The Evolving Role of the Real Estate Broker!

The role of the real estate agent in Portland Oregon or anywhere else is constantly evolving.  When I started my real estate career in 1985, we had one computer in our office.  NO ONE in my office had a personal computer.  I knew one Realtor with a cell phone (that was about the size of a State Fair prize-winning zucchini) and it was so expensive the agent was afraid to make calls!  No one had ever “faxed” an offer to someone (much less e-mailed one).  I still remember beating out another offer because I “faxed” an offer to a client in the mid-west for his signature (while the other agent overnight-ed their packet).  I had to work-out on a regular basis because my “Multiple Listing Book” was larger and heavier than a Manhattan phone book (and, that was really the only way to access the listing inventory).  Of course, the book was always two weeks behind the inventory due to publishing and printing constraints.  A secretary “manned” (or, more likely, “womaned”) the front desk and was your lifeline to communication with clients and potential clients, where you maybe checked in twice a day by stopping by or calling from a pay phone while “out in the field”.  Real estate offices did eventually “morph” and provided 2-3 computers in a work room for all the agents in the office to share (I was in an office with 75 agents and 3 computers at one time).  Since in today’s world way over 50% of our business is transacted through working on our web sites, blogging, e-mailing, e-faxing and connecting while in the field from our “Smart Phones”, I don’t know why there weren’t more shootings in real estate offices as agents vied for time on the computers!!! If I hadn’t lived it myself, I would think this was a figment of someone’s imagination….really good “fiction” about the way things were.  And, NO……those were not the “good ‘ol days”……not for me anyway!

Anyway, I digress.  To survive in the real estate business you must constantly reflect your buyer’s and seller’s needs and the requirements of the marketplace in present tense.  Real estate information is no longer proprietary and we are not the “gate-keepers” of listing inventory or property details.  Home buyers and sellers have access to multiple sources of information and with 90% of buyers starting their real estate search on the web and xx% of sellers researching their position online, the public does not need real estate agents as their first point of contact.  There are a myriad of ways to access much of that data.  Our industry must keep re-structuring and re-inventing itself to reflect the times.  We need to “kick it up a notch” and be a partner in an important set of decisions that revolve around a real estate purchase.  We must be a source for other referrals such as mortgage brokers, title and escrow companies and property inspectors.  We must be an educated and experienced resource.  We have to be a strategist, a fellow brain-stormer, an advocate and a sponge (take it all in, wring out what we don’t need).  We have to not chase the immediate sale, but rather embracethe long-term relationship.  We have to negotiate with a win-win attitude while solidly championing our clients’ position.  We absolutely have to maintain a certain level of technical proficiency and constantly be willing to upgrade our technology….it is a “people-first business”, but you must have access to fast information and an even faster response time!  We have to read, take classes, attend seminars/webinars and scour real estate, financial and economic “rags” to keep abreast of the “latest and greatest”.  We have to respect ourselves and our clients by first investing in ourselves, personally and professionally.  You cannot be an advocate if you’re not mentally, physically and spiritually at least trying to be at the “top of your own game”!

The emergence of this new breed of real estate agent will, of course, begin with the on-going edification of existing professionals.  The rest of the evolution of the industry will have to launch with hiring practices.  Instead of pressure on managing Brokers in real estate offices to “fill seats” or simply produce “warm bodies”; instead of a “numbers game” the industry will have to embrace the age-old “quality over quantity” ideology!  The public will have to insist on “full-time” vs “part-time” agents to represent them.  Why does this matter?  It matters because experience matters!  Everyone has to start somewhere, so why not institute “mentoring programs” within real estate offices, where new agents can actually shadow experienced agents and learn the basics.  Instead of fueling a state of paranoia, the agents develop a sense of community and camaraderie.  Of course, a little old fashioned competition mixed in doesn’t hurt, but sharing the wealth of knowledge is essential.  Lack of training is rampant and handing someone an RMLS-web code, a desk and a phone is not enough to secure the success of that agent or the clients they represent!

I am one of the lucky ones.  Not only do I love my job (despite the fact that 2008/2009 tested my stamina), but I started my career in another down market with interest rates at 13% and a stampede of real estate agents had left the business.  There were only 12 agents in my office and we were given individual attention and weekly required classes.  I know that many newer agents have never seen a downturn…till now.  This temporary down market could give managing Brokers the opportunity and time to really participate in their agents’ development.  Instead of setting the bar so low, we can now demand from ourselves our very “highest and best”.  Just some thoughts……………

And, We Wonder Why We Have a Banking Crisis???

After this posting, I might have to rename my site from “Portland Real Estate Update” to “Portland Real Estate Rant”!  But, my recent short sale experience should make us all “mad as hell and we’re not going to take it any more”!!!  So, here’s my current short-sale story.  Due to the unfortunate circumstances of a job loss, my client had to sell her home.  After researching the market, we realized that we would be forced to negotiate with the 1st and 2nd lenders to accept less than was owed on the home.  In other words, we would “sell short”.  We began the long and arduous process of collecting the stacks of information needed by the lenders to review in order for them to agree to sell short.  We also began the marketing process to find that sweet spot in the pricing continuum and the buyer willing and able to purchase.  On a good day, it takes a VERY patient buyer to want to play that “waiting game” (with no definitive closing date and no assurance of the eventual acceptance of their offer).  Plus, the buyer makes an offer and during the wait there is the opportunity for other competing offers to be submitted and to be outbid!  So, the buyer attrition rate is HUGE!  Buyers continue to look for houses while waiting for an answer, ANY ANSWER, from the lenders and will often eventually just tire of the suspense and withdraw.  Well, in my current short sale case, the buyers patiently waiting and really wanted the house.  The 1st lender agreed to the short sale and offered the Freddie Mac “standard for the industry” (which is 10% of the amount owed) to the 2nd lender (who actually has no power in the transaction other than the ability to say no).  US Bank holds the 2nd mortgage in the amount of $25,000, thus the 1st lender was offering them $2,500.  US Bank said “they would disapprove the sale unless they received $5000″.  Provident Bank, the first lender, said “their hands were tied as Freddie Mac (the secondary market banks) only allow 10%”.  The Real Estate companies involved were willing to contribute via their commissions, even the buyers were willing to come to closing with the extra $2,500 and neither bank would budge.  I can almost forgive Provident as Freddie Mac does control the buying of packaged loans on the secondary market, but US Bank IS the problem!!  Not to mention my associate (who helps me with the short-sale process) last phone conversation involved the US Bank loss mitigation rep saying that the only answer was for someone to mail them $2,500.  If money is exchanged in a real estate transaction, isn’t it “mortgage fraud” if it’s done outside of escrow and not acknowledged on the final HUD-1 statement?  This stubborn nonsense will force Provident to go through a costly foreclosure process and US Bank will get nothing!!  But, they don’t care.  My seller will now have a foreclosure on her record, the buyers don’t get the home they wanted and several real estate agents worked for months for nothing.  What kind of “kinder, gentler, wiser, more diligent” banking system is this????

What is Agency and What Does it Mean to a Buyer or Seller?

AGENCY! How exactly does “agency” apply to real estate and the relationships between buyer and seller and their real estate agent in our Portland Oregon real estate market?  What are the responsibilities and obligations?  AND, what are the subtleties that influence everyday behavior of agents and their clients.  I actually practiced the profession of real estate for years (1985 till 1996) prior to having a reasonable and rational “legally defined” relationship with my buyers.  Prior to 1996, all agents had a fiduciary responsibility to the seller.  Which, of course, was always a bit silly for agents who had clients who were buyers, who often never met or had contact with the seller (other than a possible presentation of an offer to a seller….much more common in the pre-technology days) and who were truly advising their buyers on the next home or investment!  The “old way” of thinking was that the seller paid the commission, thus all agents in the transaction were representing the seller.  Thankfully, reason prevailed and the Oregon Real Estate Agency enacted the Buyer and Seller Agency agreements and everyone agreed that the commission structure was built into the pricing of homes! 

Skip forward to present day, where buyer representation and seller representation is SOMEWHAT of an assumption.  However, I think some people are still confused.  When I list a home, I am responsible to the seller.  I prefer the new and next buyer come represented by their own agent.  That way there is NO conflict of interest.  I’m not saying I haven’t handled both sides of transactions in my 24 years of servicing real estate transactions, but those are special circumstances and that’s another blog altogether (having to do with integrity and believing in “win-win”).  Agency simply means my job is to represent your property in the marketing efforts and ensuing negotiations.  My first step is to initiate whatever means I can employ to get “product awareness” to the general public.  That means I’m first communicating with other agents, utilizing the #1 advantage Realtors have, which is the power of the real estate community!!  I employ the power of our Portland RMLS (Realtor’s Multiple Listing System) where all working Realtors are immediately notified of properties that come on market with detailed information, photographs and video tours.  Because over 90% of all buyers begin their new home or investment property searches on the web, your property deserves the very best online exposure possible. 

But, here’s where clarification is important.  As a listing agent I’m, personally, “famous” or “infamous” in quickly reacting to potential buyer inquiries.  I never even ask if someone has a real estate agent representing them.  If they want to see MY listing, I want to show them!  It’s in my best interest and the best interest of my seller for me to show my listings.  I know THAT particular listing better than most!  Do I care if they have their own representation…absolutely NOT!  That is in the best interest of the buyer, which means ultimately, its in the best interest of my seller.  So, therein lies the confusion.  When a seller calls and asks, “how many times have YOU shown the listing” it’s a meaningless question.  If you’re talking to me, I’ve shown it as many times as I had an opportunity!!!  But, that’s not representative of how many inquiries I may have had.  An agent will often get multiple e-mails and phone calls from both agents AND the general public, looking for any specific information they can’t garner from their web experience.  At higher price points, you don’t generally have buyers wandering “willy-nilly” through open houses or calling a ga-zillion agents for information.  Those buyers will hire a specific agent, utilize that agent’s expertise and contacts and have that agent organize a targeted and efficient tour of homes that fall within their chosen price point and other search parameters.  They don’t waste their time looking at overpriced listings or those that don’t present well on the web.  At lower price points, there are more buyers available who, perhaps, have not yet identified an agent of choice and will be more likely to call the listing agent to gather information or schedule a showing.  But, understanding exactly what you are hiring your agent to do is paramount to a successful relationship. 

If you are selling your home, you are hiring an agent to market your property!  This includes exposure to the other agents as well as enticement to agents AND potential buyers through descriptive narrative, professional photographs and multiple web displays.   You are also hiring their expertise on pricing and staging your home to sell.  Listen to them! Remember:  “pricing, pricing, pricing is the new location, location, location”.  Once an offer is procured, your agent is your conduit for negotiations and a resource for various possible repair help and referrals. 

If you are buying a home, you are hiring an agent to provide service through arranging tours and professional advice through their understanding of the local real estate market.  Very few people get “sold” a house.  It’s much too big a decision for someone to “sell you”.  A good buyer’s agent helps you sift through the pros and cons and make an educated decision.  Your agent is a great sounding board and support through brainstorming.  Once you’re ready to make an offer your agent is your negotiator, mentor and source for various referrals to lenders and property inspectors.  Remember:  “buy the least you can buy and still be happy”.

QUANTITY VS QUALITY

Are the old models of fancy, grand or impressive “brick & mortar” real estate companies a thing of the past? Will we see more and more unaffected and/or simplified offices or “virtual” offices as our real estate profession morphs into this new age of “cost-effective” business? The “Old Brokerage” model was forced to focus on recruiting to pay for the lavish accoutrements. It became a numbers game right? “The brokerage with the most agents wins”. The traditional brokerage models focus on recruiting as many people as they can into their brokerage. As they do this, they tend not to focus on the actual agent they are hiring but only on acquiring another body. When I began my career in the mid-80’s, there weren’t many agents and the offices were small. Then, I felt training was a priority and you had an opportunity for lots of personal attention from your Broker. We had weekly classes and the training Broker was always available to “brainstorm” problems and give advice. These days, both subconsciously and consciously, people know they don’t have to work hard to be part of brokerage. Every traditional brokerage in town allows any agent to hang their license with them if they have a pulse and a real estate license. I believe part of the new model of the new agent in our new world will be an emphasis on training, on reliable mentors and on experience. The advent of so much online information makes the role of the agent more as a “trusted advisor” rather than a dispenser of facts and figures. We should relish the onslaught of that kind information and the possibilities that our new role will be more engaged, more educated and more flexible.

The changes are already happening. The consumer is demanding more financial intuitiveness, more real estate opinion based on field experience and more disclosure. First, the brokerage will only focus on quality of agents. Second, the structure of how an agent works will change. Third, the service given to the consumer will be instant results, knowledge, and services. The consumer will also see the value of this “New Brokerage” because there won’t be inexperienced agents charging the same commission as the experienced agents. Would love to hear other thoughts on this

CHOOSING A REAL ESTATE AGENT IN THE PORTLAND, OREGON MARKETPLACE OR PARTS UNKNOWN! BEAM ME UP, SCOTTIE!!

I have a theory of business that “like attracts like”.  It’s no different when choosing a Realtor to help in the sale of your home whether or the purchase of a new home whether in Portland, Oregon or Timbuktu. I know the most successful business relationships come from referrals from my existing client base. But, every business relationship has to start somewhere. So, a second good way to establish a business connection is through “web relationships”.  Blogging & social media has replaced the conventional web site basically because it allows the buying public to feel a connection with the blogger or participant. An online relationship can evolve through an understanding of the personalities and core values.  A business mission should convey those core values. And, not just generic values like honesty, integrity….those should be assumed for any business relationship.  Convey your core values through your example!  I’m frugal, conscientious with my money, I always run the numbers. I own investment property and absolutely believe that over the long haul real estate is still definitely one of the most attractive investments.  Why is that?  A house is home & hearth for your primary residence, you can establish a budget based on an established mortgage amount (as opposed to rent which tends to increase) and it feels good.  An investment property is something you can drive by to look and touch, it’s a great write-off and someone else pays (at least most) of your costs.  There will be no pressure because you must determine how this investment will work for you (with any help I can give).

Anyway, I digress from how to choose an agent.  Choose based on your core values and needs. This is a business relationship with a lot of personal connection.  You will find that you will be speaking with your agent a lot more than you want to talk with anyone besides friends and family!  Make sure your core values are “heard and understood”.