As I look back at more than 30 years of professional real estate practice, it is fun to remember when I first started. My very first weekend in real estate, I sold a house. Makes me awesome right off the bat correct? Truth be told, I was covering for a slightly more experienced agent who left town for Memorial Day weekend and had promised an open house to her clients. Unbeknownst to me, she had priced the home, about $10,000 under market. Since that was about 18% of the sales price, when I showed up to the open house, there was a line of people waiting to see the home. Of course most of them wanted to buy it and thankfully, it was a two bedroom or all of them would have. I proceeded to write up three offers for three different people and get them signed to wait for the seller and the other agent to return Monday afternoon. The seller’s accepted one of the offers and we closed without any problems.
You may be asking yourself, what relevance this has to today’s real estate market. Allow me to explain. The three contracts that I wrote up, consumed a grand total of 6 pieces of paper. The real estate contract at that time read something like this. Name___________, Address of the Home__________________, Offer Price $________Financing Yes/No Close Date_____Signature___________and then a short clause for the seller to accept or counter. The point I am trying to make is, the real estate process was much less complicated back then compared to now. Now we have over 30 pages of offer and counter offer and almost 70 if you count all of the disclosures and other required documents. Does that make a real estate transaction better? Back then, a real estate agent was required to understand how to write an entire contract from scratch. Today, they simply have to check the appropriate boxes.
Of course, I appreciate the modern conveniences such as lockboxes instead of checking out keys from the local real estate offices but the down side is we have lost the requirement of an agent to be the local expert with intimate knowledge of the area. If you think that does not matter, one of my very recent clients was able to raise their appraisal this month by waiting for another of my sales to close and then use it as a comparable sale to facilitate their higher appraisal.
Back in the “good ole days”, an agent had to write their own verbiage into a contract. Yes, many brokers had cheat sheets for us to use when writing a contingency or a clause protecting a buyer for their financing. That also meant that we had to understand every clause in the contract and be able to explain to my buyer or seller what their obligations were.
Some of the things that are much better are the dissemination and availability of information. Using the old MLS books seems like a joke now and even the very first computers we used were dial up baud rate of just over 1000 bits per minute. Now is seems that the availability of information is so pervasive that the real estate agent becomes, to some, un-necessary. Despite this illusion, and despite the best efforts of programmers to write an algorithm that will accurately price a home oline, Zillow and some of the other websites still fail to accurately price homes. I use Zillow’s estimates in my presentations on every listing appointment and invariably they are off on all of their estimated prices by 3-10%. Nothing replaces an experienced real estate agent pricing a home accurately and based on local knowledge of comparable sales. The biggest pricing mistakes I see are generally either from inexperienced or non-local agents. An agent from Tempe or Gilbert cannot be as knowledgeable about our area as I am. As a side note, if Zillow misses by 10% high on one home and 10% low on another home, they average those together for a zero percent error rate. My error rate is very low but not zero.
The current contract provisions are written to protect sellers as well as the buyers but are weighted significantly in favor of the buyer. In truth, most of the excessive provisions of today’s purchase contract are written to protect the brokers and agents. It literally says 3 or 4 times in the Arizona purchase contract that you cannot sue the brokers at any time, for any reason which I suspect, if were true, would make our contract much shorter. The changes required by new legislation going into effect as of October 5, 2015, adds yet another layer of consumer protection. This truly may save one in a million buyers from being cheated by an unscrupulous actor. The actual effect is that many, many, buyers will pay extra days of storage, truck rental and hotel rooms waiting for their 3 day rescission period to expire. An identical scenario occurs with lender’s requiring tax transcripts from the IRS. This prevents the forgery of tax returns by the miniscule number of scam artists who would dare try it. The actual effect is millions of people either lose their interest rate locks, the home they desperately wanted to buyer or are delayed days or weeks while waiting for these transcripts. My solution, prosecute those who commit fraud and let the rest go about their lives.
Some of the new ways are significantly better than the old. Electronic signatures alone saves an average agent about 20 hours a month just in driving time. Searching the MLS for homes based on specific criteria via third party websites and web based access, is better for both the agents and the consumers. That being said, the only place you can get the most up to date information( I get about 30 calls a month on properties that are listed as active in Zillow but are actually listed as Active With Contingencies which means they already have an offer and are looking for a back up offer) is directly from an agent portal. Once you have that information you still need an experienced agent to guide you through negotiations and act as a buffer between the parties.
Lastly, you can’t give a computer common sense. Apparently that does not necessarily mean an agent automatically possesses it either. An agent at a class that a friend of mine was in, brought up my newsletter and mentioned that he didn’t understand why I keep sending it when he never sees my signs in the area! Poor Agent! I only sold 2.5 times as many as my closet competitor and 4 times as many as the average of the top ten closet competitors last year in our area as well as over 1000 homes in Avondale in my career.
Is the new way better than the old ways? Doesn’t really matter! Just make sure you choose someone with a good reputation and many years of experience!