Ten action steps to a better real estate tomorrow.

Ten action steps to a better real estate tomorrow.

What is it about real estate that's so hard for its would-be reformers and visionary wannabes to get?

What part of "if it ain't broke, don't fix it" do the reformers not understand? What part of the following truth, chiseled in letters a mile high, do the visionaries not see: "the real estate industry is currently, and will always be, designed by the consumers who use it, and not by either the industry's navel-gazers or by the industry's critics, mavericks, hangers-on and other effluvia with too much time on their hands and too little understanding of how a service industry is shaped"?

And, finally, how can a respected real estate news source, Inman News, fail to see the disconnect in running "Reforming real estate: 10 action steps" and "FTC: Fewer real estate complaints" on the same day? It ain't the real estate industry that's broke, at least no more than usual. It's the real estate market. There is a difference.

Want proof? Let's look at "Reforming real estate: 10 action steps", an editorial that, according to Inman, is a compendium of "overwhelming" input from its subscribers.

1. Create a more effective regulatory framework for real estate and mortgage professionals. I'll refer you to what someone who's neither a real estate nor a mortgage professional thinks about the effectiveness of regulation: "generals fighting the last war". I can't speak on the mortgage industry, but I'll be happy to address the training issue as it relates to real estate sales.

Yes, it certainly sounds good to ask that agents "receive a level of training that truly prepares them for work in the industry", except that 95 percent and maybe 99 percent of selling real estate can only be learned by selling real estate. I studied for my license, not at a license factory, but at a community college, and I read the textbook from cover to cover three times before I took the state test. I came to sales with what I think is some of the best preparation anyone can have, nine years' experience managing and leasing rentals. During my first few months in sales I went through not one but two extensive brokerage-sponsored training courses, then took the additional training needed to get the GRI designation. And in a move guaranteed to shoot my career in the foot before it started, I avoided doing business until I'd read everything about real estate I could get my hands on. I could've written a book on selling real estate without having ever sold a house—don't laugh, that's how most of them are written. And with all that training, both professional and self-inflicted, it was only my manager and officemates who got me through my first few transactions.

So much for "training that truly prepares" agents—it doesn't exist. And tell me how more training would "weed out treasure-seekers and scam artists"? It certainly hasn't done that in a few other professions I could name. And it's news to me that sitting through a lecture and passing a test proves you're pure at heart. And anyway, who decides who the "treasure-seekers" and "scam artists" are? Some low-level bureaucrat in Sacramento or Washington, D.C. who's sure that anyone with a ready smile and a firm handshake is a crook? And what overkill skill level will the bureaucrats be happy with? Let's require that every agent be competent at financial analysis, contract law, the latest tax laws, construction techniques—and speak seven languages and play nine musical instruments.

2. Reform the mortgage origination process. I can't speak to this, except to suggest that the better idea would be to reform human nature—remove gullibility from the victims and greed from the perps. There's probably a government agency working on this right now.

3. Promote a more efficient real estate industry, reducing costs and promoting services that favor the consumer. "Too many parties are involved in the real estate value chain." Really? Name them. Agents? Office managers? Managing brokers? Administrative staff? Legal staff? Training staff? Escrow officers? Escrow assistants? Title officers? Inspectors? Appraisers? Loan agents? Mortgage bankers? Coffee cart operators? Real estate reporters? Who do you cut out? Besides, there's no fat in the real estate industry these days. The downturn took care of that.

"Technology adoption allows for (sic) agents and brokers to conduct business virtually, and can eliminate the expense of office space." Yes, by all means, let's have every agent work out of his spare bedroom or nearest Starbucks. No more weekly office meetings to stay current on market trends and the latest brokerage procedures lovingly crafted by the legal department. No more casual office fraternizing to keep up on best business practices and bolster the ol' morale. No more of that ongoing, unstructured, real-time coaching and training and unwitting mentoring called "discrete office eavesdropping". No more using other agents at the office as sounding boards for difficult, potentially dangerous or just plain weird situations. No, let's do away with fluff like people contact and inject a little more isolation, fragmentation and alienation into the workplace (or what used to be the workplace). Yes, anomie as the latest business model. Let's let the agent, the most social of social animals, in the most people of people businesses, talk real estate only with his or her significant other, six-year-old, dog or barista—and even the dog's getting a little tired of it. All in the name of gleaming stainless-steel efficiency straight out of the business-school textbooks.

"Brokers who run 'body shops'—warehousing agents, no matter what the skill level, in massive offices—must slim down their agent pools." Already happening, something even the reformers should have noticed, and for the best of reasons: brokers can't afford non-productive agents, even in fat times but especially in lean.

4. Ensure competition and transparency in the way real estate agents are compensated. "...the industry must ensure that consumers and real estate professionals have the widest possible variety of options." Apparently whoever wrote this hasn't looked in his local newspaper or gone online and seen all the choices available to real estate consumers. "Rebuilding trust is essential to a better-functioning real estate market." That's funny, I thought it was consumer confidence at an all-time low, home equity and stock market wealth disappearing overnight, tight credit, too many houses for too few buyers, fearful uncertainty over a stricken economy—you know, all that economics stuff that's affected markets since Grover Cleveland was president—that keeps the real estate market from running on all eight cylinders. Now I find out it's really a trust issue. Forget TARP. Call Dr. Phil instead.

"The dominant compensation model represents a glaring area of public mistrust and confusion." No kidding, but the only reason it's "the dominant compensation model" is because it suits the consumer. Why? Because "the current reward-based model has many advantages" for buyers and sellers—but not for agents. Think there isn't an agent out there who wouldn't mind getting paid by the hour? Think that's ever going to happen?

5. Consolidate MLS information into a single national database. I don't know why this has suddenly become a burning issue with the reformers. As a buyer's agent, I don't care what the inventory is in Peoria, Illinois or, for that matter, in Walnut Creek or Vallejo or any other city an hour or more away by car, let alone three hours away by 747. As a listing agent, I don't look forward to working with an out-of-area buyer's agent clueless about my area, its housing stock, neighborhoods, prices, contracts, required and recommended disclosures, real estate business practices and standards of conduct, an agent who doesn't care what the local real estate community thinks of him because he can hide out five counties away if he screws up. As a consumer, I can access the entire MLS inventory for the mid-Peninsula and South Bay by going to one of the listing Web sites that gets its data from the local MLS. That's all I need, unless I'm looking in all fifty states for my dream home.

6. Real estate professionals should provide buyers and sellers with improved market analytics. "Real estate professionals should provide each buyer and seller with a set of comprehensive real estate reports that detail costs and valuation trends, quantify risk and account for market conditions." I won't argue with most of this and, in fact, I'm the only real estate agent I know of who does a Comparative Market Analysis with "costs...valuation trends...and market trends" for every house my buyers see. As far as "quantify(ing) risk", I'd sure like to know who, aside from maybe an actuary, can quantify the risk of purchasing a house. And you want the reason I'm the only agent I know of who provides this kind of quantitative information to buyers? Because there are two kinds of people in this world: thinkers, who never get beyond poring late into the night over their spreadsheets, and doers, who go out and do it, somehow, some way, just so it gets done. I'll give you one guess as to what kind of people most agents are. I'll also give you one guess as to why most agents are that kind of people. I'll even give you the answer: because you can't lead a charge while you're poring over a spreadsheet.

7. Reform the mortgage securitization process. Now there's an idea. And I'm sure that a rag-tag bunch of agents, reporters and other right-brained types who can't balance their checkbooks have plenty of great ideas on how to do it.

8. Reduce settlement services costs, regulate bundling of services to prevent price gouging. Outside my territory, although I'll guess that the reason title, insurance and settlement services are marketed to agents rather than consumers is that 99 percent of consumers are so disinterested in these arcane and infrequently-used services that they'd rather have someone else—like their agent—suggest a competent provider. Why do I think that? Because I haven't seen people marching in the streets demanding transparency in settlement services costs.

9. Ensure affordable housing, smart development. All I can say is that the real estate industry really wants affordable housing because so many consumers want affordable housing and the industry would love to sell it to them. Alas, the industry's record on "smart development" (in-fill and high-density rather than suburban sprawl) is less forward-thinking, although this likely reflects the interests of the majority of consumers who'd prefer a Tuscan villa on forty acres within walking distance of downtown Palo Alto to a townhouse with more stairs than a lighthouse and a great view of the parking lot.

10. Remove barriers to alternative business models. "The National Association of Realtors should promote policies that allow for greater innovation among its members..." So that's why so relatively few buyers and sellers are using Redfin and Zip and the bricks-and-mortar discounter down the street. It's because NAR is picketing their (often virtual) offices. As for "allowing" greater innovation, that's like accusing the newspaper industry of stifling the Internet. No industry can stifle innovation that meets the needs of more than a handful of consumers on the fringes of the marketplace. "Innovators should step up to leadership roles within the industry..." Great idea, but to assume an industry leadership role you typically have to understand how that industry works, which may be why so many "innovators" have failed to "step up".

Fairness demands that I respond to these "10 action items" in positive fashion, so I've spent hours wracking my brain and poring over spreadsheets to come up with my own 10 action items suitable for use by any outside organization desirous of reforming that ol' dinosaur real estate. Here they are, in descending order of importance:

1.-.10. Know what you're talking about. This keeps you from taking the more obvious wooden nickels. You don't need to know the fancy stuff, just the basics. I'll never forget the young guy I met early in my career, while leasing apartments, who'd just been promoted to district manager for a national pizza chain. Not long before, he'd started at the very bottom, making and delivering pizzas. He knew the business right now and from the bottom up, or at least from the bottom up to district manager level. Or, as he told me, "If you work in one of my stores, you can't put any shit over on me. There isn't anything I haven't done." A cocky attitude, yes, but a guy not likely to take many wooden nickels.

I'll even do Inman one better and add an eleventh action step, for the benefit of all those who generously gave Inman their input:

11. If you have an axe to grind, check it at the door before you enter the discussion. Otherwise someone who won't know better—a journalist, say, or an academic—might make the mistake of taking you seriously, or find it convenient to do so.

Then let the real discussion begin.