Road to Real Estate Recovery

When I was working at C__________, my boss was a big coke-head. As a result, the atmosphere was, to understate, lax. Everyone drank and ate copiously (never paying for it), sat down and/or danced randomly in the middle of the restaurant, swore, and slept with one another. All of the aforementioned took place during open-for-business hours. None of us were very surprised when an accountant appeared to “audit the situation” since the owners were confounded, and not at all pleased, that such a busy place could simply not turn a profit. The list of solutions thus generated included: uniforms, Michael Bolton CDs, crafting our famed sangria with boxed (as opposed to bottled) wine, and a NO DRINKING ON THE JOB POLICY.” Nowhere was it suggested that coke-head boss might… cut back, abstain, cease, or desist. And so ended my tenure at C_______.

The relevant thread here is that ailing businesses oft must look within to cure what ails. In the case of real estate, a national convalescent, such introspection cannot come too soon. Perhaps this is why Inman is sponsoring a “Roadmap to Recovery” program, part of which includes an essay contest, with prizes such as $500 and a free pass to the upcoming Real Estate Connect conference.

One recent essay asks how Realtors can redefine “full service.” The author, Jack Harper, has a thesis that what’s missing in real estate is transparency: a term he defines as the client having full understanding of what the agent does for his/her commission. He laments not only a lack of clear communication regarding those services, but also a lack of agreement by the industry as a whole as to what those services entail.

Commenters have opinions aplenty on this essay. Most turn out to be thinly veiled ads for the agents commenting, masturbatory “I am so good at this and that as well as that and this; and by the way, here is my contact information and website!” type stuff. But most of the ideas echo Harper’s.

As a potential client to any realtor, I would like to add that “transparency” also implies a level of honesty and freeness with information your industry is not famed for. We need to trust you again. Bringing that trust back to real estate could be one very important step on the road to recovery.

Photo credit: Active Rain.com

16 thoughts on “Road to Real Estate Recovery

  1. I agree with this post. Several “legal” tactics of real estate make my blood boil: hiding sales info, puling a listing and re-listing it later as “new,” padding square footage, referring clients to in-house loan brokers (as if there is no conflict of interest!)… if I did stuff like that at my job, I’d lose every one of my clients

  2. That’s the sort of thing I was talking about, Shelby, yes. And Fluj, you know I don’t mean to imply ALL Realtors are underhanded or indirect or liars or anything like that. The industry has suffered a black eye though, that we can agree; and agents (as a general group) have never, even in profitable eras, enjoyed a popular reputation. I’m just thinking of ways, from a client’s view, that situation might improve as the industry redfines itself in this new economy.

  3. So Anna Marie, have you submitted an essay yet? Filled out the survey? You should…

    We’re also starting up The Future of Real Estate Commissions 2009 survey here in the next couple days to collect as much data as we can.

    Take care,

    Jeff

  4. the problem with real estate agents is that they get paid about the same regardless of the transaction cost.

    their 1/4th of the 6% commission on a $900K, 1M, or 1.1M sale turns out to be a $13,500, 15,000, or 16,500 commission to the agent.

    doing 10 deals a year versus 15 deals a year has a much greater impact on the agent’s commission, so it make sense to price deals cheap, get the seller to deal, and move on to the next transaction.

  5. Another problem is that people within deals do not really understand how diometrically opposed buyers and sellers often are. Future versus past. Least versus most. Good agents are worth every last penny becuase these motivations are real, and they will paralyze. I am all for transparency. But transparency alone cannot solve every issue, as numbers are subject to interpretation. And interpretation is colored by desire. Whether buyers and sellers internalize it or not, most need someone to do their dirty work. Not wetwork, mind, but dirty work.

  6. Thanks Jeff– I might send an essay if you think one from a buyer (as opposed to an agent, which I am clearly not) would be of value to your readers.

    Garrett: Right? Why I quit.

    Fluj: Surely you are correct that there is more at issue than just transparency as I am defining it. How would you suppose that issue you speak of could be improved or made more clear? Or do you think the nature of the transaction means that we will always need a middle-person to negotiate between the two warring factions? And if so, I would not disagree: agents provide a valuable –and at times– incomprehensible service to sellers/buyers. Yet the industry is being turned on its head, and held underwater. I’m interested to know who’ll get free and rise to the top– and how.

  7. To use a sports example, look at Stephon Marbury. He’s sitting on the Knicks bench miserable sans agent right now. Think he could use a buffering zone between himself and management?

  8. @Garrett…no frikcin way! Imagine a “social function” without liquor! We work all the time, and if a client calls me when I’m 3 margaritas deep, it’s all about disclose, disclose, disclose at that point.

    @Fluj,
    You came up with some pretty deep words: “But transparency alone cannot solve every issue, as numbers are subject to interpretation. And interpretation is colored by desire.”…you been drinkin?

    @Anna,
    You rock! Great post, and so glad to have you writing for tFS. I’m taking the week off from posting, so will be babbling away from time to time in these here comments.

  9. In general, any relationship that requires trust has to have transparency. This goes for citizen/government relationships, as well as real estate agent/buyer/seller relationships.

  10. The greatest thing about this downturn is the squeeeeeeeeeeeze. the squeeze out of excess… and the collapse in commission rates. There are desperate people willing to sell for 1% commission…. 5% commission is a JOKE.

  11. I have been both a buyer and a seller in san francisco over the past ten years. (I’m not an agent.) My first experience with my agent when buying back in 2000 was that she did little, if anything, to assist with my search, other than once in awhile trying to push one of her own listings on me when it wasn’t moving. Since I was new in town she did give me some helpful advice about neighborhoods. Almost ten years later I decided to do a for sale by owner after meeting with a couple realtors and realizing that they would not add much value to the sales process (and certainly not tens of thousands of dollars worth of value.) It seemed to me that my listing was blackballed by agents as not a single agent would show it to their clients, other than one woman from Zip Realty. The flat was well-priced and was located in a prime part of Hayes Valley so it was a find. Nonetheless I managed to sell it in less than two weeks to a couple who also did not mind buying without an agent. It was work on my part to do the open houses and so on, but it was well worth it to pocket all that commission money myself. On the other hand, my husband used an agent to sell a property in West Oakland, and I thank heaven that he did. The agent specialized in West Oakland, and we pushed her hard to move the property and she did. Other units in that loft complex have since not been able to sell. So in that case the agent did add value – she moved a great property in a difficult neighborhood by working every angle she could. In that case we were happy to pay her. So I’d say it’s situational whether agents add much value… or not.

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