Agency

Steve was dutifully reading his long-anticipated California Presidential Primary Election “Official Voter Information Guide” yesterday, and came across the all-important Proposition 91. This proposition calls for a State constitutional amendment regarding the use of transportation funds, but that isn’t important.

When evaluating how to vote on complex issues of which We the People have little understanding, we routinely refer to the arguments in favor and against which are conveniently presented to us by the “experts” immediately following the 10,000 word, small font legislative description (which we can not understand as we failed to complete our Juris Doctorate course work or don our magic decoder rings this particular day). So, I bring you this, straight from the Information Guide, which should clarify this critical piece of proposed legislation:

Argument in Favor: “As the official proponents of this measure, we are encouraging you to VOTE NO ON PROPOSITION 91.”

Argument Against: “No argument against Proposition 91 was submitted.”

Huh? Steve’s response was, “I can’t wait to read Proposition 92!”

Offering a home for sale has become a lot like our beloved Proposition 91 lately. All indications (the yard sign, the Multiple Listing Service entry, the flyers in the flyer pouch) are that the owner wants to sell. Yet, the arguments in favor are confusing and suggest otherwise. These are some of the ways in which you and your agent could be screaming “Vote No!”.

• Property flyers should not be appear as if they were created with a box of crayons while wearing coordinating oven mitts and then copied on a machine with a depleted ink cartridge.
• Showing instructions should not involve the imposition of obstacles such as “show only between 1:00 and 1:02 on the New Moon Pisces Rising. Agent must be present. Buyer must be prequalified by Seller’s uncle in Raleigh. Don’t enter garage - Agressive emus may bite.”
• MLS entries should be written in a widely-recognized language, such as Sanskrit. Or English.
• Photos should be professional, plentiful, and, preferably, of the home, not of the occupants or of the agent/photographer as reflected in the bathroom mirror.
• Condition should be ‘’show ready.” Now would not be the time to experiment with sponge painting, to redecorate in Early Hunting Lodge, or to try that new recipe for Pickled Puffin with Curry Chutney.
• Price (of course) should be based on actual sales data, market activity and competition, not on a call to the 1-800-Psychic Hotline.

There is nothing new here; we have written about these things repeatedly in the past. My proposition has a new twist. As a seller, it is not you who is to blame but your agent.

All of these mixed messages are ultimately delivered on your behalf by your agent and are within his control. The agent is the “expert” who is responsible for interpreting your needs and presenting the supporting arguments.

I am certain that seven hundred agents are out there right now, arms flailing, hollering, “The seller doesn’t get it! Their price is unrealistic, they didn’t agree to move the sofa (to the landfill), and they won’t allow showings on Monday through Sunday without a presidential pardon!” That very well may be, but then why did you agree to represent them? How can you get everyone to vote “yes” when the proponents are arguing otherwise?

When we “experts” sit down to meet with a client wanting to sell, we have an obligation to honestly advise on pricing and preparation, and in accepting a fiduciary role, we have an obligation to support our client’s proposition to the best or our abilities, with the best marketing, service and counsel we can provide. Sure, we have all lamented, at one time or another, encounters with homeowners who we felt had unrealistic pricing expectations. And, there will always be an agent out there who will ink the listing contract at any price and terms just to get the business, but it doesn’t have to be you.

If you see it as a losing proposition, then don’t accept the assignment. If you accept the job, accept it eyes wide open and don’t proceed to belly-ache about how unenlightened your clients are. You are supposed to be the “expert” who provides the analysis and supports the argument. Take responsibility, and get out and vote!

I want to believe in reincarnation. Not because I want to live over and over again (well, that would be nice), but because I fear that when I am fertilizing the lilies, there will be so much I failed to achieve, a cookie jar of excellence on the top shelf which I couldn’t quite reach. I want to come back as Marc Davison.

This post is quintessential Marc - the perfect combination of fabulous writing and dead-on message.

For the most part, real estate just tries to throw a net around everyone.To be all things to all people. Well, the sad part is, that doesn’t work. You end up appealing to no one. You are like everyone else. Plain vanilla yogurt…

I want to be the more satisfying, fun flavor with sprinkles. And this is one of the greatest values of blogging to me and to my potential clients. You may not like sprinkles, but you at least get the opportunity to peek into the generic packaging to see what’s truly inside before diving in.

What you call a listing, is really my home.
What you refer to as a lead is really just a person looking for some information. 
The neighborhood I live in you call a … farm. 
Once I make a simple inquiry, you incubate me as if I were an egg.
To keep me interested you drip on me rather than shower me with affection.
When you sell my home, I become a notch on your top producer belt.
You market to me as if your personality means more to me than the value of my home.

Agents are trained to be vanilla yogurt. From the day the new agent is shown to his cubicle, he is enrolled in a total emersion class in the language of real estate. While he is taught to farm and drip mail and court his sphere of influence (formerly known as friends), the ideas of professionalism and excellence and integrity are swept under the rug like so much clutter. When lip service is paid to these concepts, it is as a throw-away line, subordinate to the primary goal of getting the deal.

To be a doormat you have to lay down. Agents whine and bemoan the pervasive lack of respect for their numbers, yet we have spent our history trying to enter from the off-ramp. No wonder we’re a wreck. Of course we need clients to make a living, of course we need clients to demonstrate professionalism, excellence and all the rest, and of course we need to market ourselves to earn the customer’s business. But we are coming at it from the wrong direction. The lessons we need to first master are not those involving bulk-mail farming, chasing “expireds”, or converting open house leads. How can we possibly expect the public to respect us when the most respect we can give them is a Recipe of the Month card or a reminder to set their clocks back on Daylight Savings day in the form of a PrintShop-generated door hanger?

On second thought, I want to come back as a real estate Broker-Owner. My office policy manual will include the following:

• No agent shall be allowed to participate in a real estate transaction until they have successfully completed training in basic business practices, contracts, liability, and ethics - real training.
• No agent shall be allowed to participate in a real estate transaction until they have successfully completed training in technology and demonstrated competence through application.
• Ethics violations of any kind will be immediate cause for dismissal.
• No agent will be allowed to even think about paying (or having their clients pay) a Transaction Coordinator to manage their paperwork until they have done it themselves, start to finish, and a minimum of six times. Veteran agents will be required to self-manage at least one transaction per year as continuing education.
• Any agent who even thinks about a marketing program involving unrelated content, including but not limited to “List with me and get a free (anything)”, “Forget-Me-Not” (seed packet included), and “Your Neighborhood Specialist” will be hog tied and left for dead in the title company’s lobby.
• Pop-quizzes will be administered periodically to test the agent’s knowledge of fundamentals such as statistics and trends for their market, statutory disclosure laws, Board rules, mortgage rates, and how to multiply and divide integers. Agents failing to receive a passing grade will be excluded from next year’s office holiday party and have mustaches drawn on their bus bench images (with Sharpies). 
• Property brochures consisting of black and white photocopies of the multiple listing service entry will be set afire.
• Agents without a professional website and email address will be set afire.
• There will be annual performance reviews and minimum standards, not based solely on the agent’s “numbers”, but on the numbers measured against the satisfied customers versus destruction having been left in their wake.

Income alone will not be sufficient to ensure future desk space in my next-life office. This means that I will have to be selective, but I assure you that my office will be full. There truly are many, many exceptional agents out there; you just have to know what to look for, what to teach, and how to inspire.

I will let Marc work for me.

I have spent the better part of the past week at the Inman Connect Conference, a real estate technology event or, as some prefer to call it, a trade show. While there are many detractors out there, I found the experience to be much more than a vendor feeding frenzy and even more than a frivolous party, but that’s just me.

I kept a mini-travel journal beginning here which spoke to my impending departure, continuing to here, where I summarized the H-E-Double-Hockey-Sticks that is airline travel, and even landing here, where I submitted a field report on a little industry “stuff”. Of course, I couldn’t help amusing myself with a parody of the Perfect Blog and Blogger. Call that last one my “me” time.

Although one of the things I learned at the conference was that the Bell Hops at the Palace in San Francisco do indeed accept Visa and American Express, it was worth the price of admission (my daughters’ college educations). And so much of what I heard was yesterday’s newspaper yet was a swift-kick-in-the-hind-quarters reminder to tackle some items on last week’s To Do list.

As expected, I added 478 new ways to promote our client’s properties for sale online (this to our already stout list). I finally was inspired to the point of adding electronic signatures to our arsenal. This came in particularly handy today as I was chasing contract signatures from a client who lives in Japan, and it will come in equally handy next week when I won’t have to schlep across town chasing an overlooked initial (or have my client schlep to my office). I finally tackled the challenge of combining market trend data with mapping technology, which turned out to be not much of a challenge at all.

My biggest “take aways” were conceptual and will take some time to sort through before they morph into actual commentary. Many industry heavyweights were in attendance ranging from the carpetbaggers and opportunists, to the visionaries, to the old guard (NAR) trying desperately to hold fast to their model which is under threat of becoming outmoded, to the field soldiers (the agents) sincerely trying to improve their business and their value to their clients.

At the unspoken overlapping center of this Venn Diagram was the consumer. The consumer was directly or indirectly referred to as a “hit”, a “unique visitor”, “future business”, a “lead” and a “lead conversion”. 

How about we return to thinking of the consumer as the “Customer”? This will be the cornerstone of my reworked business plan, not the client as customer concept (that has always been our philosophy), but the notion that we should worry less about winning the customer’s business and more about perfecting our business to the point where we will have left no doubt as to our qualifications for the job.

One thing the customers all have in common is that they are different. Some are primarily concerned with an agent’s fees, some will never believe that they need an agent at all and will opt to use (our) online resources to do it themselves or ultimately do it with a faceless limited services model. Still others will select the agent that they see at church or at the weekly Bunko game every time. And then many more will find value in the things we perceive value in - deep and rich marketing, comprehensive and current market knowledge, a slate of technological tools and business systems to streamline the transaction process, and experience. If our values aren’t aligned, in fact, we shouldn’t be working together.

Not everyone will choose to work with us, and, as agents, we should all be a little less concerned with winning you over - as a hit or visitor or lead. We should be a lot more concerned with improving ourselves as service providers, consultants, and professionals, and effectively communicating what we stand for. Then the choice will be yours. As our tag line says, “It’s Your Move!”

Now, that’s progress.

I have said it before. Redfin’s success, and the success of the countless other Refin-ish companies out there, will be their failure.

 The “who pays the commission” debate rages on over at the Bloodhound, as does the banter about divorcing the seller’s agent and buyer’s agent commissions. I won’t attempt to tackle the “who pays” subject this morning, at least not in a big way. I have gone on record many times as saying the seller pays. That is the reality. The seller establishes the total commission and the seller establishes the amount of the coop to the buyer’s agent.

The bigger issue I see is the issue of whose money the buyer-side commission is versus the perception of whose money it is. And it is this perception that what will drive us toward divorcing the buy- and sell-side agent paychecks.

I have already been received a mini brow beating this week for my unpopular comments on the role agents play in making a market, so I am on a roll. I might as well stoke the fire - If I am representing the buyer, the coop fee is my money. Period. And, what I choose to do with this money is my decision. If I am Redfin, I will choose to give 2/3rds of it to my client, if I am Buyside Realty, I will choose to give more. Most “traditional” agents will confess that there are many times they will choose to credit their client some amount due to repeat business, to close the gap at the contract negotiation stage, or even to resolve repair issues arising from the property inspection.

But, regardless of who pays, it is the agent’s money, at least at close of escrow, for services rendered. Russell Shaw said as much in this recent post (read between the lines), so maybe he will come to my defense when the friendly fire ensues. It is the agent’s money, and everyone wants a piece of it.

1. Agent as Principal. This one is easy, and we get a lot of these. They can and will represent themselves. ”I live in (a land far, far away), and I am a licensed agent. I saw your listing on (pick your favorite search engine site). Can you let me in to see the home? And, oh, by the way, how much is the buyer’s agent commission?” Aside from the added hassle to the listing agent of having to provide access to the property and the fact that the out-of-area agent lacks the knowledge of the market, local disclosures, area practices and contracts, the Agent as Principal considers himself in a position to perform on his own behalf, and he will be “compensated” for those services to himself.
2. Listing Agent Shopper. “I do not have an agent. If I let you represent me, how much will you give me?” Never do they say, “My commission is “x”. How much will I have to pay you?” In any event, it is the listing agent as potential buyer’s agent who has the choice to share his paycheck for buy-side services rendered, or not.
3. Limited-Services Broker Client. “I do not have an agent. Can you show me the home?” Wait, this is the wrong topic. Okay, too many times the clients of the limited services model tend to initially lie to gain access, knowing that they are asking you to do the job for which their agent is going to be paid, and their agent has chosen to give them some portion of their commission. Most of us agree that the limited services agent will not truly, fully earn the commission, but their commission it is.

And then, there are the traditional agents who make the introduction and perform the traditional broker duties for and on the behalf of their clients. This is their job, one for which they will be paid. Some of these agents may choose to credit a portion of their paycheck to their clients in proportion to value they place on themselves, and sadly, too many seem to place very little value in their abilities, but it is their choice.

These traditional agents are the agents that are still involved in the majority of our transactions, but their numbers are diminishing. And here is why. All of the other folks I spoke of will accept a lower level of service because they perceive little risk in lesser representation. They expect, rightly so, that the listing agent will pick up the slack to ensure a successful transaction. The listing agent is increasingly being put in the position of accepting more work, more responsibility and more liability so that the buyer’s agent can give justify a business model centered on giving their own paycheck away. And the buyer’s agent is leaving the buyer with the perception that their money is somehow not really their own.

So, why may commissions ultimately be divorced and why might we just live to see a world in which the seller pays their agent and the buyer pays their own? Because each time a Redfin or the like climbs the popularity ladder, because with the success of each new listing agent shopper and discount seeker, one more nail is being driven into the coffin of the traditional buyer’s agent. When we have a world of people seeking money for nothing and a world of agents willing to deliver, the seller will have no reason to offer a coop.

Which brings me back to the wisdom of divorcing commissions and the future of the opportunists who aspire to feed on the buyer coop carrion. No coop means that buyers will finally be asked assign a value to the their representation. Buyer’s agents will finally have to demonstrate their value and earn their fee. And when the agents representing the buyers have nothing to give away but conversely have to place a price on their services and actually charge their clients directly, the associated accountability will only benefit the buyer… and the Redfins of this world will no longer have a shtick.

The Bloodhound Blog’s Greg Swann has been making his argument for elimination of agent licensing altogether. Call me busy (I have it on authority that the cat-who-hates-Steve just hurled her Fancy Salmon Feast again), call me distracted with other issues of import (paying my utility bill and my quarterly taxes weighs heavily on me right now), or accuse me of lacking the Big Thinker gene (”big” as in larger than Paris Hilton’s legal bill). I disagree with his proposition that occupational licensing is criminal, but I lack the mental agility and clarity of thought to tackle this weighty thesis this morning. That would require self-sequestration in a windowless room appointed only with black lights and the soothing background sounds of Ayn Rand’s talking book series.

What I am prepared to argue, however, is that we are already there. Sure, strictly speaking, we have real estate licensing requirements. Greg’s world, one with virtually no barrier to entry, is essentially upon us; the day when everyone is a de facto licensee is today, because the majority of the adult population it seems does in fact have their license!

My past week has been rich and full of bad-agent experiences. I have seen the devil, and he is wearing a cheap suit… or, at least, his cousin is.

Mega-Agent- I haven’t personally spoken to him, I will never meet him, but his ad campaigns tell me he is bigger than life. Trying to submit an offer on the behalf of my client on one of his listings has been an experience akin to swimming the English Channel. He is a busy, busy guy. He is so busy, that each call to his office, calls in which I identify my purpose and ask to speak with him, is met by a “Is there something I can help you with?” screening from the receptionist. Once, when I had finally, successfully navigated my way to the Marketing Manager, I felt so empowered that I was ready to take out my own ads. “Kris Berg is connected in the real estate community. Her vast Network includes Mega-Agent’s Marketing Manager!” I did finally receive, at one point (underscore “one”), a perfunctory call back to voicemail from The Man, The Man who does not publish or otherwise give out his direct phone number. “Ah-ha!”, I shrieked, scrolling through my call records.  ”Now I have his number!”  Blocked Caller.

Mega-Agent Wannabe - He is looking for a home for himself, but he is smarter than I am. I know this because he tells me it is so. Every conversation begins with my being reminded that he is the “#1 agent for (company)” in the county. Every conversation except the last, that is. The last one began with his statement, “I hate old people”. I am not kidding, and neither was he, as he proceeded to tell me why. Apparently, they are indecisive, they take up too much of his time, and they tell long stories. How dare they! I’m trying to negotiate an offer with this nice man, and they are wasting his time with stories! Oh, and after assuring me that, despite the fact that he had offers on several homes at the moment (my listing being one of them), he would honor our contract if the sellers signed, he reneged. No problem that my clients left work for two hours to sign a steaming mound of documents in good faith. I guess he is just smarter than I am. One word, Mister - Karma.

The Con Artist - I thought that the voice message said that her husband was an agent, but that he is in China. She assured Steve on the phone, however, that she was unrepresented and that he misunderstood. Later at the showing (at 8:45 PM to be exact), after more than two hours of discussion involving price and terms of an offer, the olive branch was generously extended. Steve would be allowed to represent her… for a 2% “rebate”. It seems that the husband isn’t an agent, that much is true, but the cousin is! Steve never confirmed his whereabouts, but it is presumably China at the moment. I guess they have fax machines.

The Con Victim - “I have a strange question. Did you get an offer from me on (property address)? We came to the open house and told our agent two days ago that we wanted to make an offer, but she isn’t returning our phone calls. I saw on your website this morning that it is in escrow. Was it us? Oh, wait, we probably would have had to sign something.” Tears followed. You can’t make this stuff up.

I have got at least a half-dozen more personal examples of an industry run amok from just this week alone, each more painful than the next. So, you see Greg, you win the argument but we are all losing the war. Licensing requirements, while they exist, are simply straw men. If you want anyone to be able to practice real estate, I am here to tell you that they already are.

I spent much of Friday morning sidetracked, playing with the new features on Trulia. That also happened to be the morning I had promised to revisit the limited-service real estate model in the context of an encounter Steve and I had last week. As any parent knows, “tomorrow” to a child simply means “not this moment”. It could mean five minutes from now, next week, or the Summer Solstice. I will conveniently go with this definition and consider myself well within my contractual timeframes.

I will get to it in due course. First, however, we need an introduction, as posted by me on the Bloodhound Blog this morning. ”Tomorrow” I will share our particular case study.