Say I'm a stock broker who calls you up and says "Have I ever got an investment for you. Over the past 60 years this investment has doubled every ten years. If you had put $50,000 in it 30 years ago, you'd have almost $403,000 today and you wouldn't have to do anything. Just sit there and watch it grow."
What would you think? No brainer, right?
So me being the smart bloke that I am, I'd realize that I was wasting my time phoning people to tell them of this deal. It would be far more advantageous if I found a good-looking person and made a commercial so I could tell hundreds of thousands of people about my investment that I'd found.
It's the same principle that applies to all those late night, get-rich-quick from your one-bedroom apartment by placing tiny little classified advertisements in thousands of community newspapers selling nothing much at all. Now that's a mouthful.
So what's preventing me from pulling this off. It's not money. My investment is guaranteed. I have 60 years of history to take to the bank to borrow money for my advertising campaign.
Except that I have to run one tiny little sentence at the end of my ad. I have to do something that pretty much everyone who sells any kind of "investment product" has to do (with one exception) I have to write it on the screen and I have to say it out loud: "Past performance does not guarantee future results, these results are not typical."
Now I'm sure you know where I'm headed with this. This isn't a swipe at any particular individuals who sell real estate. This is a complaint about the profession of real estate sales. They're self governing, so I guess you'd win an argument that this is a swipe at everyone who sells real estate, except that in a democracy, the few can be outnumbered by the many, so I'll use this disclaimer: one bad egg does not necessarily represent the whole carton being bad, check your eggs carefully, we do not take responsibility for the fact that the good eggs did not outnumber the bad.
There is a series of Realtor commercials running in the states telling people exactly what I stated above: 10 years to double your money, history is the guarantee. Watch the videos. See if you can find the disclaimer. If you can, I'll give you ten bucks. Disclaimer: you'll notice I used ten bucks to represent an imaginary monetary sum. I will also make you aware that current hunting licenses prevent this writer from actually getting you ten bucks, so don't ask if you prove me wrong, you will only be disappointed.
A quick search of the Realtor.org site will produce hundreds of links to one kind of disclaimer, but it has nothing to do with economics, it just says we won't discriminate against anyone's human rights.
A quick search of the CREA website turns up even less.
Me thinks that after the bubble bursts, many people will be seeking legislation that forces adequate disclosure and separation between being a Real Estate Professional and being an "Investment Advisor."
Oh and by the way, for RE to double every ten years "or so" requires an annualized rate of 7.2%. Realtors are calling an average of 6%. What's the difference? Only 2 years. And if you owned a house for the last two years in the US, you may find yourself cursing that "advice."
Now I'll add the final disclaimer: before you go dismissing me as a ranting bitter renter, I'd like to point out that this post is in jest, for the most part (I still think they shouldn't be allowed to talk about "investments") and the fact that I have to point out it is meant to be more funny than serious means its likely more serious than funny. I've never been accused of being a comedian. So sue me. No, wait.