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Op/Ed

NAR Board opts not to approve policy to raise standards of entry: huge missed opportunity

The NAR Board of Directors approved several landmark policies that dramatically improve the industry in short order, but one policy didn’t make the cut – is all hope lost?

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opportunity

The big news out of New Orleans this weekend, which played host to the 2014 REALTORS Conference & Expo, was a long-winded Board of Directors meeting that debated the “Realtor of the Future Leadership Team Proposal,” passing four of five policy proposals, all seeking to improve the practice through an aspirational Code of Excellence, more frequent education, standards for practitioner evaluations (ratings), and better delivery systems for improved data to arm agents.

What pleased broker Andrea Geller and several others that we spoke to is that the undercurrent for this entire thread of changes is to better serve consumers.

She stated, “the words that struck me [about Realuoso’s coverage of the Board meeting] were competencies and consumers. What a concept? It’s about the consumer. I have attended so many REALTOR conferences over the years and the focus appeared to me to be about what the industry wants and how do we get them on our terms. The consumer always seemed to come second or maybe third.”

Putting the consumer front and center is always the best move, period. But what about that pesky fifth policy proposal? What was it, and why did it not go before the Board?

The mysterious fifth policy proposal you never heard about

Being consumer-centric is praiseworthy, and we’re excited about the tone shift. Truly. And where the Board and I see eye to eye is that educating NAR members is the best way to accomplish this goal.

So why then was a policy that raised standards at the entry level not approved?

Here is the full text of the policy proposal:

POLICY: NAR will explore increasing the standards of entry into the Realtor Association, by improving the education, credentials and professionalism of all REALTORS.

OBJECTIVE: To further distinguish the Realtor from the non-Realtor licensee, and to provide better customer service. This consideration could include for example, but is not limited to, increased additional entry level education requirements, a mentoring or apprenticeship program, etc.

Let me tell you – my ears haven’t perked up this much in years. Apprenticeship? A policy after my own heart. The irony is that just hours after the Board meeting, Fox aired an episode of Family Guy mocking Realtors as smarmy, stupid, and dubs it a safety net job that divorced soccer moms fall back on – this is why the aforementioned policy is crucial. The episode was hilarious, but stung a bit, as some people still equate Realtors with greasy used car salespeople.

Most agree that the standards of entry are too low, and I would take it further and assert that using the CCIM model is the gold standard and entry should be that challenging (hint: many people fail their first shot at the CCIM exam, even those who have been in the field for years, and it doesn’t get easier after that).

A huge missed opportunity; is all hope lost?

To use a tired phrase, raising the bar can only be done at the start line. That alone would change the structure of the practice – let’s say you’re a broker and you have to officially mentor an agent or put them through a year-long apprenticeship at your own expense to invest in their future production potential… the burn-and-turn of desk warmers officially ends.

2014 NAR President, Steve Brown told us that the Executive Committee felt that these standards were truly included in the other four. I disagree. This seems like a huge missed opportunity.

All hope is not lost, though, as Brown said they may revisit this policy proposal in the future. The passed policies do launch the profession forward and improve standards and education, and that is extremely admirable, and something I’m quite excited about.

I suspect that combined with the other drastic changes, raising the bar of entry would have pushed for too much change too quickly and could have rocked the boat too much, but for the professions’ sake, I do hope that Policy Proposal #5 is considered again next year.

What do you think?

Lani is the Chief Operating Officer at The Real Daily and sister news outlet, The American Genius, and has been named in the Inman 100 Most Influential Real Estate Leaders several times, co-authored a book, co-founded BASHH and Austin Digital Jobs, and is a seasoned business writer and editorialist with a penchant for the irreverent.

Op/Ed

How can you prevent deepfake trickery?

(EDITORIAL) It’s hard enough to get a complete story about anything, but the use of deepfakes makes that process harder. How can you prevent from being tricked?

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facial recognition deepfakes

Deepfakes are some the latest content entering social media and digital news outlets. Deepfakes are false photos and videos created by artificial intelligence, that at first glance, can pass off as authentic imagery.

Deepfake content appears as a person in a real picture or video that is replaced by someone else’s appearance. The deepfake can then go on to pose as the real person doing or saying things that never happened. As one can imagine, it’s possible the Internet can take one joke too far and unleash a deepfake with insidious motives.

So what are some ways to spot one of these fake videos? One of the telltale signs is the mismatched lighting or discoloration on the person’s face. Another tip is to check for blurring edges around the lips, jawline, chin, and neck where the AI is trying to superimpose the fake image atop the real one. Lip-synching can be tricky, but it helps to watch and listen to how the audio is matching up.

To some, these tips may be pretty obvious, but not everyone is familiar with editing techniques and deepfakes can pop up many places online. As of now there are no reliable programs available to catch these inconsistencies so it’s up to us to pay attention to the media we consume (the zoom tool is a BFF). With AI and software development, this fake content will only become more convincing. Fortunately, companies and even states are taking action to ban deepfakes online.

Some companies are tiptoeing the line of normalizing this kind of technology, and many people seem to be fine with that, so long as it’s for a laugh. The problem with laughing at something that looks real, but is fake, is that that can conversely cause someone to minimize something that is real because the viewer thinks it’s fake. This mentality helps no one, and can only hurt our understanding of the events that happen around us.

Ultimately, and for now, viewers should keep our heads up while online to spot the seams in our reality.

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Op/Ed

How smart cities are now impacting the construction industry

(OPINION EDITORIALS) The movement towards smart cities will change the construction industry for the best – creating more connected, collaborative, and efficient cities.

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construction site

There are few innovations in recent years as impactful as the digital revolution. The world is now on the verge of what might be the ultimate expression of mass digitization: the smart city. Interconnectivity and data have proved themselves in the business world, and now they’re moving into the streets.

As the world’s metropolises start diving into the IoT, some questions emerge. The smart city movement will spur a ripple effect of changes across many industries and aspects of daily life. How will these changes affect the construction industry?

Construction is one of the world’s largest industries, generating more than $1 trillion in the U.S. alone. Since smart city technology relies on new infrastructure, this shift will undoubtedly touch this massive sector. Here’s a closer look at how.

The smart city revolution is boosting construction.

The smart city movement is still in its infancy, so some changes will take a while. Others are more immediate, like the impact on construction revenue. One of the first effects smart cities construction companies will notice is a surge in new projects.

For areas to experience the full advantages of smart cities, they’ll need new infrastructure. All this infrastructure has to come from somewhere, so construction companies will see an increase in available opportunities. This industry boom could last for several years, as cities gradually adopt more and more smart infrastructure.

Not only will the number of construction projects increase, but these new opportunities will also be profitable. By some estimates, global smart city spending will approach $124 billion this year. Singapore, New York, Tokyo and London alone may account for as much as $1 billion of that spending.

Construction will change to meet new needs.

A more long-term change, and a more substantial one, is that the role of construction will shift. Digitization has changed what people do across various industries, and now that movement is coming to the building sector. As smart city development gradually becomes standard, construction companies will start to look more like technology businesses.

By its very nature, smart city technology requires a marriage of construction and computer sciences. Consider the ambitious Toyota Woven City project, where they’re building a small-scale smart city to test new technology. Woven City will see architects work alongside scientists and researchers to create the infrastructure necessary for things like self-driving cars to function.

The connected city movement is changing what it means for infrastructure to be functional. As a result, the industry will have to shift to fit this new definition, becoming IoT experts as much as architectural ones. This shift won’t take place immediately, but the sooner companies can morph, the better.

The industry is becoming more collaborative.

Given this technological metamorphosis in the industry, construction companies will have to embrace collaboration. The most prevalent instance of this collaboration is the one between builders and data science companies. Construction companies can’t expect to become data experts overnight, but they can reach out to data professionals.

Some businesses have already started to adopt this approach. PCL Construction is now teaming with CopperTree Analytics to incorporate data-gathering and analysis technology into their infrastructure. PCL is not a data analytics company, but by collaborating with one, they can offer the services the cities of the future need.

As new technology allows for more collaboration between companies and clients, residents will have more of a say in planning. Urban development, especially smart city development, ultimately serves the people, so construction businesses may collaborate with residents more. The public may have access to platforms where they can discuss the kinds of infrastructure they need.

A smart city could improve urban construction.

Construction companies themselves can experience some of the advantages of smart city technology. This movement isn’t only making businesses shift in the present, but will also improve them in the future. More connected city infrastructure in an area could make things easier for construction companies working on nearby projects.

Pittsburgh employs an AI-based traffic light system that reacts in real time to redirect and optimize traffic flow. This system reduces travel times by 25% and shows the potential for helping with things like in-city construction. Networks like this could redirect traffic around construction zones, reducing construction’s impact on traffic and improving safety.

With more data points in the city, crews could get a more cohesive picture of each site’s conditions. Data on traffic patterns, population and weather could help companies optimize their plan and maximize both safety and efficiency. As construction companies install more connected infrastructure, they can benefit from it.

When will this all take place?

It’s all but a guarantee that the smart city movement will cause substantial changes for the construction industry, but when these shifts will start to emerge, may not be quite as clear. As with any prediction, there’s a lot of uncertainty involved, but some changes are already taking place.

The industry will evolve as smart cities become more common, which won’t take long. The urban population has grown by 40% in the past decade alone, and this trend will likely continue. With more population in cities comes a heightened need for connected infrastructure, driving these industry changes.

As mentioned earlier, some construction companies are already starting to adopt collaborative, data-driven approaches. Within the next 10 years, this will likely become a standard throughout the industry, which will coincide with the changing role of construction. The COVID-19 pandemic may slow some of these trends, but only by a couple of years at most.

As cities change, so will construction.

In some form or another, the construction industry will change because it cannot remain stagnant and still sustain smart city development. Every sector always evolves to meet the needs and demands of the market, and construction’s market is moving toward connected cities. As urban development takes on these new tasks, the face of the sector will shift in response.

The construction industry is dynamic, which benefits us all. In the coming years, the sector will be more collaborative, more data-centric and more profitable than ever.

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Op/Ed

REX Homes – not disrupting anything except investor balance sheets

(EDITORIAL) What follows is an open letter response with 13 questions regarding numerous recent representations by REX Homes.

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REX Homes founder, Jack Ryan

In my humble opinion, Jack Ryan, CEO and Co-Founder of REX Homes, is the most prolific propagandist in the real estate sector’s history. Ryan is the one muddying the waters regarding the real estate process and fee structure. Ryan initiated the DOJ inquiry. He is cited in the most significant class-action case involving Cohen-Milstein, which all other cases echo (in part), and knowingly misleads consumers at scale.

REX’s most impressive achievement is blurring the lines between commission percentages and aggregate fees paid. In REX Homes v. Oregon, the complaint states that US Brokers charge 2x-3x more than comparable foreign markets. Markets often cited in PropTech propaganda/lawsuits include Singapore and their average listing fee of ~3% vs. the US average of 4.94% (even though many PropTech firms and lawsuits often claim Realtors charge 6%.)

Consumers bank dollars, not percentages, and homes in Singapore sold for $874,372 while houses in the US sold for $389,400, so although the US had a higher percentage, the fee for selling a home in Singapore was 27% higher based on 2019 data.

REX’s business model recently received scrutiny, which resulted in Executives attempting to provide clarity; however, representations asserted create new questions.

If given the opportunity, I would REX ask the following follow up questions:

1. Please provide an update on the company’s leadership status? A review from an alleged employee posted via Glassdoor on 10/3/2021 asserts:

“Everybody from marketing fled. – Half of engineering left already. – CTO/CFO/CDO/Head of HR all left within 2 months – The company could not even afford to pay severance in the last round of layoff (there were many). – The company has zero competitive advantage, it has no secret sauce, no technology.”


2. REX’s home page states that the commission covers the buy and sell-side commissions, pop-ups say that REX does not pay buy-side commissions, and under the buyer FAQ page, REX claims that the Buyer pays the commission as it’s built into the purchase price.

Would REX like to elect a final position on this matter?

3. Based on the statistics you provided, quoted from August 23rd and stale, REX appears to employ two people per active real estate listing, despite being a company that started in ~2014.

Considering REX claims to be a company that includes tech geniuses, why isn’t current listing data provided? Could it be that the metrics are significantly worse now?

4. How do you reconcile REX’s claims of “changing the industry” when REX, as of 10/9/2021, only lists ~15 properties in the greater Las Vegas area. This is a performance that a single, average Agent could achieve. As of 10/9/2021, 5,133 active listings in the Las Vegas area were displayed via various sources.

Why do you deny Consumers vital information when they’re making the most critical purchase decision of their lives?

5. REX claims that traditional Realtors steer clients to properties with higher commissions. In a glaring display of hypocrisy, REX fails to display non-REX listings and will only represent Buyers with non-REX listings when REX is enriched. Any explanation?

This is the exact definition of steering.

6. REX appears to operate via a team-based model, and REX provided a breakdown of licensed and non-licensed employees. Unlicensed employees, in most states, must perform tasks under the direct supervision of a state licensee and Operating Broker, and in Nevada, that means operating in the state Brokerage office.

How do you square this if Consumers allegedly must call REX employees in Texas as a primary point of contact, and how would an Agent licensee and Broker have direct oversight of unlicensed employees in Texas if they’re located in states like Nevada? This concern appears to be corroborated via this Glassdoor review:

“The clientele are folks who don’t want to pay for an agent’s service to begin with, this job is daily trying to convince FSBO’s of your worth. Very top heavy corporate that started to sell other services that are not apart [sic] of typical real estate transactions – made me uncomfortable. The AA is the bottom of the totem pole and NEVER has any pertinent information regarding the home they’ll be showing. Sample questions that you’ll never know the answer to as the designated field agent and the ONLY one the seller sees: Is the home under contract? what does the HOA cover? what is the year of the roof? When does my contract expire? Why can’t I get anyone on the phone? Why do you not know the answers to these questions? You’ll NEVER know the answers to these questions.”

This suggests REX subjects Consumers/Agents to unlicensed and unsupervised employees. Considering this and your feeble attempt to shed your fiduciary responsibilities to Consumers via TOS, in my view, REX’s listing classification on Zillow is accurate.

I look forward to Zillow filing a demand to retain records specific to call center employees, their licenses in each state they interact with Consumers, the supervising Broker, and the location of the supervising Broker.

7. As of 10/9/2021, REXhomes.com continues to claim that REX does not market on the MLS, yet you’ve now contradicted this statement in a real estate industry two-part article, court proceedings, and an internal call with staff that remained after your second round of layoffs.

Are you aware that making material and knowingly false representations to Consumers at scale is an actionable offense that could result in your Brokerage license revocation in every state?

8. You documented REX’s pathetic listing exposure on Zillow in court documents, a material event that Consumers should understand before listing properties with REX, yet fail to disclose these material events on REXhomes.com.

Are you aware that this is a license-revoking act?

9. You often quote the Cohen-Milstein complaint and the DOJ inquiry; however, you conveniently omit that the two entities have conflicting opinions on who pays real estate commissions.

Why are you failing to disclose this material information via your PR-based propaganda schemes?

10. Are you aware that “save” is not a determining factor to transact? Net proceeds are, and Consumers net proceeds goals can be achieved in several ways, INCLUDING providing rebates like Redfin or post-offer commission contributions to close gaps in pricing? I have personally credited Consumers over $200,000 via post-offer addendums.

11. Per CrunchBase, REX raised $90m in 2019, only $25m in May 2020, as of publication, and an undisclosed Series D amount not featured on CrunchBase. (I understand The American Genius has reached out to REX for that amount and has not heard back as of publication)

Considering your anemic pipeline of business, share a scenario where you’re not bankrupt within 24 months (an assertion that employees at all levels are claiming – which at worst is accurate, at best a negative internal perception of REX’s financial situation)?

This is a topic of concern of others as an alleged former employee stated the following in a Glassdoor review on 10/4/2021:

“CEO and the Cofounder don’t know anything about running start-ups and are both panicking but telling everyone that things are ok – some investors refused to fund the company so they are not even paying their bills and the CEO and his wife are now running things which is weird. CEO and cofounder are asking employees to pump up numbers so that they can try pretend things are okay when they’re talking to their investors, this is making everyone uncomfortable. The best people have mostly left and even senior people resigned after they saw what was happening. They don’t have proper leaders anymore in marketing, data science, finance, hr, and other teams are low on people.”

Are you familiar with which acts or representations constitute securities fraud?

12. Are you aware that complaints against REX Homes are filed or will be filed in the next week with the Federal Trade Commission, Consumer Financial Protection Bureau, Securities and Exchange Commission, and State-level real estate and consumer protection agencies in markets you operate in?

Now you know.

13. Why does REX continue to call NAR a ‘Cartel’ despite a recent court ruling which stated: “The Court discourages any future use of the term ‘cartel’ to describe Defendants’ conduct,” the footnote states, “which is neither persuasive nor remotely accurate.”

Given the gravity of allegations asserted against REX, have you explored the 6×9 housing unit segment? It might be prudent.

Your friend,
Anthony Phillips
Chief Sicario – The Las Vegas Realtor Cartel

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