There is apparently no limit as to how stupid some real estate agents can be. Or maybe they just don’t care. One of my pet peeves is the outrageously awful service/marketing that some real estate agents provide – especially on foreclosures or short sales. In addition to not answering the phone or returning phone calls there is a pattern of using really awful photos. It’s one thing to take your own photos (we do not) but these realtors are really bad photographers:

• Pictures taken with cell phone cameras
• Poor lighting
• Out of focus
• Center on the wrong thing

The last point is my favorite, of which there are numerous examples. For instance, it is fairly typical to see pictures of floors or corners of rooms as in this picture below for a condo in Bronzeville (it took me less than 3 minutes to find a picture like this).

With absolutely no perspective on the room, it’s not at all clear what attributes the realtor is trying to highlight. The dirty carpet? The abandoned phone in the closet?

However, nothing compares to this photo found for a listing in Riverside, CA, which quickly became an Internet sensation because of the contents of the toilet, which were not pixelated in the original listing.

I first learned about it in the comments section for a post on Cribchatter and it was originally part of this listing from Redfin. Now if you go to the Redfin listing link you will no longer find this photo because apparently they eventually figured out that they were drawing the wrong kind of attention to the listing. Fortunately Dr. Housing Bubble preserved the photo for posterity and had the good sense to pixelate the contents of the toilet. I might not have been so sensitive.

So let’s give this realtor the benefit of the doubt. Maybe the water had been turned off and the toilet couldn’t be flushed. But then why isn’t the lid closed? I see pictures of toilets all the time in the MLS (but not dirty) and it always fascinates me that a) they took the picture of the toilet in the first place and b) they left the lid open.

The bottom line: if your home is currently for sale you should run to the nearest computer to find out if your realtor is highlighting your toilet.

During the housing bubble one of the national brokerages aired a commercial entitled The Debate. In it a married couple with 2 small children are debating whether or not to buy a house.

The video has been viewed over 120,000 times on YouTube. You might want to go to the site to check out the 228 comments, most of which deride the role of realtors in creating the real estate bubble and many of which are unsuitable for republishing here.

Why has this seemingly innocent commercial drawn so much ire? There are a few simple reasons:

• Clearly this couple is being pushed to their limits financially and the husband is very nervous about it. This is how we got into the current mortgage mess.
• What exactly did Suzanne research? She’s a realtor, not a financial planner and the implication is that Suzanne is telling them that “they can do this” financially. Of course, Suzanne is in no position to advise them on their finances.
• The wife “loves that house”, which appears to be sufficient reason for going out on a limb. She’s become emotionally attached, which I realize is a common reaction. However, when buying a house it’s best to keep your emotions in check so that you don’t overpay.

I’m sure the advertising agency and the brokerage that produced this commercial thought they had a winner but it subsequently has become an icon of what is wrong with the real estate industry.

What else is new? The NAR is asking the government for handouts.

As I’ve mentioned before, the last thing we need is for the government to prop up inflated home prices. Nevertheless, the NAR came up with their four point housing stimulus plan a while ago, in an attempt to do just that. Last week they emailed realtors with a Call To Action to get them, and their clients, to email their representatives in Washington in support of the handouts. Chicago Association of Realtors President David Hanna is quoted: “Your action has never been so important, now is the time for you to stand up for your industry and demand the changes we need. Every Realtor must participate in this Call to Action, please contact your representatives and urge your peers and clients to as well.”

Here, in a nutshell, is what they are asking for:

1. Make the $7500 tax credit available to all buyers and eliminate the repayment requirement.
2. Make the 2008 FHA, Fannie Mae and Freddie Mac loan limits permanent.
3. Target more funds to mortgage relief and create a federal mortgage interest buy-down program to make below-market rates available.
4. Permanently bar banks from engaging in real estate brokerage and management.

Here, in a nutshell, are the problems with each of the four points:

1. Why should people who make $200K per year get a tax credit from the government? For that matter, why should anyone? The government should not be subsidizing home purchases. Not to mention that this would cost at least $38B per year.
2. As if Fannie and Freddie weren’t already spread too thin.
3. The very existence of Fannie and Freddie is a buy-down program. They effectively lower mortgage rates. In fact, the entire economic bailout program is helping to lower mortgage rates and low mortgage rates is what got us here to begin with.
4. And this will help the economy how? By keeping real estate commissions high? The NAR is positioning this proposal as necessary to keep the banks focused on fixing all their problems. But come on! Could anything be more blatantly anti-competitive?

It’s stuff like this that gives Realtors a bad name.

As I’ve written in the past, the real estate industry is full of really weird rules – or maybe they’re not that weird in light of the fact that the intention is often to undermine competition.

One such set of rules pertains to the arcane world of IDX and VOW – two different ways for MLS listings to be distributed across the Internet. The rules regarding these two different protocols are so convoluted that I always need to refer back to my notes to remember what the deal is.

IDX stands for Internet Data Exchange and is also known as Broker Reciprocity. Brokers who participate in this program agree to allow each other to display their listings on each other’s Web sites. When a listing is distributed via IDX it can be shown on any Web site without the user needing to register. However, the local MLS may restrict the display of some data fields and the Web site must display the name of the listing broker. OK…with the exception of the data restriction and the fact that brokers can choose not to reciprocate (why in the world wouldn’t everyone reciprocate?), this seems to be the way things should work. So why is there any other way to do business? Because this is real estate and nothing is simple. Hence, there is VOW.

VOW stands for Virtual Office Web site. The idea of VOW is that the Web site is a virtual office of the real estate broker and therefore the broker has established a client relationship with the visitor – provided the visitor has registered. Once the visitor registers, the broker is allowed to interact with that client just like they would if the client walked in the door of their office. They can show them all the information on any listing, whether or not the listing agent is participating in the reciprocity program. Seems to me to be a trivial distinction in order to show consumers something they should have access to without restriction.

When I first started researching the real estate industry the Multiple Listing Service of Northern Illinois (MLSNI) told me that only 60% of the listings were available through IDX in the Chicago area. Therefore, a Web site operator really needed to get users to register in order to show them all the listings. However, since then MLSNI merged with the other local MLS system (MAP) and in the process IDX became the default process. As far as I know this had nothing to do with the recent settlement between the NAR and the DOJ. Today around 97% of the listings are available through IDX. In other words, registration is really not necessary.

So then why do many broker sites still require registration, often with messages like the following when searching on their Web site?

It looks like Remax is only showing their own listings without registration but requiring registration to see anyone else’s listings, under the guise of MLS rules. Just to be clear, it is a flat out lie that the MLS requires registration – a great way to engender trust.

So why is registration required? Because they want your contact information so that they can follow up with you. We would love to follow up with you also but we don’t want registration to stand in the way of you getting what you want right now. We figure that if you would like us to follow up with you you will contact us.

People who are aware of the considerable lobbying machine operated by Realtors get pretty hot under the collar about it. I don’t blame them. I’ve always seen this as an obviously self serving activity and the description of these organization’s purpose is pretty scary to consumers.

• Protects your income and maintains your commissions.
• Educates and elects policy-makers who support REALTOR issues.
• The candidates we support make decisions that affect REALTORS’ ability to assist clients in buying and selling property.
• RPAC ensures that we have strong and informed candidates who support our issues.

Of course, that’s what all lobbying efforts are so why should this one be any different? Which is why I’m not in favor of lobbying in general. But I guess it’s a fact of life with our political system.

I bring up the Realtor lobbying machine because I recently got the invoice for my 2009 dues for the three levels of Realtor associations: national, Illinois, and Chicago. (I have no idea why we need three levels of this stuff. I think it’s part of the bloated bureaucracy of this industry.) Just to give you an idea of what it costs to be a Realtor, those 3 total $520 – and that’s before MLS fees. But added on to the bottom of the invoice are”voluntary” charges for RPAC (REALTORS® Political Action Committee) and CARPAC (Chicago Association of REALTORS® Political Action Committee), which total an additional $75. In going through the online payment process it’s actually kind of tricky to remove these charges. However, if all of the 17,000 Realtors in Chicago (At least that’s how many there were at the end of 2007. Maybe a lot of these folks have left the business since the gravy train is gone.) were to pay this money that would amount to $1.2 MM for just Chicago. Of course, I’m sure that many Realtors, like me, chose not to pay this money. (I don’t think I’ve ever supported a PAC.) However, RPAC’s goal for the year is to raise a total of $10 MM.

As a side note, RPAC claims to be the largest bipartisan PAC in the world. In the 2006 elections they spent $12 MM supporting various candidates sympathetic to Realtors’ causes. You can check the following link to see exactly what else these Realtor PACs do.

Surprisingly, it’s actually not such a bad list after all. Sure, it has it’s share of anti-competitive initiatives, such as keeping banks out of the real estate business. However, overall, it’s dominated by activities in support of homeowners and landlords. Perhaps one of the most important pro-homeowner activities CARPAC engaged in during the last year isn’t even listed. That would be their opposition to the city of Chicago’s increase in the transfer tax. It’s not listed because CAR chose to highlight their accomplishments and this is a battle they lost. Nevertheless, I think they deserve an A for effort against what I think is a really bad idea.

If you like the list, I’m sure they would take your money – even if you’re not a Realtor.