Is it time to regulate real estate agents?
Lawrence Roberts, author of The Great Housing Bubble, recently toldThe Wall Street Journal (subscription required) that the Securities and Exchange Commission should regulate NAR the way it regulates financial advisers. "Realtors are currently able to make any statement they wish regarding the investment potential of real estate, no matter how ridiculous," he says.
That's a great point, and one that I hope Congress will look into. The primary residence is the single largest investment that most people will ever make, so the counsel they receive on it certainly seems worthy of regulation. Real estate agents are allowed to make outrageous predictions about future value growth -- those predictions are often based on nothing except the desire to make a sale, and consumers have no recourse if they turn out to be wrong.
I remember watching an episode of House Hunters where an agent told a family that the home they were looking at was certain to appreciate more rapidly than those in other neighborhoods -- there was no "caveat emptor" delivered along with that message, and yet the agent assumes no liability and gets the same commission even if the buyer is underwater within five months because of his counsel.
Regulating Realtors is definitely low on regulators' lists at they look to stabilize the economy, but it's definitely something that needs to be looked into. The National Association of Realtors and its members definitely deserve a large chunk of blame for the mess we're in now.