Friday, May 29, 2009

Regulate the Realtors - Government Improvement Series

If I had my way, the realtors will all be regulated. The financial advisers are regulated, and the accountants are part of the association that governs how they are supposed to conduct business. Why not the realtors as well?

Never mind our 401k and taxable investment accounts. The house is the biggest asset in most American households. Furthermore, not over-leveraging on our home is one of the most beneficial decisions we can make for our finances.

While Emma and I were looking at houses, we have met agents who yelled at us, lied to us, looked down on us and this was during one of the toughest time in California housing history! Can you imagine how it was like during the bubble years?

These people claim to help us find our home, but most of them have no idea how most of the financing options worked nor do they seriously have our interest in mind. Buy buy buy is what they really care about. When they shake our hand, I bet all they see are dollar signs.

True, there is the National Association of Realtors (NAR) but instead of valuing ethics and integrity, this organizing routinely works like a giant advertising agency. We know the benefits of home ownership already. We don’t need more people telling us that “Now is the perfect time to buy” every day of the month and every month of the year, every single year.

Even the compensation structure of realtors are setup so that home buyers are screwed. While a buying agent is supposed to represent the buyer’s interest, the agent makes more money by keeping the transaction price high, not to mention that the number one priority is to create a transaction. What if the buyer wants a better deal? What if the house isn’t a right fit? The realtors are the experts, and should offer advice and be compensated that way.

In order to improve the experience of the American dream, the realtor association should be:

  • emphasizing on ethics and integrity, and realtors should be punished heavily when he/she violates the code
  • increasing the standards of obtaining a realtor license and controlling the number of new a licenses issued each year. This way, there are less realtors out there and the ones that are out there are more knowledgeable and qualified.
  • working on changing the compensation structure to be based on effort put in and not based on transactions. We need representation, not salespeople when we buy a home.

Please do something about all these realtors. We don’t need the stupid advice of “House prices will never go down so stretch to buy the most expensive house you want” ever again.

This is part of the Government Improvement Series, where we discuss on ways that the government can help the U.S. become a better nation every Friday. If you like this article, you may be interested in finding others at the link above.

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