Earlier this year an article by Blink author, Malcolm Gladwell, appeared in the New Yorker magazine. The subtitle of Gladwell's piece was, "Enron, intelligence, and the perils of too much information." In the article, Gladwell's thesis is illustrated by the now infamous case of Enron's demise. He points out that, contrary to many of the prosecutions remarks, information wasn't really withheld by Enron. Rather, literally too much of it was provided.

Gladwell notes that the journalists and analysts who ultimately exposed Enron's problems didn't arrive at their conclusions in a manner similar to Woodward and Bernstein of All the President's Men. There was no Deep Throat who revealed secret information to them. Rather, they read it in Enron's public reports. It wasn't that Enron didn't tell investors enough about its problematic S.P.E.s (special-purpose entities). "Enron had some three thousand S.P.E.s, and the paperwork for each one probably ran in excess of a thousand pages … a summary of Enron's S.P.E.s would have come to a hundred and twenty thousand single-spaced pages. What about a summary of all those summaries? That's what the bankruptcy examiner in the Enron case put together, and it took up a thousand pages."

Gladwell makes a distinction between puzzles and mysteries. In his schema, puzzles exist when we need more information; when mysteries occur, we may have all the information in front of us, but we don't know what to make of it. The Enron case was a mystery, not a puzzle.

I hardly want to insist on the analogy being perfect, but the practice of real estate disclosures bears analysis from the perspective of Gladstone's discussion. In many cases, what should be a puzzle (Can I be comfortable purchasing this house?), answerable by pertinent information, may take more the form of a mystery: there is so much information, it is difficult to ferret out the answer to the question.

The typical California residential transaction generates 18 disclosures and advisories comprising 37 pages. Single-spaced, of course. That doesn't include the transaction documents themselves (offer, counter-offer, addenda), nor local and company-specific disclosures, nor, mind you, the reports generated by various inspections. (I don't know if this makes California a national leader in this arena, but I imagine other states can produce comparable numbers.) And there are more disclosure documents coming.

We have to wonder if so much disclosure serves a meaningful purpose. So much disclosure and advice makes principals less inclined to read and to just sign or initial as indicated. It seems we, in California at least, have come to the point that a summary page is needed that would highlight the issues of importance to the particular transaction. But who would take the liability of deciding what not to include? No one who listens to their company legal counsel, that's for sure.

The problem of disclosures that are woefully high on volume and sometimes distressingly low on comprehensibility is not unique to real estate transactions or publicly-traded companies. Think medicine, hospitals, and surgical procedures. But the commonality of these problems does not diminish their negative effects.

Don't get me wrong. I don't yearn for the "good old days" of no disclosure. It would just be nice to see circumstances where disclosures might be made more meaningful by being less overwhelming.

Published: April 27, 2007

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Bob Hunt is a former director of the National Association of Realtors and is author of the recently published book, "Real Estate the Ethical Way." A graduate of Princeton with a master's degree from UCLA in philosophy, Hunt has served as a U.S. Marine, Realtor association president in South Orange County, and director of the California Association of Realtors, and is an award-winning Realtor. Contact Bob at .