Preamble

When we launched Redfin, we wanted to change real estate for the better. Then we realized that just about everyone in real estate wants it to be better.

We all know that consumers sometimes struggle to get the full story on the house they're buying. Sometimes they worry that their agent doesn't represent their best interests, or they feel compelled to pay for services they don't want. We know that sellers often hire an agent just so other agents will show their house, and that buyers often hire an agent just to get access to agent-listed houses.

To make real estate the industry we all want it to be, we have to protect consumers' ability to make informed choices by acknowledging a basic set of rights upon which everyone can agree. We thus hope to build a coalition of brokers committed to these rights so that consumers can buy or sell houses through any of us with confidence.

Bill of Rights

1. Choose the services you pay for: Laws in more than a dozen states forbid brokers from refunding commissions to you, or require brokers to provide services you may not want to pay for. These laws protect the industry, not the consumer.

SAUL KLEIN: I agree, brokers should be allowed to refund commissions as a refunded commission or commission rebate is nothing more than a negotiated commission, which all state real estate laws tend to encourage. 

Keep in mind, however, these anti rebate laws were more than likely not instituted initially to forbid real estate commission rebates, but other consumer rebates. Each state has a history of consumer protection laws and regulations. 

Now, what do you suggest? That someone or some entity lobbies the legislatures state by state to exclude anti commission rebate laws and/or regulations?

2. Know how your agent makes his money: In real estate, the seller pays both his own agent and the buyer's agent a percentage of the sale; the agent earns more when his client pays more. If a house seems difficult to sell, the seller may even offer buyers' agents an especially high percentage. Buyers' agents should be required to explain to their clients how they are paid. 

SAUL KLEIN: Agreed ... and many agents explain this point.

Your statement “… the agent earns more when his client pays more" is a negatively loaded comment. A statement such as this infers that an agent representing a buyer would intentionally work to get a buyer to pay more. This is a very nasty attitude you have begun to demonstrate, when you profess the sweet, smiling "we just want everyone to get along" position. My experience has been that those representing buyers work to get a deal for the buyer. This is a referral driven industry and many real estate professionals have integrity and want to get the best deal for the party they represent.

Attorneys earn more the longer the case. Does this mean all attorneys work to drag out the cases? Some do, but some attorneys also have integrity.

3. Know when you are committed to an agent: Often just showing a property entitles an agent to the commission for representing you, regardless of whether you intended to work with someone else or even preferred to represent yourself. The relationship between an agent and a consumer should always be explicit, so that both parties know when they're committed to one another.

SAUL KLEIN: Please cite your authoritative reference to the statement "Often just showing a property entitles an agent to the commission for representing you, regardless of whether you intended to work with someone else or even preferred to represent yourself."

I presume (but can't be sure) that you are referring to the concept of procuring cause? Procuring cause is not as defined as you state. It speaks of entitlement to commission for that person or entity based on an "unbroken chain of events." The "Threshold Rule" does not exist. You are publicly perpetuating a myth by making a statement such as this. I am beginning to believe your consumer bill of rights is very self serving for Redfin.

4. Know what services your agent will provide: Much of the work of a buyer's agent begins after the buyer has agreed to buy a house. This work includes coordinating inspections, repairs, mortgages, title reviews and escrow services. But agents today are paid only to bring a buyer to a transaction. Once that happens, it is virtually impossible to fire your agent. In most cases, this is appropriate, as the agent who puts a deal together deserves the commission. But in becoming committed to an agent, you should know what services the agent will provide as part of that commitment and what recourse you have if the agent doesn't perform those services. An open agreement between you and the agent protects the agent from being unfairly dismissed, and ensures you get the service you expect through closing.

SAUL KLEIN: I agree ... those who do not do their job should be fired...and probably paid for what they accomplished and no more.

Many agents represent buyers. Many work hard to bring the transaction to closing, after they have brought the offer to the sellers’ agent. Your "Consumer’s Bill of Rights." is negatively constructed and articulated. It is accusatory in its language.

5. Have an agent that represents only your interests: Most states allow an agent to represent the buyer and seller in one transaction, and get both sides of a commission. As a result, some sellers' agents are on the prowl for unrepresented buyers to bring to the seller. It's a solicitation neither side can easily refuse because the seller wants the buyer and the buyer wants the house. But an agent can't fairly represent the interests of two parties to the same transaction. An agent should represent only one party, and take commissions for only one party.

SAUL KLEIN: Once again your "Consumer Bill of Rights" is negative and self serving. I always thought a bill of rights should state affirmations and not statements such as "some sellers' agents are on the prowl for unrepresented buyers to bring to the seller."

In mediation, can one mediator bring parties to a satisfactory result?

6. Know the commission refund you can get before you buy a house: Depending on the service provided by the buyer's agent, some sellers vary the commission offered to buyers' agents. This flexibility is good in theory, but in practice it's often used to thwart commission refunds: Buyers expecting a refund of $10,000 or more from their agent discover on making an offer that the amount has been radically reduced in favor of the seller's agent. Buyers should know in advance what circumstances let the seller's agent keep more of a commission for himself. It's fine to change the price but not at the cash register.

SAUL KLEIN: You contradict yourself. If an agent representing the buyer, only delivers the buyer and does no work beyond that (as you state in number 4), should not the other agent in the transaction be allowed to only pay the buyer's agent for the work performed?

7. See all the houses for sale: Many of the multiple listing services set up to share listings between brokerages forbid participating Web sites from displaying for-sale-by-owner houses alongside broker-listed houses. As a result, home buyers usually don't see all the houses for sale, and home sellers have to hire brokers just to get their house on mainstream sites. MLSs should not require exclusive display of listings.

SAUL KLEIN: You do not understand the purpose of an MLS. It is not a public utility. Sellers who want to market their properties without the critical mass of brokers, should be allowed to market their property, but not in the MLS. If you have a car to sell, should you be allowed to display it on the local car dealer’s lot?

8. Have an open discussion about a house for sale: On the Web, you can openly discuss almost any product for sale except a house. That's because sellers' agents "own the listing," controlling where and how it's posted for their benefit. The rules of some MLSs discourage real estate Web sites from publishing independent reviews and preclude owners from distributing MLS marketing materials outside MLS-sanctioned Web sites. Once a house is for sale, everyone in the market should be able to discuss it.

SAUL KLEIN: You can discuss a house if you want. We can set up a searchable blog and buyers can make all the comments they want to make. What MLS prohibits this?

Sellers are always allowed to market their property, even if it is listed with a broker. Brokers, from a liability perspective, must be careful as must all business people when making comments about the business or property of another. Once again, you fail to understand the MLS, what it is and what it is not.

9. See all the information available about a house for sale: Many MLSs make it difficult for buyers to see recent past sales data, how long a house has been for sale, or whether its price has been reduced. Once a house is for sale, you should be able to see all the information available about it on your own, without becoming anyone's client. The only exception to this rule is information whose publication jeopardizes the seller's safety, such as when the presence of children precludes a showing.

SAUL KLEIN: Past sales data is available from a member of a multiple listing service.  Consumers have abundant opportunity to access this information without becoming a client of anyone.

10. Be sure your agent will show your home to everyone: Some sellers' agents selectively refuse to show houses to a buyer represented by an alternative brokerage, which hurts the seller and the buyer. If, as part of his service, a seller's agent doesn't show houses to all buyers, the seller should know it, and the buyer should be able to contact the seller directly. When agents don't facilitate showing a house, they should at least stand aside and let buyers see the house on their own.

SAUL KLEIN: Agreed ... home should be shown to all qualified interested parties.

Conclusion (opinion): This is a disguised marketing piece for Redfin, not a real estate consumer bill of rights. The authors lack what I believe to be important industry knowledge. What other knowledge might they lack?

Editor’s Note: RealTown invites your comments and thoughts that will help us construct a “Real Estate Consumer Bill of Rights” that issues respect for the consumer, sans hyperbole and self interest. Let’s make this about the consumer, not a business model!