[Update: because of issues with our web host, all posts for May 9th were lost in addition to the backup! I have recreated it in rough fashion.]
Freakonomics has been taking on the National Association of Realtors (NAR) lately. I admire Freakonomics for their contrarian and smart views and their sense of shameless self-promotion. They were feuding with Malcom Gladwell of late. While I have certainly been on the NAR’s case lately for their public relations efforts to spin the real estate bubble talk and their use of misleading jargon, but this time I think Freakonomics has got it wrong.
The research paper in this post [pdf] that is used as evidence that brokers are not professional is pretty tame because it uses the dreaded controlling for a wide range of housing characteristics catch-all phrase.
What these economists miss is the fact that one sale impacts future business immediately from neighborhors, other buyers and sellers in the same market. Words travels fast. To look at a real estate transaction as a once in a 7-10 year period is pretty thin reasoning. Have they ever been brokers for even a short period of time. The experience can be very eye-opening.
I know its fashionable to blame the real estate brokers for all the troubles in the real estate world, but researchers still need to be objective.
NAR wins the third round but there’s still a lot of time remaining.