Consequences of carpet-bagging

Well, it looks like the Time magazine cover story from a few weeks ago has scored some collateral damage. From the LV Sun:

A Las Vegas real estate agent who landed a prominent role in a Time magazine cover story is being scrutinized by state licensing officials because of her comments, has left her employer and is lying low.

The story by Joel Stein in the Aug. 24 issue, “Less Vegas,” is a high-spirited and high-altitude view of the troubles facing Las Vegas, which he calls both “our most American city” and “an entire city of John Dillingers.”

In the story, Brooke Boemio — “a bouncy, sweet, recently remarried 31-year-old mom” — is cast as one of the Dillingers. She helps Stein break into a foreclosed home and brags about helping clients who are underwater on their mortgages buy a second house on the cheap and stop making payments on their first mortgages, pressuring the bank into selling the houses for a loss. Everybody’s doing it, she says in the story. In fact, she said, she did it herself.

Since the story appeared, Boemio and her employer have, in the words of Coldwell Banker Wardley Real Estate President Jeff Sommers, “parted ways.”

Sommers also said his company has conducted an internal investigation and has been unable to find any cases of Boemio engaging in the behavior described in the story. The buy-and-bail tactics described in the story, he said, are serious allegations and “really just in direct opposition to everything in our policies.”

In a further statement released online, Sommers said Boemio told him she had been misquoted and misrepresented by Time.

Unflattering Time magazine story puts agent in hot water

There’s an interesting comments thread on the story, which only adds dimension to it. Naturally, there’s the CYA by the company in question, as well as all sorts of allegations about what “really goes on” in the real estate game.
In this case, the “carpet-bagger” journalist has apparently left some big trouble in his wake.
As I see it, there are 2 options:
1. The agent in question isn’t too bright, and discussed unethical practices with apparent blithe glee to a reporter.
2. The reporter greatly exaggerated what the agent said, or deliberately misquoted her.
Not knowing the agent or reporter personally, I don’t know which is the likelier scenario, and if the agent’s apparent termination is a miscarriage of justice or just deserts. But it is never a bad idea to be cautious when you’re speaking to a reporter.

Today I had a call from someone who wanted me to say, based on my comments in this story, that City Center would “destroy” every other hotel in town.

I responded that this probably won’t be the case. “There’s no need to get apocalyptic,” was my exact quote. In fact, it comes down to simple economics: you’re putting more supply on the market, and unless you can create more demand, the price will fall. I don’t think there’s any way out of that equation.

There seem to be two extremes out there: either City Center will lure millions of new customers to Las Vegas and reverse the ongoing decline, or it will cannibalize the market and force massive closures. I think those are both unrealistic and unsophisticated attempts at prognostication.

The answer is instead, well in the middle: if other hotels don’t adjust their rates accordingly, or stop delivering good service, then naturally customers will drift away–if they like what they’re getting at the new place. In the best of all worlds, this kind of competition will result in lower rates for customers and better service. That’s what competition is about, and that’s what built the casino industry in Las Vegas. When Wynn opened in 2005, for example, the execs at the Bellagio didn’t throw up their hands and concede the high-end market.

All of which is an elaborate way of saying that, with all honesty, I don’t know what’s going to happen in December. No one who’s being truthful can tell you that they do. There are simply too many other variables to solve that equation: what’s the international economic picture going to look like? What’s the cost of a gallon of gas? Will business travel pick up in 2010? These are just three of the factors largely out of the control of anyone in Las Vegas, and each of them is crucial to forecasting–even in the most crude sense–what the future brings. But it makes sense to conjecture that, if other conditions remain as they are, there will be more competition for hotel guests in a few months.

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