For years, as home prices rose, the enthusiasm of many brokers for high prices came across as shrewd. But now that the market is soft, would-be homebuyers are beginning to question some brokers’ still bullish take on the market.
Specifically, buyers say they think brokers and some industry groups like the National Association of Realtors haven’t come to terms with the changed nature of the housing market. And while Wall Streeters — who are dealing with an industry meltdown, federal bailouts and criticism over outlandish compensation — are clearly on top of the public hit list these days, brokers seem to be ranking a close second.
An informal survey on a weekend morning outside the office of a prominent New York brokerage firm showed just how out of favor brokers have become with some.
In line with a recent study, most respondents were favorable or apathetic about brokers and the real estate industry. Still, there were some sharp opinions. One frustrated home shopper likened the city’s brokers to the orchestra of the Titanic. Another would-be buyer claimed brokers were more damaging to the economy than Al Qaeda.
“Frankly, it’s hard to listen to them,” said John Lund, who was looking for an apartment in Greenpoint or Astoria. “I think brokers would do better if they were more upfront about risks.”
Brokers answered these types of complaints by asserting that the problem is out of their hands. While they have been criticized for unduly positive spin by some, they say sellers can be worse. Some brokers say sellers who now refuse to lower their asking price to more realistic levels, especially in fringe neighborhoods, are making for a slower market because units won’t sell until prices are adjusted.
But some in the industry think the brokerage firms bear at least some of the responsibility for the current mess in the nation’s housing markets.
“During the housing boom and post-housing boom era, [brokerages] have been very aggressive in characterizing the market in a very positive way, to the point where there’s been a disconnect with what the data shows,” said Jonathan Miller, president of appraisal firm Miller Samuel.
Miller argues that much of the damage done to the reputation of the industry has been done at a national level, where sugar-coated economic reports from groups like the National Association of Realtors didn’t prepare brokers for the possibility of a down market. David Lereah, the former chief economist for NAR, came under particular attack for his rosy prognostications even when the national market began to slow.
At the same time, not everyone sees the problem as belonging to the industry. A few industry leaders blame the news media for the current state of affairs.
“If the press over-hammers something, absolutely it becomes a self-fulfilling prophecy,” said Hall Willkie, president of Brown Harris Stevens. His particular gripe: “They frequently talk about the market as if there’s only one market.”
Robyn Kammerer, Halstead Property’s vice president of communications, said she’s been fielding a growing number of negative inquiries from the press and has more trouble conveying positive news. “Some of them grasp at straws for negativity,” she said. “TV, they won’t report on our market report, because it’s not negative.”
While Miller said press is not the most definitive force in real estate, he said optimistic press helped validate brokers’ optimistic pricing during the boom years.
“In 2004 and 2005, pretty much what you set the list at, the market would catch up. It was almost prudent to list optimistic because eventually, you would be proven correct as an agent,” he said. “Now, properties are selling when they’re priced at market.”
Real estate and public relations executives have been considering different ways to repair the industry’s image.
Donna Reichle, a spokesperson for the National Association of Home Builders, suggests providing media with localized and constant sales, inventory and price figures to combat frightening national wire reports.
In New York, Internet sites like PropertyShark, StreetEasy and the city’s Department of Finance Web site have in recent years started to help make more detailed property records and information about price adjustments more readily available.
Miller suggests a multi-pronged approach, including more well-thought-out brokerage branding or image advertising at a national level, combined with instruction to brokers on how to understand and communicate market conditions. “Brokers don’t make markets. Their role is to help move houses, but if they’re not taught how to communicate market conditions, then they’re stuck with the boilerplate given to them,” he said.
Howard Rubenstein, president of the giant public relations firm Rubenstein Associates, which counts a number of real estate players as clients, also thinks the industry could use some rebranding.
“There is a big target on the backs of the real estate industry, which too often has not shown sympathy to the victims of the economic slowdown and the issues projected in the subprime market,” said Rubenstein. “The industry, for too long, has looked at everything through rose-colored glasses. It is time to get clearer lenses.”
He said there are a few steps the industry can take to improve its image. These include stepping up philanthropic activities, emphasizing human interest stories where the industry has helped people in financial distress and regularly providing tips to help buyers and sellers cope with this market.