I know we have been having a lot of discussions regarding the limited and discounted real estate practices going on in the industry today. My purpose is not to attack anyone with this post, only to get serious feedback from other concerned professionals in the real estate industry.
First let me state that I have no problem with limited or discount service providers. However, I do think there could be a problem in the way they are advertising their services, and I would like to get other points of view to ensure that I am not seeing this in the wrong light.
For discussion purposes let us look at http://www.499homesold.com as an example. I want to state that I have nothing against this company and I don't really even know who they are and I am not saying anything bad about them. I would just like for us to observe their claims and discuss the merits of them as they are stated on their website. I saw the same advertisement on their car so that is what brought me to their sight.
Now correct me if I am wrong, but I believe this website tells consumers that they will "Sell" their home for them for $499 if they purchase their next home using their services. It indicates that consumers should say no to a 6% commission. So the average consumer may think, wow that is great, I can sell my home for only $499.00 and they give them a call.
In their defense, this site does indicate in a table what a consumer would "save" by using their services. And it also makes it clear their offer only applies to people who are buying another home using their services. That is better than some other sites I have seen.
However, there is no disclaimer indicating "Seller will still be responsible for paying an additional 3% or $6,000 to any cooperating buyers agent who secures a buyer for your present home based on a $200,000 sales price", no table explaining the additional increased cost of such sale for each price range either.
There is no true indication of a sellers net.
(There is some verbiage at the bottom of the page, but I cannot seem to grasp what they are trying to say, so please enlighten me if someone else can.)
So in essence, a seller using this service would really be required to pay $6,499.00 to "Sell" their home, not the $499 advertised boldly in the header (and the $6,499 does not include any closing costs or other fees the seller might be required to pay to actually complete this transaction and "sell" their home).
Again, please correct me if I am wrong.
Now, in the report from the FTC and DOJ we read the other day it was recommended that consumers be made more aware of what it is they are getting so they can make informed decisions. I agree.
I think if consumers saw a "cost" table along with the "savings" table as well as the $499 fee, they might think twice about calling or perhaps end up calling someone else instead. That would make for a level playing field for everyone. But to me, it does not appear that this is what is happening here.
This appears to me to be an unclear advertisement and there could be two potential problems with this:
1. If this licensee were a REALTOR® they could be violating the code of "ethics":
According to the 2007 Code of Ethics and Standards of Practice:
Article 12
R
EALTORS® shall be careful at all times to present a true picture in their
advertising and representations to the public. R
EALTORS® shall also
ensure that their professional status (e.g., broker, appraiser, property
manager, etc.) or status as R
EALTORS® is clearly identifiable in any such
advertising.
(Amended 1/93)
Now I know that not everyone is in the National Association of REALTORS®, so they may be okay as far as that goes, but if they are members of NAR, they might be violating the Code of Ethics with what is currently on their website. (And if they are members of NAR, they do not appear to be displaying any REALTOR® logo or other professional status on the site which would be another issue.)
As a side note, they could also be in violation of the Code by indicating in their savings table that there is a "standard" 6% commission. This implies that all other real estate practioners would be charging them a 6% commission. This could prevent the consumer from interviewing other possible candidates which again tilts the playing field in their favor. However, that is not the main focus of the discussion here.
In this instance, I will assume this licensee is not a members of the NAR.
2. Even though they are not members of the NAR they must still be licensed in the State of Georgia as either a real estate salesperson or broker.
This then could become a license law issue.
According to Georgia Code O.C.G.A. 43-40-25-(b)-(2)
(b) Licensees shall not engage in any of the following unfair trade practices:
(2) Intentionally advertising material which is misleading or inaccurate or which in any way misrepresents any property, terms, values, policies, or services of the business conducted;
So, even if this licensee is not a member of the NAR and therefore not in violation of the Code of Ethics, they could potentially still be in violation of Georgia license law by using misleading or innaccurate advertising. That could make them subject to investigation by the Georgia Real Estate Commission. That is if someone were to file a complaint in writing to the Georgia Real Estate Commission which would then compel the Commission to investigate for any such violations.
Again, please correct me if I am wrong in my analysis.
If I am not wrong, then I believe we might state that advertising being used by some limited and discount brokerages could be hurting consumers by misleading them regarding the true costs of the services being provided to them. These advertising practices could also be having a direct negative impact on other real estate practioners causing them to potentially lose revenue and could even unfairly be forcing them out of business.
It also seems to me that there are too many real estate practioners for the NAR, DOJ, FTC or state governments to keep track of individually. I believe it is wrong of us to think they should be doing so. If that is indeed the case, what then could or should consumers or other real estate practioners do to prevent this from happening?
I do believe we have the right to legally defend ourselves, and that we bear the responsibility to do so. I would appreciate any and all feedback from others before I formulate any plan of action I might take to address this issue in the name of fair trade and true consumer protectionism.
Thank you in advance for your consideration.