Attention RE Agents: NAR Spin is Counter-Productive !
We have had a god-awful run of Housing data. New and Existing Home Sales, Defaults and Foreclosure data, even the Case Shiller report — all have been utterly horrific.
In light of this, I want to make the following announcement: Attention RE Agents! The National Association of Realtors are doing you a terrible disservice.
Consider the following comments from a RE Agent, published exactly three years ago (September 4, 2007) in the Realty Times:
“The National Association of Realtors and your state association will always have published reports that sound better than what you are personally experiencing in the market. Please understand that they support us. They know that whatever they say will end up in public press. We do not need any more negative press! When you read reports that we have reached the bottom or that the market has actually gone up, take it with a grain of salt. Their job is to permeate the world with good news about real estate.”
In other words, mislead the public with spin. Create false hope. Lie. This agent was defending the National Assocation of Realtor’s blatant dishonesty — a mistake on its face — just as the damage they did began to have an effect.
What the NAR was offering to buyers, sellers, their agents, indeed, anyone involved with Housing, was the blue pill.
The sort of nonsense the Realtor’s group peddles helps explain why sellers have incorrectly believed a recovery was imminent, even as housing went through a historic collapse. It is why home owners incorrectly still expect their homes to go appreciate by 10% a year.
These false beliefs have real world consequences. They create ridiculous expectations among sellers, who selectively grab onto any positive news they can. They choose the temporary blissful ignorance of illusion — that damned blue pill — versus embracing the painful truth of reality (i.e., the red pill).
This confirmation bias leads sellers into mis-pricing the value of their homes. They have been a season or even a year or more behind the pricing curve the entire way down.
Ask any listing agent how difficult it is to get sellers to become realistic in their asking prices. Real Estate agents would be moving a helluvalot more houses if they were not fighting misinformation that the NAR has put into the marketplace. Many, many agents have confirmed that, even in this crummy environment, a good house properly priced will sell.
Here’s a question for you reality (vs NAR realty) agents. Ever wonder why you seem to be having such a hard time convincing sellers to set reasonable asking prices? Ever ponder why they have such a distorted sense of the true value of their homes? Ever try to get them to set reasonable asking numbers that are competitive with current market prices?
The short answer: NAR spin.
To see how bad this false NAR narrative has become, check out this new show on HGTV: “Real Estate Intervention.” The show’s hosts travel town-to-town in an attempt to convince homeowners to sober up, put the magic mushrooms away, and price their houses realistically. They literally drag these poor bastards to nicer comparable homes to theirs — better locations, bigger square footage, nicer kitchens — all in an effort to TALK SELLERS INTO REALISTIC PRICE POINTS. It staggers the imagination: A television show actually had to be created to counter-act the excess stupidity coming from the Realtor’s trade group.
Gee, where do you think sellers got these crazy ideas? Might the NAR, by encouraging a fantasy, be actually hurting the housing market as a whole?
Even the normally staid NYT has recognized how absurd the NAR spin has become. This past weekend, Joe Nocera began an article with the sentence: “You have to wonder sometimes what they’re smoking over there at the National Association of Realtors.”
When the Gray Lady asks if your economists are high, isn’t that are warning sign that you must make a major change? How on earth is having a reputation of being stoners good for the RE business?
And, buyers have figured out that the NAR news releases are unmitigated fantasy. They have learned that any organization that has to go to such lengths to spin bad news must know that the news is much much worse. The result has been a Real Estate buyers strike.
Here it is, three years after that lame defense of NAR spin, and we can see the damage that spin has wrought. It is readily apparent that the NAR has become counter-productive to the agents they are supposed to be serving.
No, the NAR is not supporting you. They are making your jobs much, much harder. They are spinning the public, and doing you an enormous disservice.
Try RealityTM! Its what is working these days.
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Post Script I write this not only as an analyst that has covered housing for years (and as an owner of real estate), but as the son of a RE Agent. This sort of crap was dinner table conversation for me since I was 8.
>
Previously:
Tracking NAR Spin (April 23rd, 2008)
Former NAR Economist David Lereah is a Jackass (January 6th, 2009)
Its ALWAYS a Good Time to Buy a House! (March 14th, 2010)
Source:
Twelve Step Plan to Make You Feel Better About This Market
Walter Sanford
Reality Times, September 4, 2007
http://realtytimes.com/rtpages/20070904_stepplan.htm
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September 1st, 2010 at 9:39 am
Real estate agent: “But, but, but even Fed chairman Ben B. sez ‘We’ve never had a decline in house prices on a nationwide basis.’ The spin is in at even the most “revered” positions of economic thought in the land!
September 1st, 2010 at 9:46 am
I guess when I posted last week that someone should examine Dr. Yun’s credentials, I was out front?
September 1st, 2010 at 9:47 am
BR asked:
Attention RE Agents: NAR Spin is Counter-Productive !
reply:
————
Don’t bother asking. It won’t do any good. I’ve been asking all sorts of people and groups to stop lying and stealing for several years now and none appeared to have listened. Those who are still solvent still lie and steal and will continue, most likely, until they either bust out or die of old age. Please note that wall street liars and thieves have been most successful in chasing away customers and OPM. They still lie anyway, hoping they get a chance to steal if someone is still left who believes them. They can’t stop and nobody appears to want to make them stop.
September 1st, 2010 at 9:50 am
Treasury Secretary Henry Paulson said late Tuesday the turmoil in the subprime mortgage market is no surprise given the correction in U.S housing market. Paulson also said the fallout in subprime mortgages is “going to be painful to some lenders, but it is largely contained.” “We have had a significant housing correction in the U.S.,” Paulson said in an interview on CNBC. “The correction has been significant. You can’t have a correction like that without causing some dislocation. It is too early to tell whether it has bottomed. We’ll know more in the next month or two.”
He was lying through his teeth.
September 1st, 2010 at 9:51 am
That was from March 13 2007.
September 1st, 2010 at 9:51 am
i don’t doubt their spin has effects, but i believe the underlying reason you see the seller mispricing to the high side is “ownership bias”
September 1st, 2010 at 9:55 am
“In other words, mislead the public with spin. Create false hope. Lie. This agent was defending the…” “…blatant dishonesty — a mistake on its face — just as the damage they did began to have an effect.”
September 1st, 2010 at 9:57 am
Format error above. Try 2:
“In other words, mislead the public with spin. Create false hope. Lie. This agent was defending the…” Insert political party, brokerage or news network here “…blatant dishonesty — a mistake on its face — just as the damage they did began to have an effect.”
September 1st, 2010 at 10:11 am
Yeah, it’s funny how the shows on HGTV went from “Property Ladder” and “Flip this House” to “Sell This House” and “Real Estate Intervention”.
September 1st, 2010 at 10:11 am
No, the NAR is not supporting you. They are making your jobs much, much harder. They are spinning the public, and doing you an enormous disservice.
—-
You know, Barry, I love it when you talk like this. :) Actually, I wish a lot more people, especially in leadership positions, were talking like this.
September 1st, 2010 at 10:15 am
Hey I grew up at the same dinner table and would add that another portion of the blame goes to the Agents who will go along with the not connected to reality owners just to get the listing. I recall on more then one occasion “oh well the owner didn’t want to hear the truth but three months from now their house is unsold they will realise that what I told them was true, dump that moron and list with me at a price that will sell” and thus it was.
September 1st, 2010 at 10:31 am
It’s actually quite ironic. The NAR doesn’t even understand how its members make money to pay their dues to the NAR. They do it through transactions volumes, not sales prices. A house that won’t sell at $250k is worthless as a listing to a realtor, whereas the same house priced to sell at 150k will actually earn a commission. Put a couple of those together that actually sell, and you’ve made more than the $250k house sitting on the market indefinitely. Zero commission on 250k is a lot less than $9k (@6% commish) on the one that sells. Realtors, and the NAR should only care a little what the selling prices are, just so long as they sell.
September 1st, 2010 at 10:42 am
BR- I think we need an anthem for all the housing talk.
http://www.youtube.com/watch?v=xNnAvTTaJjM&feature=related
September 1st, 2010 at 10:47 am
And we need an anthem for when nothing changes and it’s buisness as usual.
http://www.youtube.com/watch?v=-io-kZKl_BI&feature=related
September 1st, 2010 at 11:05 am
Remember Bagdad Bob who insisted that Saddam Hussein was winning as explosions are heard in the background? However this practice of obfuscation is practiced daily on CNBC by their guests and hosts (Bagdad Kudlow??). And don’t forget the “Fair and Balanced” network.
~~~
BR: Funny you say that — I referred to the NAR chief economist as Baghdad Bob in one of the “previously” links mentioned: Former NAR Economist David Lereah is a Jackass (January 6th, 2009)
September 1st, 2010 at 11:11 am
If your stocked up on Insulin, try the ever sugary http://www.positiveonrealestate.com/ for your daily firehosing of rich, delicious Kool-Aid. You thought the NAR was hyper sunny. They’re simpletons compared to whomever runs this site.
You’ve been warned….
My .02c
Soylent Green Is People.
September 1st, 2010 at 11:13 am
If you’re fully stocked with Insulin, try http://www.positiveonrealestate.com/ for a daily firehosing of rich, delicious Real Estate Kool-Aid. You think the NAR is hyper sunny? They’re simpletons compared to the people who run this site.
You’ve been fairly warned.
Soylent Green Is People.
September 1st, 2010 at 11:32 am
How long before we reach Sanford’s step 12?
September 1st, 2010 at 11:45 am
I used to work at NAR. And I once time forwarded a blog post by Barry Ritholtz to Lawrence Yun, kind of just as a heads up. Lawrence was none too pleased. Heh.
September 1st, 2010 at 11:49 am
BR, you can continue with the “Bank Spin, Auto Company Spin, etc.” Take your pick….
September 1st, 2010 at 11:53 am
Take your pick…
“The manufacturing sector has maintained its momentum at least through August,” said Zach Pandl, an economist at Nomura Securities International Inc. in New York. The report “makes clear the economy is not slipping into recession any time but it’s still reasonable to be concerned about where we’re heading over the next three to six months.”
General Motors Co.’s sales fell 25 percent last month and trailed analysts’ estimates, as the U.S. auto industry headed for its worst August in 28 years.
GM said deliveries fell to 185,176 from 246,479 last August, when the U.S. government’s “cash for clunkers” incentive program boosted sales.
September 1st, 2010 at 11:56 am
Regrets for the double post. The first one did not show so I rewrote it again. I confess to my foolishness.
September 1st, 2010 at 12:02 pm
Since the time I bought my first house, the cry of the Realtor(TM) has been, ‘Buy now, before prices go up!’
They are Permabulls, like many Wall Street brokers — not to be taken seriously. Pay them for transacting, not for their stuck-clock market predictions.
And — until proven otherwise — don’t regard them as professionals. That’s what the idiot NAR has accomplished — to deprofessionalize the image of a group which includes some very dedicated people. It took the NAR decades of hard work to break into the circus-clown limelight. Take a bow, bozos!
September 1st, 2010 at 12:07 pm
I doubt it’s the NAR’s fault that people expect their homes to appreciate 10% a year. Nobody really pays attention to them outside the statistics junkies I would wager. I blame exactly the kind of stupidity that has proven to be rampant across all sectors of the economy. Oh, and, you know – unrelated – it’s time to go watch Dick Fuld.
September 1st, 2010 at 12:16 pm
The news media eat up those NAR reports.
Surely you have contacts at the big media to whom you can pass along this report with the hope that someone does the right thing.
http://blog.mdwoptions.com/options_for_rookies/
September 1st, 2010 at 12:21 pm
There is no one thing to blame for all this. The NAR is not the cause of the bubble. Wall Street is the proximate facilitator but not really the cause. Washington was a complicit beneficiary but not the cause. Assholes who bought homes that cost more than three times their income are victims and perpetrators but not truly guilty of anything but stupidity and gullibility. Lereah, Yun, and the NAR are in the unfortunate position of being mouthpieces for this mass hysteria so they are singled out.
But in reality, Lereah is no worse than any US president or member of congress when it comes to huge, important lies. What about the pope or any priest with a pulpit? The hellfire and brimstone, homophobic racists on the Bible Belt circuit? Imams calling for jihad. Etc.
Personally, I think the NAR is guilty of high crimes and treason against the US, having done more damage to our country than any blind or diabetic islamic terrorist. And what do we try to do to islamic terrorists? And what should we do to all members of the NAR? Anyone? Anyone? Bueller?
September 1st, 2010 at 1:03 pm
What do they expect when they are always selling houses as investments and not places to live? In the investing world RE is the equivalent of the summer resort if we are talking timing. What I’m saying is that the owners of a summer resort know their product is only marketable a few months out of the year and that is what they target for.
Do you think the folks in the RE industry and/or the NAR want to be telling folks their ‘investment dream’ is only a great deal a few years out of many in the investment cycle? NO! That would put them out of business for years until the crowds came back every cyclical summer
That’s not gonna happen
September 1st, 2010 at 1:31 pm
Red pill HGTV sounds like a fabulous idea–to replace that NAR of the “financial” TV, CNBC.
September 1st, 2010 at 3:04 pm
The NAR are liars, and they aren’t even very good at it. Lawrence Yun is a laughing stock. The people who need to be strung up are the corporate media outlets that just take the press releases full of whoppers along the lines of “cotton candy cures cancer!!!!!!!!” and reprinting it along side what passes for “news.”
Industry shills are industry shills and always have been. What has changed is any semblance of concern for truthful and accurate reporting of statistics, facts, and trends. Statistics, facts, and trends are considered so malleable these days, no one worries about what conflicts of interests the spinners may have – they just care how little they have to rewrite it from the NAR’s website before press/broadcast time.
Despicable.
September 1st, 2010 at 4:35 pm
Why is that *every* article written by or quoting a real estate professional includes the refrain “It’s never been a better time to buy.” ?
Reminds me of the warning how do you know a politician is lying…
September 1st, 2010 at 6:55 pm
It’s so true I recently had an experience where the local newspaper quoted me, after I said that our local market was going to decline, in my blog: http://loganrealestate.blogspot.com/2010/02/number-of-logan-homes-for-sale.html The local Board President came to me and told me not to speak with the media anymore. He said those in leadership had special “training” in how to handle media.
The ironic thing is that my market falling predictions came true. But we don’t want the public to know the truth do we.
September 1st, 2010 at 8:37 pm
The “Blue Pill” being Viagra. Or, in other words the NAR is saying “Up yours”?!!
Very appropriate!
September 1st, 2010 at 9:30 pm
I have beaten up on RE agents a couple times over the last year:
http://www.irvinehousingblog.com/blog/comments/realtors-treated-as-lackeys-and-maids-grovel-for-6/
and
http://www.irvinehousingblog.com/blog/comments/urgency-versus-reality-realtors-win-buyers-lose-14-jackson-irvine/
I totally agree with your assessment of the foolish way they operate. In fact, the growth of my side business as a broker is largely due to the fact that I refuse to spin BS the way they do.
BTW, thank you for the link yesterday. I greatly appreciate it, and I am flattered that you stop by and read my blog.
September 2nd, 2010 at 8:36 am
“In other words, mislead the public with spin. Create false hope. Lie.” – Sir, that is NAR’s job as a trade association. Please name one trade association that does not do this.
~~~
BR:
There are lots of them:
• The Association of American Railroads
• American Trucking Association Tonnage Index
• National Association of Home Builders
We even did a post last year on it: Which Are the Credible Industry Trade Groups?
September 2nd, 2010 at 10:04 am
The extent of the lying is in direct proportion to the money at stake. Clearly real estate agents make way too much money!
September 6th, 2010 at 11:59 am
[...] Well we can look south to the USA for the answer to that question. How is the National Association of Realtors dealing with their horrible market? I read this great article about it this morning, Attention RE Agents:NAR spin is Counterproductive. [...]
September 16th, 2010 at 9:53 pm
What is the difference between labor unions and the (NAR) National Association of Realtors? Easy answer – the labor unions work to keep their members employed.
In a surprise move, the NAR has come out in full opposition to a transfer fee program that could revitalize and re-employ the real estate industry. With home sales at historic lows, and millions of real estate agents unemployed and their own Realtor members dropping like flies, why in the world would the NAR cause such a ruckus?
Do Realtors understand they are paying their membership fees to put themselves out of business? The reason has to be ignorance. Not knowing the facts is probably a factor.
The transfer fee program, introduced by a company called Freehold Capital Partners, is designed to attract the U.S. government or big Wall Street firms back into the lending market to revitalize the real estate industry. They would loan developers money to re-start construction projects and commence sales again. Each time a home would sell AFTER the first original sale, a 1% transfer fee would be charged the Seller with the proceeds going to pay back the investor (Wall Street / U.S. Government). The current estimate at this time is that such a transfer fee program would cause to employ more than 5 million new people back into real estate.
“There is no service performed for such fees and they add nothing to the value of a property,” said NAR President Vicki Cox Golder.” Hello?
Maybe NAR feels that if clients are paying a 6% commission for home sales, an additional 1% might kill the deal. Most Realtors with whom I talked with would rather have a vigorous, active market right now, rather than worry about a 1% fee maybe 10-12 years from now. In California, many developments have Mello Roos taxes. These taxes add up to an additional 1% of the value of the home PER YEAR. NAR – is that okay?
By the way, those millions of unemployed real estate agents and Realtors, in most cases are not being tracked statistically. Agents, in most cases are independent contractors and are not eligible for unemployment benefits. Add a few more % points the the unemployment statistics we never hear about. Is he NAR helping these agents get through these difficult times? Give me a break!