Welcome to my world: an insider’s tough-love look at real estate.
A real estate manifesto for the ages, or at least for the next five minutes.
Disillusion can become itself an illusion.
T.S. Elliot, The Cocktail Party
By "tough love", you might expect what follows to be a no-holds-barred look at real estate. And you’d be right. It's as no-holds-barred as anyone who respects the premise behind the real estate industry can make it.
You might also expect this to be a kiss-and-tell expose of the real estate industry. Ten Things Your Realtor Won't Tell You, maybe written by someone who flunked out of real estate and hasn't dealt with it. And you’d be wrong. I'll leave that to the fast-buck artists already mining that vein.
No, this will be much better. This will be the full story, as much as I know it, as impartially told as I can tell it, written for better or worse from the front lines of real estate.
I’m not an academic, peering at real estate through the wrong end of my telescope. I’m not a retread financial writer covering the fad of the moment while I hold my nose and hope the stock market gets interesting again (and with the DJIA briefly crossing 14,000, I'm hopeful the stock market is interesting again). Nor am I a blogging real estate dilettante, duct-taping together an Xtreme ideology from random bits off the Internet and random encounters at open houses.
Real estate is my profession and real estate is a legitimate profession, offering complexities and nuances, to practitioner and client alike, apparently far beyond the comprehension of virtually every outsider no matter how smokin' his blog, how distinguished his curriculum vitae or how credible the media outlet she works for.
That sounds scary and is, not just because the real estate consumer winds up ill- and mis-informed, but for its implications. Take the invariably superficial, often agenda-driven reporting and punditry on real estate and apply it to every news topic, weighty or insubstantial, and you wonder if the professional explainers have anything worthwhile to tell you—about anything. What if it's not just real estate, but the entire world, that eludes the people who report it? What if every subject more nuanced than a five-alarm fire is too nuanced for the explainers to explain it?
Sure, there's plenty wrong with how America buys and sells homes. The American consumer feels this more than s/he knows it, and only to a point. And because the most visible, accessible and often irritating symbol of the real estate industry is the agent, the agent is the big problem and probably the only problem.
Look at the news racks or the Internet or the best-seller lists and you’ll see that throwing rotten tomatoes at agents is a great way to make a buck. It sells books, boosts circulation, inflates blogger egos. It just plain sells. Sell sell sell. Just like those pushy agents.
No, not every agent belongs in the business. Some have yesterday’s skills in today’s demanding environment. Some don't even have that. Some aren't even sure it’s today.
Yes, some agents have the flexible ethics found in what may be an identical percentage of the public. "It's okay when I look out for Number One, but it's not okay when the other guy does."
Yes, a few agents are the out-and-out crooks that give the industry a bad name.
And yes, even the better agents make big targets, with their “lofty” commissions, advertised success and larger-than-life personae. It's the materialistic side of the American Dream, the side we love to love for its promise of the big life and the side we love to hate for its distortion of the good life. There's plenty of mud here for the amateur moralists to play with.
But there’s also plenty wrong with much of the criticism of how America buys and sells homes. As with any important story, real estate has many sides. It's a story that hasn't and, worse, seemingly can't be told accurately and unemotionally, without grinding an axe or meeting a quick deadline.
Biased and uninformed reporting is easily sold and easily swallowed when it gives the public what it suspects. That's what gives this reporting its remarkable staying power.
Well over a hundred years ago, newspaper publishers created a sensational and irresponsible reporting called "yellow journalism". Yesterday's yellow journalism is today's “media bias”, a phrase I use extremely reluctantly because it’s frequently aimed at the small percentage of reporting that's unflattering but knows its subject, but the time-honored formula remains: find a group few like or understand, blame it for whatever the public thinks is wrong, milk the story for all it’s worth, then move on to the next pariah when the public signals it's bored, all while shedding more heat than light on the subject. The Information Age's contribution to yellow journalism has been to remove the few restraints and fig leaves it had left and invite it to the no-holds-barred nirvana of the blogs. The target changes constantly—an ethnic group, a country, an industry, a profession—whatever happens to find itself crossing the street in the oncoming headlights of popular attention and its faithful sidekick, the media.
Attacks on the real estate industry can be as cynical and self-serving as the industry at its worst. More often, they're simply misinformed. Genuine in-depth understanding of any industry comes not from reporters quoting press releases or from academics grinding out studies like sausage—insight is never that easy to acquire, no matter how many years of grad school you have—but from living it day by day.
Academic real estate economists, facing the imperative "publish or perish", poke their subject frequently but at a safe distance to see if it does something useless or crooked. The warped and often bizarre result is disguised in scientific-sounding jargon and passed off on a media which screens it, not for the quality of its methodology ("what's a methodology?") but for the likelihood that it boosts circulation and careers.
Spawn of this unholy alliance is the real estate dilettante, pontificating from his blog on the dismal state of the real estate industry and on the fools who buy homes in this (or any) market.
No, none of this is conspiracy, of course; unlike so many critics of the industry, I don't see collusion around every corner. No, like so much non-truth, it's nothing more or less than the convenient and eminently salable product of a synergistic, cynical and nihilistic—nothing is true, everything is permitted—economic partnership.
Reporters get their "hard-hitting consumer pieces" tied up with a bow, eliminating any need to use their brains and shoe leather covering the industry they expose. Academic real estate economists get to make it up as they go along, because in this softest of sciences and fuzziest of professions you rarely collide with the hard surface of inconvenient reality. Read real estate reporting critically, as all of us should and so few of us think to do, and you'll discover that very little of it requires a real knowledge of real estate ("experts say...") and that almost all of it can be banged out on a computer from a spare bedroom while wearing pajamas. Here's a handy test to separate real estate fact from fiction: imagine selling homes in your pajamas.
I have no doubt that both reporter and real estate academic, each nursing a fashionable cynicism of the business world which often is simple naïveté, believe they do useful work. I have little doubt that in the academic's heart of hearts lurks the hope that he or she is the next Robert Shiller, America's pop economist, simplifier of things that won't be simplified, busting out of the dusty halls of academe and into the sunny world of the New York Times best-seller list.
Once the academic real estate economist's veneer of credibility cracks, you discover to your amazement that his world isn't the hard-won verities of the marketplace but the convenient illusion of the algorithm, and that he knows less about real estate than the average first-time buyer—not only have I never found an economist who's sold homes, I've never found one who sounds like he's bought a home. You learn also that the material he works with is so ephemeral that no one can prove objectively that it exists. He lacks even the physical scientist's ability to validate the concreteness of his work by accidently burning down his own lab.
And it takes very little cynicism to see the academic's proof of his relevance, the peer-reviewed study, especially in the small world of real estate economics, as nothing more than incitement to group-think, scratch-my-back-I'll-scratch-yours-ism and the maintenance of accepted error and a dogmatic Old Boy network. Veblen, Nietzsche, Baudelaire, Thoreau, Melville, Dickinson, Williams, Pound, Poe—how many original thinkers had to reach their sixties or be dead fifty years before they could get a decent "peer review"?
And when the media isn't passing along the academic's artificial constructs, they're passing along someone's agenda-driven press release. And when they're not passing along a press release, they're plugging the latest fad, for the good solid reason that new = new news = good and old = old news = bad. And when they're not plugging and publicizing, they're hounding panicky buyers in booms and panicky sellers in busts. "How does it feel?": the latest substitute for insight.
Human interest sells. Sensation sells. New sells. Sell sell sell. Just like real estate.
Yes, it can be a nice charade, wrapped up in hazy memories of Woodward and Bernstein and in the hallowed sanctity of the First Amendment, absorbed uncritically in the street, regurgitated on blogs, in cubicles and at backyard barbeques. It's enough to make me regret I was one filled class away from majoring in journalism. Because selling homes turned out to be hard work.
It's a comforting illusion to think that mainstream journalism withers away these days because we've finally recognized its Wizard-of-Oz fakery, but in fact the coverage goes from bad to worse: much of the public appears to hunger for Wizard-of-Oz fakery—craves it in its raw, uncut state—and looks to the Internet to get it. If the bubble blogs are any indication, we've progressed from heck, they're lying to us to cool, we're fooling ourselves.
So who-da thunk-it? The ink-stained wretches of the media turn out to be less menacing to truth than the terribly earnest amateurs on the Internet. And why not? Zealotry always trumps restraint. Could this be Yeats' apocalyptic "rough beast, its hour come round at last", or perhaps Cummings' "little doll" discovered on top of dead institutions, "pulling and tweaking with his little hands to get back the microscopic knife which sticks firmly in the quiet meat of their hearts"?
So welcome to my world and pardon the mess, but it offers us a wonderful irony: while Moses was up on the mountaintop receipting the Ten Commandments, all us truth-seekers were down here busily worshipping gods—objective science, an intrepid press, the this-changes-everything! Internet—produced by our own imagination. As online real estate discussions prove, the more we seek truth from supposedly disinterested sources, the less likely we are to find it. Given the inevitably selective and subjective nature of our quest—what axe will we grind today?—the more we inform ourselves on unfamiliar subjects, the more we move from uninformed to ill-informed.
For instance, say I'd like to get up to speed on economics. I don't need any guided formal instruction, of course. No, not me. I'm a bright guy with a college degree and the world of ideas has no door I can't open. Besides, the Information Age lets me pick the low-hanging truths and—bingo!—I'm an expert. And while wandering over the economic landscape I trip on John Kenneth Galbraith and know that here is Truth: he's a liberal economist with a jaundiced view of economists. I like what he tells me so he's the well I go back to, time and again. But one day I stray from the path and meet George Stigler, a conservative economist who thinks his profession walks on water. He bugs me so much that I turn away. But if I do, I turn away from someone who proves to have considerable charm and intellect and, toward the end of his autobiography, even a few doubts about the omniscience of economists. Stigler doesn't move me to the right, but he does move me toward a more enlightened view. Except that, remember, he bugged me, so I never read him.
You can make a strong case that disillusionment—whether it's over the media, academia or a particular industry—isn't enlightenment but rather the final illusion. And when it comes to real estate discussion these days, disillusion is both common thread and handy fashion statement. The bubblehead's disillusion is invariably second-hand and borrowed from academia and folk wisdom (often there's little difference) although this doesn't keep him from running it up the flagpole and making it his own identity. The academic real estate economist, who seems to think the road to enlightenment runs through grad school, is plainly disillusioned by the public's "irrational" market behavior and "inexplicable" patronage of the real estate industry. Then there's the journalist's veneer of professional skepticism, although it's always reserved for the industry and not for the industry's critics.
But here's a happy thought: what if disillusionment is just a convenient rest stop on the eight-lane interstate to enlightenment? Yes, I'm saying maybe you should look forward to the day your profession is dissed by know-nothings in the press and on the blogs. I'm saying you should pine yes pine for the day your favorite magazine buries its knife right up to the hilt in your industry's quivering flesh just to sell a few copies. I'm saying brothers and sisters that nothing is true and everything is permitted. Yes rejoice hallelujah! when the sages are called charlatans and the charlatans sages. For the truth shall set you free!—even if it blindsides you. Especially if it blindsides you.
Blogger or TV talking head, woolly academic or print journalist coasting through her story, their work creates a reservoir of suspicion and resentment toward the real estate industry, some of it deserved, much of it not, that colors the industry/consumer relationship.
The real estate industry, for its part, does little to explain who it is and what it does. The marketing of individual agents is often amateurish, sometimes scary. Ad agencies tasked with selling the industry and its brokerages crank out naive, unbelievable fluff. You get the feeling the writers don't believe their stuff any more than the public will.
That's unfortunate, because real estate at the grass-roots level is nothing more scary than self-employed, independent contractors much like other small businesspersons—plumbers, dentists, appliance dealers—each competing tooth-and-nail for your business. But at the national level, real estate looks and acts like Big Business, something very few consumers can snuggle up to.
And, always, there’s the elephant in the room: yes, real estate is a legitimate business, but it's as much three-ring circus as hard-nosed business, as much village bazaar as modern services delivery system, a unique, often baffling, occasionally repelling yet still oddly compelling mix of sizzle and steak far beyond the comprehension of almost every consumer, no matter how sophisticated, I’ve met. Why does the industry do this to itself? Because the public wants it. Because any service industry—any industry that works on Main Street—is designed from the ground up by, and for, the people who consume its services.
I’ll give you a ring-side view of real estate. I think you’ll find it useful and thought-provoking, whether you’re a buyer or seller or maybe just someone who likes hitting open houses, whether you're a veteran agent or someone thinking about getting in the business. This is tough love, and you may not always like it. You may think I’m not critical enough of the industry, or that I'm too critical of consumers, academia and the media. But I think you’ll come away with a much better understanding of this vital yet dysfunctional industry that touches and fascinates so many.
One caveat: the articles that follow aren't necessarily a “how to” guide to real estate. If that's what you need, go back to my home page and read "Just for buyers", "Just for sellers", "Articles of special interest" and, of course, "About me". The first three categories cover the nuts and bolts of real estate. What you'll get here is an insider’s overview of real estate. A knowledgeable overview that gives you something even many who know the details of real estate don’t have: the big picture.
You need an objective, realistic overview. You don’t need an apology for the industry. I’m part and parcel of it and respect its better intentions and elements but, as you’ll learn, I don’t see it through rose-colored glasses. Both you and I—real estate’s bona fide consumer and real estate’s dedicated practitioner—deserve better.
I even make suggestions on how to improve the real estate services delivery system. I think these suggestions benefit both consumers and agents and, most important, may even be workable. Do I think they'll change the status quo? No, because only consumers can do that, and today the status quo benefits consumers more than it does the industry. Yes, it's true. It's the only reason the status is quo. We'll talk about that too.
But mostly this is an in-depth, inside look at the emotional, suspicious interface between the real estate agent and the real estate consumer, between the real estate industry and its environment.
Fasten your seatbelts. We’re in for a bumpy ride.
Next, Real estate illusion and reality.