Another big (and direct) hit from "60 Minutes".
Morality play: a presentation providing a moral lesson through the use of allegorical characters to portray a struggle between good and evil. Popular in the 15th and 16th centuries. Revived by the mass media in the 20th century to sell deodorant and atrophy audience thought processes.
Sorry. I didn't have the heart to watch "60 Minutes" work the real estate industry over with its trusty rubber hose last Sunday. Call it a flaw, but I like my cheap morality plays to stick fairly close to real life or, failing that, break new ground imaginatively. Predictably, "Chipping Away At Realtors' Six Percent" did neither. In fact, I could have sketched the segment's storyline without even seeing it (note to media outlets: call me about availability, price and other terms). I could also have predicted the industry's reaction: "inaccurate and unfair", "one-sided journalism", "egregious errors". All of it true, but tell it to someone who cares.
I'll deal with the substance of "Chipping Away At Realtors' Six Percent" in a moment. I think you'll find my response, well, unpredictable. But first let's look at something far more popular these days, in this or any debate: not substance—heck no, not boring old substance—but form.
"Chipping Away" was predictable because it's the same tried-and-true horse opera starring the same tried-and-true stock characters, wearing the same white and black hats sent over from Props and using the same script guaranteed to play our emotions like a violin. Just rotate the heroes and villains so the audience doesn't know they're watching a re-run. And if it knew, would it care? The curtain goes up every day of every week, on every industry, group or person who stumbles into the hot glare of the media spotlight.
And the curtain always closes on the same scene. Industry just tarred and feathered desperately raises legitimate objections that no one believes or wants to hear and comes out looking paranoid, thin-skinned and guilty as sin. Industry critics and medium hit below belt, grind axes on exposed flesh of industry and come out looking like candidates for sainthood. Like any schlock cranked out by the mass culture machine, its genius and appeal is the skillful buffing and polishing that makes it look like shining truth revealed. And in this case, I rant against cynical media opportunism and look like some neo-con fulminating against media liberal bias.
If only the media's sins were that innocuous. Meanwhile, the alert media consumer should:
So I couldn't watch "Chipping Away". Much. About five seconds, enough to see a long shot of what turned out to be the local discounter taking a melancholic walk through The Town That Turned Against Him, alone, bent, friendless. You could've reached out and touched the ruin, it was that palpable. I thought of Gary Cooper's lonely walk down a dusty street in "High Noon". "This will all end in tears" I thought, and flipped back to "America's Funniest Videos". I don't mind schlock. I just don't like it when it pretends it's something else.
I did download the deceptively innocuous script (apparently words can get you sued but not tone of voice) and the National Association of Realtor's outraged response, probably written months ago when it first heard what was coming. I also got some unofficial industry reaction at our Monday morning office meeting. My manager, apparently a big fan of "60 Minutes", was disappointed and genuinely hurt that Lesley Stahl "didn't drill down to the facts". Another agent, who's involved in NAR and the California Association of Realtors at high levels, said she'd always thought "60 Minutes" was "more even-handed than that". I'm just flabbergasted that sophisticated real estate professionals who've presumably watched "hard-hitting consumer reporting" tar our industry with a broad brush over the past five years would expect anything better. Truly, it's a lesson in the selling power of slickly presented myth. Even people who know better keep coming back to the buffet table.
Like others hooked on these glossy morality plays, these agents don't realize that "60 Minutes" has the same formulaic approach to every subject it scorches. Every medium does, for that matter, and for good reason: people eat it up. Asked the secret to his amazing success, long-time "60 Minutes" producer Don Hewitt, now retired to industry accolades, just grins and says, "Aw shucks. If I told you the reason—we toy with your emotions better than anyone else—I'd have to shoot my way out of this studio. The only ones who don't salivate every time we ring the bell are the pointy-headed intellectuals watching C-Span and the culture snobs off reading a good book, and we lost those guys when CBS kicked Edward R. Murrow off the air and I was in knee pants, so who cares?"
If Don Hewitt is too modest to share his success secrets, I will. First, find an industry that's its own worst enemy. You won't have to look far. Ideally the industry will offer a product or service familiar to a large audience but too nuanced to be easily understood, which is every product or service more complicated than dog-walking. Then keep your storyline simple. Grey just irritates the audience, while black-and-white sells hard. The industry to be crucified—sorry, "profiled"—should be up to something that with little or no effort can be made to look underhanded and self-serving. Subject industry should have a high profile but be populated mainly by paunchy fifty-year-olds likely to shoot themselves in the foot while it's still in their mouth. In other words, jus' plain ol' folks like you and me, doing exactly what you and I would do while being skillfully dissected, without warning or anesthetic, by expert interrogators for hour after hour before an unblinking camera.
How do you find these suckers? You have to beat them off with a stick. Just look for cardboard characters, promise them national exposure (and how!) and let the camera roll baby. This stuff just writes itself. Leave any nuances on the cutting room floor. For "balance", show a few well-spoken and sympathetic industry critics.
Tension and release, tension and release: the secret to good art. Case closed, industry taken out and shot, sun smiles, viewers clap delightedly. Rinse and repeat, week after week, year after year.
The tragedy of "Chipping Away" is that this is one "60 Minutes" morality play that didn't have to happen. The real estate industry has taken heat, most recently in a Federal Trade Commission report, for allegedly squelching alternate business models that seem to offer benefits to consumers. Lost in all the bellowing and posing are two key facts.
First, discounters are nothing new to the real estate industry. They've lived on the fringes of the industry since long before the Internet, and that's where they are now. This changes everything! And that's not including the shadow discounters, the ones that know better than to identify themselves openly as cut-raters. Marginal members of the real estate community, even some ostensibly full-service full-commission agents, have always been willing to openly or covertly undercut the unofficial "going rate".
Why would they do that?
I can think of two reasons. First, discounters go into real estate because they've renounced money. They'd really like to do social work but it pays too well. This seems to be the position of the academic real estate economists, especially those in thrall to the American Bankers Association, which is looking for an excuse to turn real estate sales into a loss leader for its lending operations. Think real estate professionalism can't sink any lower? Think again. Low-paid teller today, low-paid agent tomorrow. Same great service.
Here's a second, perhaps more likely reason. Unlike their clients, discounters know that a cut-rate commission is all their services are worth. How do they know? It's simple, and it's economics more solid than you'll get from any economist. The market (real estate consumers collectively) in its unbiased and infinite wisdom tells any agent what he or she is worth. The market sends the discounter a clear and unambiguous message: we value your services at less than full commission. No one reduces the cost of their services unless they have to—unless what they offer is distressed merchandise seeking its natural level on the sale rack.
Most people understand this. That's why I think online discounters pose a far greater threat to old-line bricks-and-mortar discounters than to full-service brokers. I can afford this devil-may-care attitude because I don't head a state association of Realtors, nor am I likely to. I don't have a clamoring hot-headed membership to answer to. I can never be accused of fiddling while Rome burns. Catastrophe can never happen on my watch.
But the real catastrophe happens when a local Multiple Listing Service excludes a discounter (not the case in my area) or when a state legislature bows to Realtor pressure and outlaws rebates or passes a minimum-service law. Because the real estate establishment then hands its enemies two gifts. First, it protects the turf of the bricks-and-mortar discounters it's long detested. Second, it paints a bulls eye on its back that no hack journalist, wooly academic or frothing conspiracy theorist could ever miss.
The Internet has changed the discount-versus-full-commission debate by promising to eliminate "friction" in the delivery system, much as it has in the book and travel industries. To take this premise seriously, though, requires a belief that buying and selling real estate is of the same order of complexity as buying the latest Tom Clancy thriller or booking a carefree week in Puerto Vallarta. It reduces an asset worth hundreds of thousands or even millions of dollars to a commodity. Most people with an actual—as opposed to theoretical—knowledge of real estate (or even just common sense) recognize the fallacy in this.
As for the economies of scale that online discounters supposedly offer—"we have an agent who can do (eight deals) a week", says Redfin, the discounter featured in "Chipping Away"—no agent can successfully manage eight deals a week, even if he or she isn't spending valuable time driving clients around "in the back seat of a Lexus". That's thirty or forty deals in escrow at any one time, all of them needing a little or a lot of attention. You really don't want your agent to be that busy, just like you don't want your dentist or lawyer to be that busy (unless you're a plaintiff's attorney). Turn those hordes of deals over to unlicensed assistants? Redfin is mute on this aspect of their alleged volume operation, and understandably so. No one wants their real estate future in the hands of some $10-and-hour admin.
What about the empowered consumer who comes to the real estate market already knowing where the listings are or what her house is worth? If "Internet-savvy" was the same as "real-estate savvy", the real estate industry would have withered away in 1998 as soon as online listings appeared, and I think we all agree it hasn't. "Information" isn't "knowledge". "Information" is data that needs to be sorted out by someone with "knowledge". "Knowledge" is acquired not through a Web browser but through classroom and on-the-job training and through long demanding experience. That's almost certainly true of your own field. If it's not, you're not brokering large assets.
Sooner or later, most real estate consumers get this. I have faith that they'll keep on getting this. The industry might do well to share my faith.