Yesterday, on ActiveRain, I wrote a review of the first chapter of Marjorie Garber’s book, Sex And Real Estate. I have decided to take it one chapter at a time, to highlight the intricacies of her work on the different aspects of love and levels of emotions that consumers have around the concept of home.
This is not a new book. It has been out for several years. If you’ve not read it, you should. If you have, it’s worth revisiting, given the changes that have occurred in the real estate market since it’s original release in 2000.
I focused my attention on the “love at first sight” aspects of the house as beloved. It is said that more than 50% of home buyers experience this overwhelming desire. For that reason, I believe that a seller’s agent has a responsibility to maximize the home’s appeal to this emotion and the buyer’s agent has a responsibility to minimize it. I wrote:
“It seems to me that one of the key benefits a buyer’s agent can bring to the table is the wisdom of an objective third party perspective. They are there to protect the “suitor” from what Freud called, “the overestimation of the object.” Like a good friend who warns you to take your time with a torrid new relationship, a good buyer’s agent becomes the voice of reason, the best friend who’s not afraid to tell you the truth about your new girlfriend. “
And interesting and valid comment came from Martin Rodriguez, a mortgage specialist in Valencia, CA. The post was speaking to real estate agents, but he came at it from the loan officer’s perspective.
“You (or Marjorie Garber) bring up an interesting point that I’ve found myself answering on more than one occasion. Clients will often call and ask me for my opinion about the house they are buying. As a mortgage broker I try not to get involved with the selection or the decison making of the buyers new home. Heck, I’ve never even seen the house, so why are they asking me? However, this question highlights a lack of confidence in either the buyers own decision or the advice being given by the realtor that represents them.
Did they fall in love with the wrong house? Am I (the numbers guy) supposed to be their objective voice of reason. I can’t say for sure, but clearly there’s a distinct blurring of the lines between emotions to buy and logical reasons to buy.”
Our always vigilant Brian Brady responded immediately with a bit of wit and humor:
“Excellent point. Mortgage brokers are often looked to as the “voice of reason”. I have learned one thing about giving advice to someone who is in love; it’s best to stay out of it, smile, and be happy for them. When they talk about the costs of financing their love interest, it is usually…just find me a way to get into the home!”
But their voices, so far, have been the only mortgage voices heard on the topic and I’m left wondering about the duty of the lender. I know if I came to my lender basked in my first love glow the last thing I’d be looking for at that moment was someone killing my buzz. By the time I’m ready for the lender to work on it, that house is mine, at least in my head. I want them, as Brian said, to “just find me a way to get into the home.”
But what if you’re the lender and you know something that I may not be seeing? You understand that emotions blind me in the home buying process. Garber quotes Karen Curran, of the Boston Globe, “The home buyers most likely to regret their purchase decisions are those who fall in love with a house before finding out what they need to know about it.”
I know what the buyer’s agent responsibility is in my transaction, it’s to protect me from myself. What is the responsibility of the lender? What if my buyer’s agent hasn’t done their job? Should you stop me at the altar and offer me a way out of the chapel before I enter into a marriage I’m going to regret?
CJ, Broker in L A, CA says:
Jeff, I bought the book soon after reading your post on Active Rain. But when I saw the copyright date of 2000, it ended up in my “to read later” stack. After all, the book was written at a time when “marriage” was considerably more “affordable”. The cost of a “blissful union” has tripled around these parts.
That said, may I suggest that the Home Inspector is usually the most effective voice of reason. The inspector’s job is to peer into all the secret places of the home. Most times, the mortgage broker never actually goes out to the property.
February 12, 2007 — 5:10 am
Jeff Turner says:
CJ, yes, it’s not a new book, but it’s worth the reading time required. This is mostly true because the writing is brilliant and the cultural examples are well developed. It may be more important as a read for the seller’s agent than anyone else in this market. I find most internet marketing presentations devoid of any real appeal to emotion.
I agree, the Home Inspector should be that voice of reason, if the problems are with the house itself. But what if it’s something else? I wish I had enough transaction experience to point out what that might be, but I don’t. What if it’s not something that would turn up in a home inspection report?
February 12, 2007 — 7:31 am
ardell dellaloggia says:
I remember back in 1993 I found the perfect house for a guy and his family. Took about four months. As soon as it hit the market I called him at work and met him there after work. I told him it’s about $20,000 more than it should be. It had everything he needed: a pool, room for his wife’s 26 boxes of Christmas decorations, room for his baby-a 66 Vette, 4 bedrooms 2 1/2 baths. Everything he wanted. He bought it.
I heard from him a couple of days ago for the first time since 1993. Guess what? He still lives there. Many of the people I sold property to from 1990 to 1996 still live in the homes I sold to them. Why? Becuase they loved them.
It is my job to tell them it is $20,000 more than fair market value. It is not my job to tell them not to love it. He says he’ll live there another 7 years or so. So he paid an extra $1,000 a year for his dream home over a 21 year period. He’s happy. He knew the facts before he made the offer.
In short, he made an informed decision.
For those wondering why ARDELL is saying “the house I sold to him”…it was 1993, back when we all represented the seller. No buyer agency. But I still go back to PA and visit people in the same houses I sold to them, including my sister and my sister-in-law.
Let them love their house…they just might stay awhile.
I sold my own house in Manhattan Beach to a guy, but first told him it was about $30,000 more than fair market value. I had a little sit down with him over a glass of wine. He said “Will you sell it for $30,000 less?” I said no, but I just thought you should know that. He bought it.
He sold it last year for twice the price he paid for it in 2001. Informed decisions. People are allowed to love houses and they are allowed to pay more for the houses they love. Usually works out just fine.
I love my house. I’m pretty sure I overpaid for it a bit. So what. It’s my home. I love it. It’s gone up in value, but even if I lose a little money if and when I ever sell it…so what.
A house you love: Priceless.
February 12, 2007 — 8:21 pm
Brian Brady says:
Here’s the thing most lenders don’t want to admit, Jeff. It’s not our place to tell you anything about the value of the purchase. We are not licensed (or practicing) real estate agents, just purveyors of debt.
We do NOT, repeat NOT have a fiduciary responsibility to the client (although there is a movement brewing to establish it for mortgage brokers). Our responsibilities are to our employing broker (or lender), then the lender to ensure that fraud has not been committed, and finally, the borrower.
That won’t be a popular statement. I’ve had other mortgage companies claim to “always work on the borrower’s behalf” and then continue to accept compensation from both borrower and lender.
To those of you in my industry that dispute my claim, read paragraph nine of this post:
https://www.bloodhoundrealty.com/BloodhoundBlog/?p=967
Click on the model disclosure for (short cut)
http://www.namb.org/namb/Model_Disclosure_Form.asp?SnID=7081
As much as I think you could be marrying the wrong person? It is legally NOT my place to speak up; just try to get you a loan.
February 12, 2007 — 8:27 pm
Jeff Turner says:
Ardell, I couldn’t have said it better. Like you, I just want to be informed. I’m willing to live with my decisions, good or bad, so long as I’ve had all of the information made available.
Brian, this is why I wrote this post. Thank you for stepping up. I’m quite certain I would NEVER have gone to the Model Disclosure Form of my own accord. I am also quite certain the average consumer had no idea that you have no fiduciary responsibility in the transaction.
February 12, 2007 — 10:15 pm
Sharon Simms says:
Jeff, what an interesting discussion this has been – from a great book to obligations of the various parties to the transaction. Let’s not try to do the other person’s job – or to discourage the buyer from his love. To tell him he should have an appraisal (to determine the value) or a home inspection (to find the flaws) is fine – but Brian pointed out, don’t try to be the appraiser or inspector. I want to direct my clients to a good mortgage broker – and when they’ve jointly chosen the best program, it’s not my job to second guess and say, Oh, you’re paying too much for that loan – I don’t know all the details, of either the loan or the buyer. Find an expert you can trust – and trust them. One of the worst injustices is for someone to make blanket comments about the neighborhood the home is in – which is so often made from a biased perspective – the commenter may not have been in that neighborhood in 30 years!
February 22, 2007 — 3:36 am