When realtors dislike McMansions

Realtors sell homes. So how do they feel about McMansions? A piece at Realtor.com offers some hints:

We’ve struggled to cover McMansions. For starters, they’re not pleasing to the eye. And, more importantly, we can’t put our finger on exactly what it is about these sad but pricey structures that inspires such a visceral negative reaction…

Q: We’ve grappled with this one for a long time here at realtor.com®. McMansions are like the classic definition of obscenity—”I know when I see it”—but we’ve never come up with a concrete definition for them…

All of the mail from realtors I’ve gotten has been really positive as well. I think that realtors are generally tired of McMansions, especially since they’re so difficult to sell. They find a lot of catharsis in reading McMansionHell.

Does this mean that realtors wouldn’t help sell or buy a McMansion because of their refined architectural sensibilities or because McMansions use of a lot of resources? While McMansions could generate profits for builders, they could also be good for realtors who could make larger commissions.

Based on this, I would enjoy seeing some realtors discuss their approach to McMansions. If I had to guess, I would imagine fewer realtors would be openly critical of such homes because it might limit their business. Perhaps some want to sell such homes while others avoid them like the plague. If they have strong feelings either way, would they openly share these opinions with buyers and/or guide them in certain directions? How many realtors live in homes that could be considered McMansions?

Real estate agents and steering today

Many real estate agents today won’t answer certain questions but does this eliminate steering?

Agents such as Foster and Thakkar are hypersensitive because they don’t want to run afoul of the Fair Housing Act, which prohibits discrimination on the basis of race, color, religion, gender, national origin, familial status, disability or handicap. The law is administered by the Department of Housing and Urban Development. Penalties for violating fair housing rules can be costly, so many real estate brokerage firms train agents on what constitutes “steering” of homebuyer clients as well as what could be interpreted as showing any form of bias against any “protected class.”

What can agents do when clients ask certain questions? Here are several of the examples provided:

“We can’t answer,” Foster said. “It’s all too subjective.” Instead, she refers them to online information sources about whatever they’re asking — websites that rate schools, statistical compilations on crime rates and the like…

“It’s a very common question,” he says: “Can you tell us how many other Indian families live on this street?” Even though he thinks he understands the thrust of the question — are there people like us around? — he declines to answer directly. Instead, he supplies them a list of the names of current owners on the street, allowing his clients to decide for themselves whether the names indicate that they are Indian or not.

Referring people to other sources may lead to issues:

But some fair housing advocates are concerned that the online information available today may actually enable a subtle form of racial steering when agents name specific sites that offer highly localized racial and ethnic breakdowns and refer clients to them. Lisa Rice, executive vice president of the National Fair Housing Alliance, a nonprofit group that has fielded teams of white and minority “testers” to detect bias in homes sales, thinks that in the event of fair housing complaints against those agents, the fact that they made such specific referrals could be held against them.

It seems to me that one of the best ways to eliminate this issue is to educate homeowners about all the potential information they can access. Stop them from asking in the first place. Realtors could even make this clear at the beginning. The Internet certainly presents a lot of available information to possible home buyers ranging from the Census to other data aggregators to message boards to municipal websites. In other words, it is not hard to find out this sort of information. Yet, this would go against the argument that realtors make about why they are still necessary: they have inside information about the home and the entire process. Additionally, all the online information is not necessarily easy to interpret. Say a homeowner is interested in future property values: can they make a prediction based on what is online? Or, say that an online message board suggests one thing is happening while the local newspaper claim something else is taking place. How could someone unfamiliar with the area make a judgment regarding conflicting information?

In the long run, if people want to fight residential segregation and housing discrimination (which are legitimate concerns), would it be better to remove real estate agents from the process or not?

Realtors argue their guild needs more professionalization

Real estate is an important part of the American economy but a recent report from the National Association of Realtors suggests realtors need more training:

In an unusual move for a major American trade association, the million-member National Association of Realtors has commissioned and released a frank and sometimes searing assessment of top challenges facing its industry for the next several years. The critiques hit everything from the professionalism and training of agents to the commissions charged consumers, and even the association’s ?leadership.

-“The real estate industry is saddled with a large number of part-time, untrained, unethical and/or incompetent agents. This knowledge gap threatens the credibility of the industry.” Ouch!

-Low entry requirements for agents are a key problem. While other professionals often must undergo extensive education and training for thousands of hours or multiple years, realty agents need only complete 70 hours on average to qualify for licenses to sell homes, with the lowest state requirement for licensing at just 13 hours. Cosmetologists, by contrast, average 372 hours of training, according to the report.

-Professional, hard-working agents across the country “increasingly understand that the ‘not-so-good’ agents are bringing the entire industry down.” Yet there “are no meaningful educational initiatives on the table to raise the national bar …”

 

This is a good example of maintaining professional standards, a key activity of many business associations. (For an award-winning sociological read on trade associations and a book for which I did a small amount of research work, see Solidarity in Strategy: Making Business Meaningful in American Trade Associations.) Keeping track of the actions of thousands of members is a difficult task. The NAR has the ability to bestow the name REALTOR®. Upping the standards with harder tests and stricter requirements has been done by lots of groups in order to improve their status.

But, this might also have some negative consequences:

1. Might it encourage more people to bypass realtors all together? This is easier than ever with the Internet.

2. If I remember correctly, the average age of realtors has increased in recent years. Might this simply increase that?

3. Might this issue be solved in other ways like if realtors worked within agencies that stressed standards or through mentoring programs that offer benefits for both parties?

4. Do realtors want more regulatory oversight like other groups – such as cosmetologists? This may help up their status but could lead to more hoops to jump through.