The government has confirmed that which nearly everyone in the country already knew ? the median price for homes has fallen all over the country. That's not news for the countless number of home sellers who are facing severe crises due to the length of market time. When the fallout of this market recession settles, maybe there will be an opportunity for another real estate market correction ? fixing the unethical and unprofessional manner in which houses are sold.

There was a time not that long ago when the commission in this country was 4%. It went up because house values did not increase at the same pace as the rest of the economy and Realtors were losing ground no matter how well they did their job of representing the seller). Then the laws changed to include a clearly defined 'buyer's representation' and costs escalated'they needed a bigger commission. Once housing values exploded however, the Realtors kept their cut at a higher level.
From the mid 90's through 2003, a house only required being thrown on the market priced near 'the ballpark' and it would change ownership within a matter of days. The effort involved by the Realtor was only to take some photos, produce a flyer, and then notify the MLS of the listing. The rest of it was sit back, wait a few days, and bang ? house sold. 6-7% commission was taken and split with another agent and perhaps a different brokerage, but the largest share was kept by the listing agent. It was easy money. Too easy. As one agent said in early 2006 when the significant dent in the market became more apparent, ??it looks like I?ll actually have to go back to work again.?

Big brokerages provide newer agents a desk and a phone, call them a real estate sales representative/agent/marketer and give them a laundry list of services they provide for a fee (to the agent and/or the buyer or seller). The one thing that is rarely offered is any idea how to professionally sell, because if one listens to vast majority of the Realtors out there, the industry does not 'sell houses,? they 'market homes.?

?Home marketing' worked well in those boom years because it was nearly impossible to fail. The situation has changed and the real estate 'marketer' is lost. Their tried and true methods are not working. Why? Because too many of the real estate sales people have not adapted to the changing marketplace, and those same 'tried and true' methods have become 'tired and trite.? Brochures are still required, because they are the tangible means by which buyers remind themselves of the properties they have just viewed. ?Open houses' have always been an excuse for neighbors to see what the owner has done to the place ? their taste in wall décor, etc. Most of the others who tend to come to an open house claim they were sent by the 'buyer's agent.? If that is the case, the listing agent has almost no motivation to talk to the prospect, and the house is left to sell itself, because the 'buyer's agent' was not there at all.

The industry is overrun with 'customer service people' pretending to be sales representatives. One clear way to determine whether one is dealing with a sales person or customer service person is how ? and how often ? he or she uses the word 'market.? If the agent insists he/she 'markets' homes, that generally means he or she is embarrassed by the word 'sales' defining who this person is. A true sales professional is proud to use that word.

Further, these 'professional home marketers' may do price research and suggest many ways to make a house look more attractive, but that only scratches the surface of 'marketing.? Besides, the seller did not retain the services of an agent to dictate how to make the home look pretty; they contracted an agent to sell the house. In most states (if not all) agents are required to be licensed and that means passing a test that says the realty wannabe has to understand the various laws of the state, and the language of real estate. No where does the governing body indicate a requirement to demonstrate knowledge of marketing nor mastery of sales skills.

Perhaps it should, because personal selling remains an enigma for most of the agents. Personal selling requires timing and a smooth, yet aggressive approach to the would-be buyer. Standing in the kitchen at an open house and delivering the statement: ?Walk around folks! And if I can answer any questions for you?? is not aggressive. It's as passive as a clerk standing behind the counter of a pharmacy. Standing in the kitchen does not show the buyers what the actual benefits of ownership are unless it's one absolutely fabulous kitchen.

One prospective home seller asked an agent recently, ?What does your 6% commission buy?? He surprised his prospect with two points that were out of the norm and should have told the seller that this agent should be in a different line of work. The first was that he made at least 60 phone calls every day to people he knew, in search of leads and input on the marketplace. Does the average person in or out of real estate know 400 people that he or she would call to interview with essentially the same questions with any frequency? Yet he told the seller that going door to door in the listed home's neighborhood was a total waste of time.

The second disturbing point was that he deserved to be compensated for driving prospects around to look at as many as 75 homes before they might make a decision. It begs the question: Is the homeowner for whom he has the listing responsible for paying for his gasoline to drive prospects to other properties? Has this agent never heard of previewing properties with prospects so that the list of possible homes could be whittled down to a manageable number? Does this agent not understand that the reason why homes sell faster in a so-called 'sellers market' is because there are fewer choices to confuse buyers? If a prospect can't make a decision after viewing 75 homes, shame on both the home 'viewers' and on the realty agent for not listening, nor selling. Even though this agent has many years' experience in real estate, he is not a capable, professional salesman: he hangs his success on the number of listings he can get, in the hope that other agents will sell the properties for him. It is this approach to the market (?we market homes, we don't sell houses?) that has an adverse affect on the seller (as well as the buyer) as it necessitates an increase in cost of the transaction.

Another increase in transaction cost is a tool recommended by listing agents to their clients whose properties are not drawing enough attention: the ?Spiff.? The spiff is a bonus paid by the seller (very rarely will the listing agency participate in the bonus) to the buyer's agent ? normally ranging from $1000 to 10,000 ? for selling the home. Unless it is clearly disclosed to the buyers, is not accepting a bonus from the seller an ethical violation of representing the buyer? Can such a 'buyer's agency contract' truly exist as long as the sales commission is being paid entirely by the seller? To some, those situations demonstrate conflicts of interest within an industry where buyers and sellers are misled into believing that their interests are the first consideration of the very people who are being paid partly to insure that everything is subject to disclosure, lawful, and ethical, when in reality the interests of the agents and brokers take precedent.

There is no doubt that the industry would be better off if buyers' and sellers' agents were paid by the parties they each represent (as is the case with lawyers) because in the event that a post-transaction conflict arose, each side could turn to their Realtor for unimpeded counsel. If both Realtors' licenses were held by the same brokerage however, they (especially the injured party's agent) would still be unable to advocate effectively on behalf of their customer. The point is not disclosure as the Realtor Code of Ethics purports, it is that these types of agency relationships are rife with conflicting interests from the very beginning. The lofty goals put forth in that code of ethics do nothing to address the issue of brokerages whose foremost objective is not solving problems for their clients, but increasing the bottom line. Perhaps that's one reason why many of the brokerages strongly advocate for the buyer and seller to agree that an independent mediator be hired to settle these disputes ? as long as the mediator's fee is paid by someone other than the broker.

Certainly, the prices paid for homes has fallen in the vast majority of the price categories throughout the country, but are the agents making it easier to sell the properties so that homeowners are taking less of a hit in the wallet? While we have seen the rise of the discount brokerages, the answer remains, ?No.? Too many agents have made it clear that the discount houses are considered the 'whores' of the industry, that buyer's agents put houses listed by the discount brokers last of possible showings (if they are to be shown at all) because they make less money (another example of the fallacy of 'buyer's agency?), and that somehow deals always seem to fall apart when a discount house is involved. Contrary to the statements made by some agents, the commission split from some discount firms remains constant for the buyer's agent, but the listing agent is paid less. While some of the discount brokers are less than forthright in terms of what services are provided at the various commission levels, most of them are straight forward with the prospective seller.

The discount firm concept ? akin to the discount Wall Street brokers ? is a step in the right direction financially for many sellers, especially in a recession-riddled market. It does nothing to remedy the ethical impediments faced by both parties, but especially the buyer, however. Most of the rules/laws that were enacted to protect the buyer from the unscrupulous sellers cannot be put into place with the current system of representation. Disclosure is not enough. Dual representation is a fallacy. Eventually, one side receives greater advocacy, and that will most likely go to the seller, because he or she is the one who pays the commission. No attorney in his or her right mind will attempt to represent both sides in a contract. For the largest purchase someone makes in their lifetime, why does the real estate industry's governing body pretend that it is acceptable?

Could we not learn from our British cousins who have a system that the seller pays only 1.75-2% commission for listing the property? In their system, the buyer views and negotiates the purchase of the property only through that agent. Once the price and other negotiated items have been agreed upon, the lawyers take over with each side represented by their own attorney at their own expense. What do you have? First, no conflict of interest exists. The sellers receive more than their American counterparts would, and the buyers receive greater value for the money paid, because the price is not inflated to reflect a 4 ? 7% commission to sell the property.

Surely, the industry must evolve to a point where greed is truly replaced by professionalism in sales, and ethical standards are not lowered to placate existing methods of doing business. Perhaps this recession is a golden opportunity to effect positive change in an industry that desperately needs it.

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