Many people enter the real-estate industry because the requirements are light and the possible rewards seem great. "I want the license for my own deals" or "I'll just do some for friends and family, here and there" are the most common refrains. And from a distance, real estate seems like a tremendous risk-reward proposition: pay $300 - $400 to attend a certified real estate school, pass the licensing exam and activate your license for $100 and change and you're off and running.

Right?

Well, no.

I just completed paying my yearly dues to the Phoenix Association of Realtors. It's almost the stuff of MasterCard commercials:

    National Association of Realtors Dues         $  94
    Arizona Association of Realtors Dues           $150
    Phoenix Association of Realtors Dues          $  75
    Opportunity to be bashed on real estate
       bubble blogs from coast to coast                 PRICELESS

Membership in NAR locally isn't exactly required but if you want access to the local MLS you have to belong. You also have to pay a separate MLS dues fee later in the year.

Everywhere you turn in this profession, there is someone waiting with their hand out politely requesting another check. And so you wonder ... with the turn in the market last year and with the seemingly easy money of 2005 gone, how many part-time sometime real estate agents are going to reach into their wallets for another year's worth of dues? My hunch is we'll see the numbers decline this year ... not an unwelcome sight, not so much for the reduced competition but simply because of the level of competence (or lack thereof) being purged from the market.


(c) Jonathan Dalton, 2006 / Jonathan Dalton's Arizona Homes

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If you've ever been in corporate America, you probably are familiar with companies who would succeed if only their management would get out of the way. I've never quite figured out what causes a seemingly intelligent person (or group of people, though intelligence seems to diminish exponentially as groups grow in number) perpetually to damage their business in the name of attempting to make things better.

All this is a roundabout way of mentioning the latest effort of genius from the National Association of Realtors. Even as NAR battles the DOJ over limiting listings data to Internet providers, the "leadership" has fired another salvo aimed at its own gun deck.

According to RealEstateJournal.com, NAR's directors during last week's annual convention reaffirmed a policy that allows brokers who list homes from the MLS on their website to omit certain homes from the web-published listings.

Further, the directors revised the policy to require that brokers use "objective criteria" when determining which listings to include. According to the article, these objective criteria can include location, type of property, "compensation offered by agents who find a buyer, or the level of service provided by the listing company.

"Thus," the article continues, "listings from brokers providing limited service for lower fees could be excluded from other brokers' sites."

Where now the local Multiple Listing Systems are required to provide all listings to participating brokers, the decision-making mechanism would be shifted from the MLS to the brokers.

While this could be a positive step, assuming the individual brokers have enough common sense to avoid eliminating listings from their site for some of the above stated reasons, the fact this continues to be a debate is both disturbing and distressing.

Apparently, the powers that be at NAR have yet to realize many of their members count on IDX and other MLS feeds to supply listings data and an automatic hook for clients visiting an agents' website.

They're so focused on preventing disintermediation of real estate that they cannot seem to understand market dynamics will dictate the success of alternative business models. Historically, the efforts to protect an industry's interests from new ideas generally only harms those whose interests theoretically were being protected.

So, hearkening bark to yesterday, I state again that simply being a member of NAR - particularly when being a member is only optional in the most liberal interpretation - does not mean one agrees with everything the group's directors may do.

(c) Jonathan Dalton, 2006 / Jonathan Dalton's Arizona Homes

Returning from my two-day sojourn down the rabbit hole and into bubble-land ...

In some respects my initial characterization of many real estate bubble proponents as being more interested in bluster than facts proved true ... for example, my opting not to comment on a five-month old market valuation report in favor of waiting for something far closer to current was interpreted as my inability to understand what was written ... but I also encountered some very thoughtful, logical debate both from some of the commenters here and also (believe it or not) the HousingDoom blog.

One suggestion I would make to the bubble folks is if the true implication you are trying to make is not that the market will "pop" like a bubble and instead may decline gradually, perhaps bubble isn't the best term to use. Bubble carries with it certain imagery which leads most readers to assume you're waiting for the market to pop a la the tech bubble and revert to pre-2004 prices.

Oh, and one last thought ... contrary to the notion "if you don't believe in a collapse, you must be telling clients the market always, always, always is on the rise" ... it's possible to acknowledge the decline without believing it will continue sliding another 20 - 30 percent.

In any event, I received several comments on my bubble myth post from John Hildahl, a well-spoken gentleman currently living in Las Vegas after selling his horse property in Oregon. As he says, he's renting in Las Vegas and loving it. Personally, I'd simply be happy being fifteen minutes from Margaritaville but I'm afraid I'd be wasting away there more often than not.

One statement John made in his final comment caught my eye:

"My opinion regarding the Real Estate profession, and I believe it is a profession with many talented, hard-working professionals using business skills, people skills, training, education, and perseverance trying to make a living in a tough world.  Advice:  launch a grass-roots effort and rid yourself of NAR leadership.  These so called leaders are making a mockery of the men and women who are real estate agents.  Many articles call attention to this."

Why am I a REALTOR®? And note, you need to be a member of NAR to say you are a REALTOR. For me, it was less a conscious choice than a need for MLS access. In the Phoenix area, the local associations of NAR own the area MLS. You don't have to join the board, but without the board membership you will not be able to search the listings and take advantage of other services provided in the local MLS system.

Now, would I have joined NAR even if I had not been more or less forced into it? Probably. NAR has an extremely strong lobbying arm and, if nothing else, I believe in self-preservation. So I will not argue that I do not support legislation that promotes and aids the industry.

Having said that ... I certainly don't agree with everything NAR does. I believe the move that caused the DOJ complaint, attempting to limit the listings access for what then was termed "Internet-savvy" (read: deep discount) brokers was short-sighted at best, moronic at worst. After all, many NAR members tend to consider themselves Internet-savvy and I personally count on the IDX listings feed we receive to be one of the primary attractions of my web site. The beagle only gets me so far.

(Quick tangent: for everyone proclaiming what an idiot I am over the last two days, there were nothing but compliments for the beagle. Which means maybe I'm not such an idiot after all, at least when it comes to marketing.)

I believe NAR's overly optimistic forecasts were misguided and likely caused more harm than good by creating credibility issues for everyone in the industry, not just the association's chief prognosticator. I also believe the recent ad campaign, "There's Never Been a Better Time to Buy or Sell a Home," aside from being lame and lacking any legitimate hook (and shouldn't an ad have a hook?) adds to the credibility gap.

There absolutely have been better times to sell a home - eighteen months ago, for example. Of course, some people need to sell now for a variety of reasons. And those who opt to price the home competitively and hire a real estate professional who will aggressively market the home are seeing that homes still are selling, not at the same rates as a year ago (or even a couple of years ago, if you look at the numbers I posted two days ago) but they still are selling.

Aside from the credibility issues, there are gaps appearing in NAR's armor and many are MLS-related. How severe they are depends greatly on the value you personally place on the MLS. Knowing agents in areas where the local brokers own the MLS, I don't see any significant difference in their business but I do see a possible benefit from the perception of a public who knows not all are REALTORS and therefore are exempt from the broad brush with which NAR members are painted.

And that, folks, could be the biggest problem NAR currently faces. For all the advertisements urging the public to ask their agent "if they are a REALTOR, a member of the National Association of REALTORS" a positive answer increasingly is leading to a negative view.

In many ways I think John is right ... new leadership is needed at the top, if only to reform the image that is being battered by the efforts of the current crew.

(c) Jonathan Dalton, 2006 / Jonathan Dalton's Arizona Homes