Jeff Turner wrote this in a comment, but I think my answer to him justifies a post of its own:
Greg, what percentage of transactions fall into the category of “requires great skill,” as a result of the kind of title issues you speak of in this post, and what percentage fall into the “no problems” category?
Four out of five, at least, seem very routine to me, but that’s misleading. There is no transaction we are involved in to which we don’t bring a great deal of non-obvious value. Frankly, if I just talk with you, or visit you at home, I’m going to shed a lot of information gleaned from experience. I’ve seen thousands of houses. I’ve worked with hundreds of buyers and sellers. I’ve been directly involved in dozens of escrows from start to finish. You might be a lot smarter man than me, but I have seen everything, big and small, that can go wrong in the sale of a home. I’m not just there for the paperwork, which any title company can do in Arizona, and I’m not just taking your order, sink or swim. My job is to make sure you get everything you want — as, when and in the amount you want. So even on transactions that seem routine to me, I will be doing many, many things for you that you would not know to do for yourself. It’s not razzle-dazzle salesmanship, and it’s not some vast brilliance. More than anything else, it’s the knowledge that comes from having done it so many times before.
For what it’s worth, the house that closed yesterday didn’t require great skill, just bulldozer persistence. A dozen phone calls a day for weeks, not letting up. Yesterday, I spent half the day in my car moving documents myself to avoid courier delays. This is dumb work, perhaps demeaning to some. My attitude: Whatever it takes. Last Friday I looked at a hopeless situation and bet everything I had that we could get the job done by the end of the month. At two-thirty yesterday afternoon, the movers were waiting at the house when I pulled up with the keys. What would have happened if I had been wrong? I made a joke about it on Tuesday, writing in the dark for Friday’s Arizona Republic, but it would have been a huge disaster with consequences rippling out through time. As it was, we finished four hours later than I wanted to. But the difference between a late success and a protracted failure, possibly involving many more lawyers, was someone stepping up to make it happen.
Here’s something you hadn’t thought about, because you’re not a Realtor: The escrow we’re talking about closed on the last day of the month. This is the busiest day of the month at title companies, the day when a closing is most likely to slip a day — or more. One of the skills you have to master to do this job well is getting your files to the top of the stack at the title company. They always have more work than they can do at the end of the month, and if you can’t get your files pushed through first, you’re that much more likely to close late. In this particular case, I made it plain that I was going feet first into the file. Walking on coals is dumb work, too. But no one else will do it with me unless I’m willing to go first.
Want more? In his last-minute move-out, the seller had taken the refrigerator, which was under contract to stay. It was contested property in the sellers’ divorce, which would have meant more delays from more attorneys. To kill the issue, I conceded $1,000 out of my own commission to the buyer. I did it that way for two reasons: First, to make the problem go away now, rather than later. And second because a unilateral concession from me required only my own signature, which meant that we could proceed without delay. I was already conceding a very substantial sum to the buyer, so that’s a thousand dollars I would rather have kept. But the more important issue was keeping my vow that we would close by the end of the month. Whatever it takes.
Without meaning to be confrontational, I think the idea of the disintermediation of Realtors is a non-starter. There are simply too many things that I do on even the most routine transactions that an unrepresented (or barely represented) buyer or seller would never know to do. The job is so complicated that, unless you are doing it full time (which could include full-time investors), you could not possibly do it as well as I can. I would expect you to have exactly the same attitude about me doing your job — and you’d be right…
Technorati Tags: arizona, arizona real estate, compensation for buyer representation, disintermediation, phoenix, phoenix real estate, real estate, real estate marketing
CJ, Broker in L A, CA says:
Jeff, I was going to write a lengthy post elsewhere in answer to your answer – but Greg covered just about everything I was thinking.
I will say that about 4 out of 5 of our deals require that “bulldozer persistence” to get closed. Title issues can range from un-reconveyed private party encumberances from 20 years ago (the title officer wants the agent’s help in finding an 80 year old beneficiary to sign off)… to open bail bonds a seller signed to help out a niece (bail bond company and niece are now long gone) …. to property boundary lines turning out to be where they aren’t supposed to be …. And don’t even get started on inspection/condition issues … there are hazardous recalled furnaces, hazardous recalled electric panels, abestos, mold …. I could go on all day.
Does it require great skill and a high IQ? Hmm, no. But it does require bulldog (or bloodhound) determination and a “do-or-die-trying” attitude.
February 1, 2007 — 7:58 am
Kris Berg says:
(Thundering applause)
>I have seen everything, big and small, that can go wrong in the sale of a home.
This is the only part of your post I will take exception to. You have not seen everything, nor have I, and that is precisely why (since we have been on the topic lately) a Redfin model is inherently flawed. At least once a quarter, Steve and I find ourselves saying, “There’s one we haven’t seen before”.
Without going into detail, perhaps our biggest horror story on record is the one involving the seller who had a short rent-back period negotiated after close of escrow while waiting on completion of their new construction home. At 4:30 in the morning, I get a call (and, yes, I did pick up) from the husband saying his wife is in a coma, on life-support, and he doesn’t want to move his family, including two young children, from “their home”. It was no longer, technically speaking, “his home” of course. The buyers had meanwhile sold their home and were in rent-back status. What is a Redfin agent to do?
February 1, 2007 — 8:18 am
Michael Cook says:
Great post Greg. The issue is that of 10 realtors out there, I think you are probably in the top 2. Its the 6-10 realtors who charge the same price (or higher) that people take issue with.
February 1, 2007 — 8:27 am
Jeff Brown says:
The real problem Greg, is that the ignorance of so many is so deep, they don’t even know when, what, or why something has gone wrong, or not the way it should have.
This is further complicated by the fact that taking them so school just isn’t an option. We can only give them the benefit of our expertise and experience.
In the end, I tell them what they’re really paying me for. If that doesn’t satisfy them – there’s the door, no hard feelings.
February 1, 2007 — 9:33 am
Michael Cook says:
I think most people appreciate the good Realtor. The problems is the average to below average ones that charge the same price as the good ones. Not all Realtors out there work as hard as you guys.
February 1, 2007 — 9:55 am
Greg Swann says:
> This is the only part of your post I will take exception to. You have not seen everything, nor have I, and that is precisely why (since we have been on the topic lately) a Redfin model is inherently flawed.
Conceded with alacrity.
February 1, 2007 — 11:12 am
Chris says:
Well said! Don’t assume someones job is easy until you have walked in there shoes.
February 1, 2007 — 1:03 pm
NYCJoe says:
You make disintermediation sound like it’s an all-or-nothing deal, which I think is inaccurate.
Take bank tellers, for example. ATM machines haven’t put bank tellers out of business, because there are simply some things that ATMs can’t do that tellers can do quite well. Are there fewer tellers, though, because of ATMs? Yes, absolutely.
I don’t think that all Realtors will be disintermediated by the Web or technology, because as you indicate there will always be Realtors that can perform specialized duties that buyers/sellers can’t or won’t do themselves. But will there be fewer Realtors because of technology? Yes, absolutely.
February 1, 2007 — 4:33 pm
Jeff Turner says:
I’m not sure how I missed this until now or why my question somehow deserved a post of it’s own, but I’m glad it got one. Perhaps it’s was Michael’s ballsy post that got in the way of my seeing this one. No matter, I finally made it.
I’m pretty sure I’ve been clear in my opinion… If I were to sell my home tomorrow, I would hire a real estate agent to do so. I readily admit that I couldn’t possibly do your job as well as you. And I fully understand that things I do in my job on a daily basis, that seem routine to me, look difficult to those who don’t have my experience. I can’t imagine that it wouldn’t be the same for any profession, including real estate.
“Here’s something you hadn’t thought about…” yes, that is certainly tru. I hadn’t thought about a lot of things. I was reading your post and this was my only thought, “hmm… wonder how many of his transactions fall into this category? I don’t know. I think I’ll ask.”
Sometimes a question is just a question.
February 1, 2007 — 11:58 pm
Greg Swann says:
> Sometimes a question is just a question.
Indeed. And I wasn’t talking to you, I was talking through you. All public net.chatter is broadcasting. I was using your question to address whomever might read the post. I should write about this sometime, because it’s the essence of weblogging. IAC, my apologies if you felt chided. I think Craig Blackmon did, too, and I wasn’t talking to him, either.
February 2, 2007 — 6:21 am
Jeff Turner says:
No apology needed. I don’t feel offended or chided. But I did feel “special.” 🙂
NYCJoe’s comment above, “You make disintermediation sound like it’s an all-or-nothing deal, which I think is inaccurate,” seems to come into play when you can define 80% of your transactions as routine.
How is the IDEA a non-starter?
February 2, 2007 — 7:39 am
Greg Swann says:
> when you can define 80% of your transactions as routine.
Evidently I was unclear. Four out of five seem routine to me. The things that I do as a matter of course on every transaction I work on would not be routine to you, nor to anyone who isn’t doing this work all the time. There is lots, lots more. I was talking to Cathleen yesterday — we didn’t record, alas — about all the tiny details a pro will see along the way that buyers and sellers miss entirely. When someone tells me that they FSBO’d or Redfin’d happily, it means one of two things to me: It’s guy-talk (“Two legs! Only wussies need two legs!”) or they have no idea how much value they left on the table.
February 2, 2007 — 8:16 am
Jeff Turner says:
No. You were clear. I get it. What’s routine for you is not routine for others. I acknowledge that in my previous comment. But you still didn’t answer my question… “How is the IDEA of disintermediation a non-starter?”
February 2, 2007 — 10:09 am
NYCJoe says:
Jeff,
I think what Greg is proposing is that since you can never tell at the outset of a real estate transaction how much risk will be involved in the deal or what curve balls will be thrown at you, then that makes every deal unique in its own right and only someone who has deep experience in the field can provide maximum value. Thus, the “idea” that you can disintermediate the agent from the process is wrong.
I agree with the logic up to a point, but I simply disagree that it’s always impossible to do a better deal a)yourself or b) using some discounted broker.
Why? Some deals are just simple, and in those cases it’s possible to do a fairly accurate accounting of the risk to the point where you can make a good decision on which route to go. I’ve even been involved in a few myself. Trust me, it’s not guy talk and I did not leave value on the table.
February 2, 2007 — 5:14 pm
Jeff Turner says:
NYCJoe, I’m sure that is what he is proposing, but I’d still rather hear it from the horse’s mouth.
I believe, by the way, that disintermediation of the real estate transaction, using the strict definition of disintermediation, is theoretically impossible. Unless the buyer and seller can find each other without anyone at all in the value chain, someone or some company will always have to be in the middle. Forget about the other ramifications, which are numerous. So, I think disintermediation is the wrong word to use.
So, even though I personally feel it’s theoretically impossible under the strict definition, I see the value in the idea as a way of exploring what is possible. My question to Greg is asked to understand why he doesn’t feel that way.
February 2, 2007 — 6:02 pm
Greg Swann says:
> I see the value in the idea as a way of exploring what is possible.
Here’s a way. When I was talking to David Gibbons at Zillow.com this afternoon, he pressed me as to why agents still fear Zillow, when it’s so obviously a media company.
There are plenty of reasons, many of which Russell Shaw has documented, but a brand new one is the Make Me Move feature in the most recent release of Zillow’s software.
Why that, particularly? Because it’s brokerage — the introduction of buyer to seller — without a real estate broker acting as intermediary. This is a true disintermediation, since Zillow.com is not taking a commission for the act of brokerage.
I personally don’t fear Zillow or any other Realty.bots. Our marketing strategy is based on delivering unmatched value. But I also don’t think any residential real estate transaction is so simple that it can be optimally effected without expert advice.
It is precisely the stuff that you could not have known that will bite you in the ass.
An example: I walked into a house today, a 1936 historic in the less-expensive end of the F.Q. Story Historic District in Phoenix. I thought the house was an over-priced wreck, but as soon as I walked inside, I knew the home had been built by Frank B. Wallace, a pioneering Phoenix home-builder who perfected, house-by-house, the techniques that became production home building. Wallace himself never built tract homes, but he taught other builders how to do it.
There is no way my buyer could have known we were in a Wallace home. The listing agent doesn’t know, which argues for shopping for quality when you look for an agent. I know it’s a Wallace house because we have listed and sold some of his best homes.
So: The house is overpriced to an uninformed buyer, but substantially underpriced from my point of view. You might successfully talk the seller down by another $10,000, then use your savings to destroy the added value that comes from owning a Wallace home.
Or you could celebrate the fact that you brought me along. I could negotiate the price down by $25,000, then show you how to restore that added historic value, to the tune of at least $50,000 in added resale value.
My 3% fee: Around $7,000.
That’s just one example from one house, and it’s only a tiny fraction of everything I would be doing on that one house. There is simply no way for an ordinary person to anticipate and address all of the complicating issues that can arise in a residential real estate transaction. Because of this, there will be no disintermediation of Realtors.
February 2, 2007 — 7:51 pm
Jeff Turner says:
Greg, I would hire you in a second. And I don’t think YOU have a reason to fear any form of Realty.bot.
As I’ve said before, I don’t buy the concepts of true disintermediation. The example above is excellent. I applaud you and wish every REALTOR? were like you. But we both know they are not.
For every story you tell like that story, there is someone out there telling a story about how a real estate agent added no value or subtracted value from the transaction. For the people who were involved in those transactions, some form of reduced fee, transaction based model will be attractive. And because that is true, and because the desk rental brokers refuse to “fire” unworthy and unproductive real estate agents, there is going to be a growing cry in the market for some form of “discount” real estate brokerage.
Honestly, what percentage of the REALTOR? population do you feel is up to your standards? What percentage are up to the minimum standards you would set?
February 2, 2007 — 9:22 pm
NYCJoe says:
Jeff,
The New York Times recently had an interesting story on this (not disintermediation per se, but rather an examination of how agents and brokers are viewed):
Agents of Angst
February 2, 2007 — 9:40 pm