“monopoly, it’s a cartel, it’s an oligopoly,”

that derives its . . . → Read More: The Real Estate Cartel]]> A cartel refers to a small group of producers of a good or service who agree to regulate supply in an effort to control or manipulate prices.  Larry MacDonald writes that according to Ned Goodman of Dundee Corp. the real estate industry is a

“monopoly, it’s a cartel, it’s an oligopoly,”

that derives its power by controlling access to the Multiple Listing Service.

A study by Stephen Brobeck and Patrick Woodall of Consumer Federation of America titled How The Rel Estate Cartel Harms Consumers and How Consumers Can Protect Themselves states the following about the real estate industry,

Begin Copy and Paste

Can across-the-board 6% or 7% commissions be justified?  We respond with a series of questions that suggest there is not one shred of a justification for this fixed price.

• Do all brokers offer services of exactly equal value?
• Should novice brokers who have just received their license routinely charge the same prices of highly skilled brokers who have been practicing for decades
• Should listing brokers who just list houses on a multiple listing service receive the same compensation as those who look aggressively for buyers?
• Should buyer brokers who work hard to find the best house for a client receive the same compensation as those who just show their own listings or those of their firm?
• Should these brokers who persuade buyers to purchase their listings receive twice as much compensation as those who split the commission with a second broker
• Should facilitators (often called “transactional brokers”), who do not represent the financial interests of either sellers or buyers, receive the same compensation as agents who agree to serve the interests of either party?
• Are brokerage services on a sale of an $800,000 house worth four times as much as these services on the sale of a $200,000 house?
• Are the services of brokers worth the money?
• Does a “double-dipping” broker deserve, for instance, $24,000 compensation on a sale of a $400,000 house? Are these services worth far more than the value of many new cars or complex, technology-dependent surgery by highly trained medical specialists
• Why are comparable brokerage services offered in other economically developed countries much less expensively than in the United States?
• Why can brokers in those countries do well by charging 2-4% commissions or much lower fixed fees?

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My 2 Cents on The Real Estate Cartel

A cartel formation is one path to making insane amounts of easy money.  The marketing of home ownership as the American dream is bogus.

The American Dream, as expressed by James Truslow Adams is

life should be better and richer and fuller for everyone, with opportunity for each according to ability or achievement” regardless of social class or circumstances of birth.

When complete control if exercised over the most expensive purchase of people that is funded by debt, it provides a lot of leverage to the players who are part of this equation.  Control of debt provides power.  Voluntarily relinquishing leverage is not consistent with independence and therefore in unAmerican.  Is the formation of a cartel or a real estate cartel kosher?  I am not sure about the legitimacy of a real estate cartel within the context of capitalism.  What is troubling is that the tentacles of the real industry do suck out lot of money that society can spend on important needs.

I have met many several real estate agents but I haven’t run into one that is completely trustworthy.  Typically, home buyers and home sellers employ real estate agents and brokers through a “standard” or “solid” home purchase agreement that is designed to protect the real estate agent and the real estate broker and to throw the home buyer and the home seller under the bus, if and when necessary.   I don’t think that there is a standard home purchase contract.  There are standard/required clauses in a home purchase agreement.  The real estate agent plays the roles of

• a friend,
• an enemy,
• a sociopath and
• all three

at times, at different phases of a home transaction.  The notion that a real estate agent is on the side of the home buyer or home seller is an illusion, unless it is in writing.  If there are no “good” or “ethical” real estate agents and this may be partially linked to the nature of the real estate industry, then the foundation of the real estate industry is dubious and harmful to the society.  And unless sheeple expect and demand better, and act less foolishly, they will get what they deserve.  Trust but verify is a Russian proverb that President Ronald Reagan was fond of.  When it comes to the real estate industry the rule must be Don’t Trust and Verify Everything.

Click to enlarge this rainfall map of the June 22-24, 2006 storm.  This massive storm event caused some flooding issues in Broadview Heights, Brecksville, Solon, Sagamore Hills, Bainbridge, Twinsburg, Independence, Glenwillow, Oakwood, Bedford, Garfield Heights, Valley View etc.

100 Year Storm: A storm of a . . . → Read More: Flooding Issues in Cleveland Suburbs]]>

Rainfall Map for Solon Cleveland Suburbs-Click to enlarge

Click to enlarge this rainfall map of the June 22-24, 2006 storm.  This massive storm event caused some flooding issues in Broadview Heights, Brecksville, Solon, Sagamore Hills, Bainbridge, Twinsburg, Independence, Glenwillow, Oakwood, Bedford, Garfield Heights, Valley View etc.

100 Year Storm: A storm of a certain intensity and length of time that has a 1% probability of occuring each and every year.

500-1000 Year Storm: The June 22-24, 2006 storm poured 5.5″ of rainfall over a 4 hour period.  This storm damaged approximately 4, 580 homes and 48 businesses in Cuyahoga County.

What you need to know is that a typical stormwater collection system is designed for a 5 year to a 25 year storm!

Flooding in Brecksville

Reference: Flood of June 22-24, 2006, in North Central Ohio with Emphasis on the Cuyahoga River Near Independence By James M. Sherwood, Andrew D. Ebner, G. F. Koltun and Brian M. Astifan, Scientific Investigations Report 2007-5161, USGS and FEMA.

Related Posts:

Does your home need a backwater valve?

Map of Munroe Falls Metro Park

Click on the location map of Munroe Falls Metro Park to enlarge it. Munroe Falls Metro Park in City of Munroe Falls is the best family park in the Greater Cleveland area. The highlight of the park is the gently sloping kid friendly beach. Life guards . . . → Read More: Best park and beach in Cleveland area-Munroe Falls Metro Park]]>

Map of Munroe Falls Metro Park

Click on the location map of Munroe Falls Metro Park to enlarge it. Munroe Falls Metro Park in City of Munroe Falls is the best family park in the Greater Cleveland area. The highlight of the park is the gently sloping kid friendly beach. Life guards are on duty. Munroe Falls Metro Park has an artificial lake that is is not large. The lake is in the middle of a valley in the topography and makes up for its small size with its cleanliness and beauty. There is an admission fee to the park, the parking is free. I did not see any dogs in the park and probably they are not permitted. Munroe Falls Metro Park does have cleaner toilets equipped with folding diaper changing platforms. Park rangers are seen patrolling the park on bicycles and they provide a degree of safety to the park visitors. Public barbecue grills are available but I am not sure if they are very clean.

Unfortunately, Munroe Falls Metro Park is one of the few parks in the Greater Cleveland area that is remarkable. The most disappointing parks in the Cleveland area are the Huntingdon Beach Park in Bay Village and Headlands Beach State Park in Mentor.