Realtors and Builders Demand Happy News...and Often Get It   

Some revenue-hungry newspapers are siding with advertisers against their readers.

It was one of those rare pressure-free Monday mornings for Los Angeles Times reporter David Myers. He had a satisfied feeling of mission accomplished: The results of his two-month investigation had appeared on the real estate section's front page just the day before, and he finally had a few minutes to relax. His article documented that many homeowners in the overheated Southern California market of early 1989 were selling their homes using discount real estate brokers – and saving thousands of dollars in sales commissions. He was about to get up to get his first cup of coffee. The phone rang.

"I'm going to come down and stomp the shit out of you!" a well-known local Realtor screamed.

Myers was shaken. "I don't have any problems with people who call and say a story sucked," the veteran real estate reporter says. "But physically threatening violence is going too far." Fortunately, the irate caller never showed up at Myers' office. But he made his point, as did the dozens of other angry Realtors who called Myers that week. The real estate industry – especially residential builders and brokers – relies on newspapers to reach potential customers. And given that the residential market rests largely on a perception of value and consumer confidence, many realty brokers will lambaste reporters and their newspapers whenever they feel press coverage threatens business.

Because the real estate industry is notoriously hypersensitive to what it perceives as negative press, real estate sections historically have treated their subjects delicately. "In general, real estate reporters have not viewed themselves as investigative or consumer-oriented journalists," says Peter Dreier, director of housing for the Boston Redevelopment Authority. Such weak-kneed coverage, he adds, has helped foster a symbiotic relationship between the media and the industry. Some real estate reporters and editors, worn down by constant, grinding and time-consuming "bitch calls" from agents and builders, censor themselves. And some newspaper publishers, keenly aware of the advertising revenue the industry represents, have even handed real estate sections over to their advertising departments, making them public relations kits for the industry. Whichever the case, consumers are deprived of the critical information they need to make intelligent choices when buying a home.

The current recession, which has been devastating for many real estate firms around the country, has strained the cozy relationship the press and the industry enjoyed during the go-go 1980s. Now the mildest critical reporting provokes the industry's wrath.

"When we talk to our people, through media training or whatever, we tell them they need to maintain positive, ongoing relationships with the press," says Jerry Jaros, senior vice president for communications for the 770,000-member National Association of Realtors (NAR). But if Realtors don't like the content or the tone of newspaper coverage and deem it unfair, Jaros adds, "they have a right to put their [advertising] dollars where they want to. That's a decision made by individual firms."

And many firms, responding to articles they consider counter to their interests, don't waste any time. They kill their advertising contracts.

In July 1989 Washington Post real estate reporter Kirstin Downey wrote about a Harvard University study charting the demographics of the baby bust. It predicted an annual 3 percent decline in real housing prices for the next 18 years. Though Downey balanced the article with dissenting viewpoints, the story, she says, generated a "huge fury" among local realty agents and builders who thought the 1980s real estate boom would never end. Over a period of a year, major builders cancelled approximately $750,000 worth of advertising to protest continuing negative coverage.

The Post 's advertising losses would have been more severe if a proposed industry boycott had materialized. David Wolfe, a Northern Virginia-based marketing consultant, reported in the July 1991 issue of American Demographics that a Washington, D.C.-area builder asked him to organize such a boycott just after Downey's baby bust article appeared.

"The industry spends millions of dollars a year in the Post ," Wolfe said in an interview with WJR . "It was a very common view around town [that] The Washington Post 's reporting really depressed the housing industry. I told them [the boycott] was ridiculous. It was a blind striking-out – a totally emotional, irrational reaction. People in real estate are quite ignorant as to what is going on in the economy."

Despite industry pressure against negative coverage, the Post has one of the most aggressive real estate sections in the country, winning the award for the best section in 1989 and 1990 from the National Association of Real Estate Editors. According to Ken Bredemeier, the newspaper's real estate editor, Post management is completely supportive of the section's hard-nosed approach.

Other publications without the financial clout and prestige of the Post have not fared as well in standing up to the industry. Bradley Inman, a syndicated real estate columnist, says he was forced in 1989 to close Western Exposure , a maverick 400-circulation trade newsletter, after 12 issues "primarily because we deliberately upset the real estate industry, and it became clear that, as mad as we were making people, there is a great deal of legal risk and liability in that kind of coverage."

Inman says he wasn't worried that Western Exposure would lose a libel suit, but a barrage of "suggestions" from industry leaders led Inman to anticipate that someone with deep pockets would launch a "nuisance lawsuit" to drive him out of business. Such a run-of-the-mill suit can easily cost the defendant $150,000 – a sum far out of Western Exposure 's league. The fear of legal liability and protracted hassles was enough to convince Inman to cease publishing, though he still writes regular real estate columns for about 70 newspapers, including the Los Angeles Times and The San Francisco Examiner .

Inman doesn't so much fault the industry for its strong-arm tactics – interest groups are supposed to lobby. But he deplores the grim level of quality of real estate coverage at most newspapers and places much of the blame on newspaper editors, reporters and publishers.

"Mainstream coverage is very, very weak," he says. "The gutless nature of some of our publishers has to be raised. [They think] it's too much to bite off to cover the real estate beat in a serious manner, and [they] don't want to take the heat. Why [does] real estate scare the pants off some publishers?"

Advertorial, Not Adversarial

One answer to Inman's question: M-O-N-E-Y. According to the Newspapers Advertising Bureau, real estate ads in the classified sections of U.S. newspapers last year constituted 18.5 percent of all classified advertising and totaled $2.1 billion, down from $2.3 billion in 1989. (Figures are not available for the value of real estate display advertising, but classified ads in general accounted for more than 30 percent of the $32.28 billion spent in 1990 for newspaper advertising.)

In some markets, real estate brokers have turned to publishing their own publications to showcase their wares, rather than support an "unfriendly" newspaper. The threat from such publications, and ongoing pressure from the industry, has prompted some newspapers over the last two decades to hand their real estate sections to their advertising departments, which fill the space with "articles" and advertising supplied by the industry.

Peter Dreier of the Boston Redevelopment Authority says the advent of such "advertorials" is not surprising. "Newspapers have [always] been boosters of growth," he says. "The economic value of the newspaper depends on the business climate of the region it serves. And real estate is often viewed as a key part of that business climate."

Some newspapers have been publishing advertorial sections for years. The weekly real estate section of the Fort Lauderdale Sun-Sentinel , for example, publishes edited press releases in much of the section, which has been produced by the paper's advertising department since 1981. The role of the section, which is identified on each of its 40 to 50 pages as a product of the advertising department, is "to generate sales and traffic at developments," says James E. Smith, the paper's director of marketing.

The advertising department of another Florida paper, The News of Boca Raton, has been publishing a weekly real estate section for nearly a decade. It, like two other advertorial sections in the paper, is clearly identified as advertising and printed using a different typeface than the rest of the paper.

Real Estate Editor Stephanie Murphy, who works for the paper's advertising division, views the advertorial format of the Saturday and Sunday real estate sections as an essential component of the paper's campaign to help the area's economy. "In our market, real estate is one of the biggest segments of the economy," she says. "I see the newspaper as an agent of prosperity in the community – not just an observer, but an active participant. We're a business. [And] as newspapers change, there is a much closer interaction between ads and news than [there] used to be."

Recent headlines, such as "Sound Judgment the Basis for Buying at Boca Quay," "The Lakes at Boca Raton Offering Close-out Savings," and "Preconstruction Grand Opening a Notable Success...New Single Family Homes on Waterfront Lots at Baybury," illustrate the section's pro-industry tone.

The only portion of the News ' real estate sections not written by advertisers is Murphy's column, which is as upbeat as the rest of the articles. Some of her column headlines include "Boca Quay Selling Itself on Price and Location Alone," and "Camino Realty Celebrates Two Decades of Personable and Professional Service."

"I prefer to tell the good story, the happy story," she says. "I don't go looking for termites – that's not my role. I've never run out of good stories to write."

Murphy acknowledges that her newspaper's news staff does not cover real estate with any regularity, so most of what her paper's readers know about real estate has a pronounced industry spin. But the section serves its purpose, and it's making money. "It's an excellent profit center," she says. "It has always been a really healthy part of the newspaper."

Editorial Integrity

Some critics question just how valuable real estate advertorials are. They can be profitable, and they allow a newspaper to avoid unpleasant conflicts with the industry. But such sections can lose readership – especially in more sophisticated markets – where readers know the difference between independently produced news and industry-generated hype.

"Advertorial works wonderfully from whose standpoint?" asks Ken Bredemeier of The Washington Post . Publishers of such sections are "fooling themselves to see readers as so stupid."

H. Jane Lehman, a self-syndicated real estate writer whose columns appear in the Chicago Tribune , The Philadelphia Inquirer , The San Diego Union and The Washington Post , also thinks such publishers are making a mistake. "Don't think your reader is an idiot [who is] going to go out and buy because Realtors say, 'Now is a good time to buy,' " she says. "[Readers] want to read the bad-news stuff. They want to know which builders have been negligent. These [advertorial] sections lose credibility."

Liz Poppens, real estate editor of The San Diego Union , maintains that advertorial sections alienate readers. "Advertorial is a short-term solution to a long-term problem," she says. "Newspapers are losing ground both in terms of readers and advertisers. Advertorials appease advertisers, but don't draw consumers. Without readers, there's no reason to have advertisers."

After 20 years of publishing an advertorial real estate section every Friday, The Miami Herald decided last year to give the section to the news department. Editors believed the section was not in the public interest. "I argued that the readers were being ill-served by something that cloaked itself as news when it was simply ad messages," says Wayne Markham, the Herald 's assistant managing editor for administration.

Markham says that readers and advertisers were better served by switching. In the following weeks, he notes, the newspaper received "fan mail" from real estate advertisers who reported a significant jump in traffic at their sales offices. Better readership translated into more business for the local real estate industry. And increased business encouraged real estate firms to advertise more: Markham says ad lineage jumped 46 percent above the levels of the old advertorial section.

One of the Herald 's popular new monthly features lists local real estate agents whose licenses have been revoked or suspended by the state. Though builders have threatened an advertising boycott in the past, Markham said the wall separating the news department from the ad department at the Herald is so high that he hasn't heard any complaints about the revoked-license feature.

Placating The Source

One major obstacle for real estate reporters is having to rely on the real estate industry itself for the most up-to-date and comprehensive statistics on housing. There is virtually no other place to go. The U.S. Commerce Department issues monthly reports on housing starts and sales of new homes, but the agency's figures generally reflect activity from months earlier. And although reporters in some larger markets can now access databases of real estate transfers based on public records, such services remain unavailable in much of the country. So most reporters turn to the NAR. That means reporters in many cases have to tread lightly, because Realtors can cut the flow of vital information when they don't like the kind of coverage they get.

John Savacool, a prominent real estate economist with the WEFA Group, an economic forecasting firm near Philadelphia, says NAR data could be inaccurate, though he still uses it. "I know that a number of researchers don't think the NAR puts out completely reliable information," he says.

If the most intrepid real estate reporter or economist has difficulty getting independent information, pity the poor home-buyer. Bradley Inman likens the home-buyer's predicament to that of an investor who wants to buy stock, but has only the advice of a commission-earning stockbroker to go on.

"As it is, there's nowhere to turn," Inman says. "That's kind of scary. The industry understandably has a point of view."

In the face of that industry point of view, heavy advertising clout and a near-monopoly on information, much – perhaps most – real estate reporting is marked by laziness, myopia and fear. And the more the economy deteriorates, the more newspapers are tempted to bend to the industry's will for the sake of their own bottom line. Meanwhile, advertising departments defend the idea of a friendly atmosphere for real estate ads as simply good business practice. But if it deprives readers of balanced, aggressive reporting and sacrifices a newspaper's credibility, it may hurt the newspaper in the long run.

Publishing puff pieces or, worse, blatantly shilling for the industry ultimately hurts consumers. Buying a home is the most important financial transaction most people will ever make. Playing fair with readers may be good for both the editor's soul and the publisher's wallet. The experience of papers such as The Miami Herald and The Washington Post suggests that if real estate news is presented honestly – warts and all – home buyers and industry advertisers can both get what they want. l

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