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Are Banks, Newspapers Behind Recent Real Estate Industry Rants?

Written by on Tuesday, 20 June 2006 7:00 pm
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First, the blow below the belt.

On Tuesday, June 20, 2006, dozens of newspapers across the nation published the so-called report, "How The Real Estate Cartel Harms Consumers and How Consumers Can Protect Themselves ," by the executive director of the Consumer Federation of America .

Then the uppercut, published the same day in the New York Times by a Brookings Institution senior fellow. "Commission Accomplished " is also a diatribe that criticizes the real estate industry and its commissions. Both reports are unabashed, unsubstantiated opinion pieces, and what's strange is that they both appeared on exactly the same day. Why?

Dozens of news services gleefully joined in the tarring and feathering of the real estate industry by reporting the CFA opinion piece as news when it should have been placed in the editorial section along with the Brookings Institution fellow's piece.

News organizations reported that the consumer group called the real estate industry a "cartel." Not one paper questioned why neither the CFA report or the Brookings Institute editorial had any quotes, facts, or anything other than the opinion of the authors. The real estate industry's side of the commission question was all but ignored by virtually every newspaper.

This isn't journalism. It's complicity. And with good reason -- newspapers are part of a different cartel -- the "Replace-Realtors-With-Us" Cartel.

To begin with, real journalists should ask themselves why they're getting a gift of a story. There are two sides to every story, and if you don't find out what the other side is, you're not doing your job.

Here are just a few questions that should have crossed these journalists' minds:

  1. Why is opinion being released as news? What does the CFA or Brookings Institute have to gain from slamming real estate agents and what they earn?

  2. Is this story true? Can it be substantiated? Are the facts correct? Why would CFA acknowledge that real estate commissions have come down from 6-7 percent, yet accuse the "real estate cartel" of holding consumers hostage to paying 6-7 percent? One of these can't be true -- so which is it? In all fairness, the CFA report dimly acknowledges other studies that have shown that commissions have fallen as much as two points nationwide, but failed to name the studies. And, if commissions are falling, then what's the complaint?

  3. By now, any decent journalist's suspicions should be in overdrive. Next question. Why now? And what about that timing? Two prestigious consumer-oriented groups slamming commissions on exactly the same day? Sorry, folks, but that's a little too coincidental for me.

So, let's turn the tables. Who's interested in using the biggest newspapers in the nation to slam the real estate industry? And why did each paper go along? Why did the Chicago Tribune, Los Angeles Times, Washington Post and dozens of others do the exact same story in the exact same way without giving any attention or voice to the other side?

That should make a good journalist wonder: Do the newspapers have something to gain, too? Are newspapers part of the "Replace-Realtors-With-Us Cartel"? Let's find out.

(By the way, we don't have to prove there's a cartel. All we have to do is suggest that one exists, just as the research institutions and newspapers have done. Let's see if we can smear the "Replace-Realtors-With-Us" Cartel with as few facts as they used to smear the real estate industry.)

What we have is two venerable research institutions slamming real estate commissions on exactly the same day using the biggest name newspapers in the country. Coincidence? No. Planned attack. Yes. So who are the generals in the war room?

So find out using some questions from Journalism 101. We have the what happened and where it happened, so who, when, and why?

Who: Both research organizations claim to benefit consumers. Can the answer can be found in the donor-contributors to these institutions? Who is asking for these so-called opinion reports and editorials to be published, and what do they have to gain?

Surprise! With only a little digging we find out who. Guess who's been a major contributor to the Consumer Federation of America since 2001? "Bank of America," says Tom Stevens, president of the National Association of Realtors. Bank of America is the leading voice to get banks into real estate.

And to the Brookings Institution? "LendingTree and Bank of America funded a research report that was very unfavorable to the real estate industry last year," says Stevens.

Hmmmm. Now we're getting somewhere.

When: Since it was obvious from the timing of the two reports that they were intended to do maximum damage to the real estate industry, what was so important about this date - Tuesday, June 20, 2006? Why would more eyes have been tuned to this story on that particular date?

Turns out there was a reason. Congressman Mike Oxley -- that friend of banks and enemy of Realtors and chairman of the Financial Services Committee (that oversees banks) was scheduled to hold hearings about the real estate industry this week. (Oxley's number one campaign contributor category is commercial banks, by the way.) Unfortunately, due to a personal integrity problem, he had to cancel. Too late to pull the CFA release and the Brookings editorial? We wonder. Oxley is in hot water over alleged violations of federal campaign finance law. He has bigger fish to fry than Realtors right now.

Why: What do these people have to gain? It's no secret that banks want to get into real estate, and have used everything from the Treasury, to Oxley, to HUD, to the Department of Justice to accomplish it. They are the leaders of the Replace-Realtors-With-Us Cartel.

But guess what? There's a willing ally. Newspapers want to get into real estate, too. So they're only too happy to pile on Realtors. And they come with a handy cartel of their own!

Most of the major newspapers that published the CFA commission rants are partners in a strategic venture called Classified Ventures . The strategic partners, "whose objectives are to collectively capitalize on the revenue growth in the online classified advertising categories of automotive, apartments, and real estate," are Belo Corporation, Gannett Company, Knight Ridder, Inc., The McClatchy Company, Tribune Company, and The Washington Post Company.

Having had their butts kicked by Craigslist and eBay, not to mention Realtor.com , the newspaper cartel members are determined to get their classified ad business back. Managed by former Bank of America executive Tim Fagan, Classified Ventures owns HomeGain, a company that gives real estate agents the opportunity to compete for customers. One of the criteria used is commissions! May the lowest agent win! Then the agent gets to pay a hefty "referral fee" to HomeGain. (Whoever says commissions haven't come down hasn't been doing his homework! Another popular commission-crushing idea to get Realtors to give rebates to buyers, paid for out of referral fees they've given to companies like HomeGain and LendingTree. What's cool is that sellers don't know they're giving something to the buyer and the online company looks like a hero. What will they think of next?)

Also, because newspapers have largely been denied access to the real estate cartel's MLS listings, (even while they charge real estate agents ridiculous classified and display ad fees,) they are forced to pursue the FSBO market. According to the Classified Ventures website, the company allows consumers "access listings throughout our national network of local newspapers."

Hmmm. It's all coming together!

(Wasn't that clever -- making an accusation look like fact? So, prove it isn't true, Chicago, Washington, et al.)

Realtors - are you angry yet? Have you had enough yet? It's high time the real estate industry hit 'em back where it hurts, just like they hit the real estate industry.

What really ought to happen here is two things:

  1. Every Realtor in America should jerk their housing ads to any newspaper that published the Brookings or the CFA "editorials." We should have a advertising holiday where not one agent puts an ad in the newspaper out of protest. Then, we can see if not having newspaper ads really hurt sales, which my guess is, it won't.

  2. Forward this story to every Realtor in America so they'll stop putting money in the enemy's war chest. Every dime you give to newspapers is a dime that will be used to put you out of business. Stop supporting any company that wants to put you out of business!

If money talks for donors, it should sure as hell talk for advertisers.

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  About the author, Blanche Evans

Individual news stories are based upon the opinions of the writer and does not reflect the opinion of Realty Times.