven million, sure to be a new record this year. And that's after five years of record sales. But agents say the work is getting harder.

Some Realtors like Washington broker Linda Hoffman says, "It seems these days that no matter where a Realtor or professional real estate agent looks-in print, online, or TV, that we are drawn, quartered and subjected to the old greed factor before we’ve ever even met!"

Others say it's harder and harder to make money, not because of the media, but the competition that the media says the industry doesn't have enough of. In the last five years, the membership of the NAR has grown by 25 percent, creating one Realtor for every 185 adults.

Texas agent Pearlena Petty told Realty Times that she has to show buyers twice as many homes to make a sale as she ever has.

Georgia agent Jim Crawford says that buyers and sellers are making more demands, and buyers asking for commission cuts is becoming more frequent.

In all this discussion, the media forgets that the real estate industry is made up of independent contractors. With more agents needing business, some agents are discounting their commissions on their own as they desperately compete against lead generation companies on the Internet, franchise brands, other companies and their agents, and their own brokers to get business.

If that's not competition, what is?

Published: August 25, 2005

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Blanche Evans is the award-winning senior editor of Realty Times, the Internet's leading independent real estate news service. She is featured daily on the Realty Times Video Network in the "Realty Viewpoint" segment. Blanche has been named one of the "25 Most Influential People In Real Estate" by REALTOR Magazine, and has been twice recognized as a "notable." In 2005, she was named "Top Reporter Covering the NAR" by Delahaye-Bacon's. Blanche is a renowned author of five real estate books. Her newest, Bubbles, Booms and Busts: Make Money In Any Real Estate Market, McGraw-Hill, was rave-reviewed by The New York Times. She was also selected from hundreds of real estate experts to contribute to Donald Trump's book, Trump: The Best Real Estate Advice I Ever Received: 100 Top Experts Share Their Strategies, Rutledge Hill Press, and is featured on page 68. Order Now Review - Honors In 2006, Blanche was selected among scores of candidates to author two consumer real estate guidebooks for the National Association of Realtors: The NAR Guide to Home Buying, and The NAR Guide to Home Selling, Wiley & Sons. She is currently planning two new books for the NAR and its members.       Known for her keen insight into real estate industry issues and for her ability to make complex subjects easy to understand, Blanche is a sought-after keynote and continuing education speaker. Real estate organizations from MLSs, to brokerages, to franchisors, to associations hire her to provide up-to-the-minute analysis of real estate industry news and advice on how to improve revenues. Her passionate delivery, peppered with stinging wit, is a huge hit with audiences and fans. Don Klein, CEO Greater Nashville Association of Realtors, Blanche Evans, Richard Courtney, president 2007, GRAR "The GNAR membership meeting last week featured Blanche Evans as the keynote speaker. Her comments and insights resonated extremely well with those in attendance and we have had many requests for copies of her PowerPoint Presentation. She was a terrific part of the membership meeting and convention program!" - Don Klein, CEO Greater Nashville Association of Realtors Coverage from WSMV, Nashville - 8-14-2007 That Interview Guy - Get Inside The Head Of Today's Generation 2007 AE Institute Session - To purchase 2006 AE Institute Session - Parts 1 2 3 4 5 6 7 8 9 HouseValues Mastermind call - Parts 1 2 Blanche's fireside chat with Jeremy Conaway, HAR - Click here. To contact Blanche, email her at . For more articles by Blanche, click here.