Sticker Shock!

This is about health insurance – but believe me – it will effect real estate.  Read on…

3 years ago, I was a registered nurse working at a hospital receiving employer provided health insurance.  This insurance for my wife and four children cost $800 pre-tax, with $400 deducted from my bi-weekly paycheck.  Our deductible was $1,000 individually, and $2,500 for the family.  Collectively, my direct health care coverage cost $9,600 in premiums, with a potential to cost $12,100 if one or more of my family incurred hospital costs.  These figures do not include copays for office visits, vision, or dental costs, nor prescriptions.

Fast forward 3 years.  I am no longer at the hospital, and purchase my insurance directly in the market place as an individual.  With our newest bill from our insurance provider, we now pay $2,050 per month, and have a “per person” deductible of $3,800, and a group deductible of $7,600.  Again this does not include the other incidentals of copays, etc.   My direct costs are now $24,600 per year.  If anyone in my family incurs hospital costs, my health care tab is now a cool $32,200.  This is not a typo.  My health care costs have gone up 266% since the implementation of the “Affordable Care Act”.

There is one saving grace.  Neither my wife, myself, nor my two sons have a uterus, yet we all have prenatal and obstetric care.  Hallelujah!  In addition, we have opted out of vision care, as the hassle factor of trying to utilize it is not worth the money we pay for it.

Health care is now the single largest line item in our family budget.  It exceeds our mortgage payment (which includes taxes and insurance).  It exceeds out transportation costs and other insurance costs.

This is where the rubber meets the road.  Gallup says 44% of Americans get their insurance through their employer.  To 44% of you out there, you have been deliberately insulated from these rising costs by the political class.  This was a conscious decision by your representatives to delay these cost to a majority of Americans until this election year.  Your employers’ mandates have been delayed, and your insurance, although most likely higher than 3 years ago are getting ready to go through the roof as mine have.

I have no use for platitudes, generalities, or straw men.  This is not affordable.  There are solutions to this.  Government has created this problem.  It is not the Government that can fix this problem.

So how does this impact real estate?  As we move forward into the morass of “affordable health care” and all the surprises awaiting us, health care costs will take a primary seat at the table.  No longer will the mortgage be the single largest line item in a family’s budget – that seat of honor is now reserved for health care.  As we push around the nuts in our family budgets, the health care dollars have to come from somewhere – and my guess is those dollars will come from what was once reserved for housing.

The Wild, Wild, West of Real Estate?

Never let it be said I am a proponent of government regulations.  I am not.  I am someone who plays by the rules and believe the rules have their place.  I believe in a robust and healthy competition, and marvel at the creativity Realtors employ in their businesses.  That said, let me get to my point.

The internet has revolutionized our industry.  Beginning with home grown text based websites maintained by individuals and exploding into the sophisticated network we have today, the regulatory bodies of our industry have struggled to keep up with the rapidly changing landscape.

The sole purpose for the creation of the regulatory agencies, and even the National Association of Realtors, was to protect the consumer and each other from sophisticated players.  The big players of the real estate internet space – Zillow, Trulia, Homes.com, Craigslist, Hotpads, Rent.com – all create venues where the consumer is getting harmed, and sophisticated players are taking advantage of the consumers lack of understanding.

A few examples:

• Rental fraud is rampant on Craigslist, Hotpads, and other internet sites.  Scammers copy listing information from legitimate websites, create profiles on these sites, advertise the rental as available, take peoples money, and sign bogus leases.  (my brokerages clients have been scammed in this way)
• Websites like Trulia and Zillow scour information from public sources and collate the data into compact presentations such as the “Zestimate”, and do not inform the consumers of the data sources, the age of the data, nor the reliability.  Data is frequently incorrect, unreliable, and stale.  Correcting the data is akin to dealing with the IRS.  The stock answer from these entities is “I will have to look into that and get back with you”.  There is rarely follow through.
• Websites collate legitimate listings and use those listings without broker authorization, then sell ad space to other real estate agents on the listing presentation pages.  This misleads the consumer and violates the laws in many states (GA in particular).
• Search history, cookies on the users computer, and many other data points are used – without the consumers knowledge – to alter the consumers personal computer experience and therefore alter/limit their choices.  The real estate industry is not alone here.  With the Consumer Financial Protection Bureau  proactively looking out for the consumer, it is a simple matter of time before they put their hands in this “cookie” jar.

I could go on, but I believe the point is clear.  The stock answer when asking key players at these firms about these issues is “We are just an advertising agency”.  They simply throw their collective hands up and say “Golly G, What can WE do”.  Here are a couple suggestions:

• Clearly display the source of information – as clearly as the call to action on the page
• Clearly display the Listing Broker information, as clear and prominent as the call to action
• Make available the Geo-location and valid email address of the modifier on manual entry listings (this can easily be done with IP addresses).
• If the source of a manually entered listing is using a proxy server or hiding their location in any manner, prevent the information from being loaded.
• Proactively manage fraud complaints with case numbers and audit trails and publicly disclose the data
• Create a direct modification of the listing by the owner (broker) of the listing with an audit trail of changes clearly posted on the listing itself (include Geo location of the user and valid email address of the modifier)

The spaces where these industries operate did not exist 10 years ago.  The progression to where we are now has occurred at lightening speed.  Regulators are typically political appointees – gunslingers of the past – no disrespect intended.  They are experts in their own right, but broadly speaking, their understanding of how this whole thing called the internet works is limited.  Consumer protections of the past must be folded into the new realities of today.

There was a time when real estate was unregulated.  High pressure sales induced buyers to purchase swampland in Florida, dual agency and lack of disclosure was the norm, fair housing laws weren’t yet enacted, and the consumer suffered greatly.  Regulatory agencies and licensing laws were created for these very reasons.

It seems we have come full circle where the consumer is now at the mercy of these sophisticated players.  While we are a long way from where we came, the unregulated world of real estate advertising and data mining on the internet has brought us back to the wild west.  There is a new sheriff in town called the CFPB.  If these sophisticated players do not self regulate and the licensing bodies of each state do not create effective protections for consumers on real estate websites, I believe the new sheriff will be knocking on their collective door soon.

Introducing… Robert Kozlowski, Real Estate Instructor

Certified GA Real Estate Instructor, Robert Kozlowski

Anyone who has ever been a teacher knows how this goes.  About 12 years ago a student came to my class.  He paid attention, enjoyed himself, laughed at himself, laughed with others, and successfully completed my real estate course.  He was “that student” all teachers love to have in their class.  He was “that student” that stands above the rest, someone who could do what you do – but be better at it.  He went on to do great things as a real estate agent.  We worked together, and had a great time.  Then the “Great Recession” touched us all.  That student went on to other things, but stayed in real estate.  I went on to other things.  Fast forward 10 years.

As the Great Recession began to subside, I returned to my passions in real estate.  My firm was growing.  With growth come growing pains.  We were in need of a managing broker in two of our offices and my wife Christy mentioned Robert – Robert would be PERFECT for the job.  So I called him.  He was perfect for the job.  And still is.

I am the director of a real estate school called The Academy of Real Estate Education and Consulting (www.AREEC.com).  I am more than pleased to announce the addition of Robert Kozlowski as our newest GA Pre-License and Post License Real Estate Educator.  Robert has extensive experience in real estate sales, has been a mentor and new agent trainer, holds his GA Associate Brokers license, and is the Managing Broker of 3 real estate offices in GA.  He is also a trusted and active member of the Glynn County Board of Realtors.

Robert will be a real estate instructor for AREEC in St. Simon’s Island, Brunswick, Kingsland, and St. Mary’s, GA.  He specializes in GA salesperson pre-license and post license education.  Every day I meet and work with exceptional people.  I invite you to meet Robert Kozlowski, and I am confident you will agree our real estate school and profession are fortunate to have such an exceptional person, teacher, and friend.