Floating around the real estate blogosphere is a discussion created by Chris Smith over at Inman. He wrote a post stating that real estate is no longer a relationship business. Essentially he was saying he doesn’t want to be friends with his real estate agent after the transaction. As of today there were 153 comments and several offshoot posts including one by Notorious Rob. I had started to comment on both posts, but figured, eh…probably would make a better commentary on my blog.
A bazillion years ago with no Internet, phones, computers….well the dark ages mind you, after we shoved the natives out of the way, there was the land rush. No real estate agents were needed. All you needed was a fast horse, a stake, and the where with all to out cheat those around you or have a bigger gun to get the land you wanted. From these bright beginnings, people needed to be brought together to buy and sell their properties. I would bet most were For Sale By Owner as you probably knew most people at church and were able to negotiate your sales through friendships. As cities became larger, it became harder for people to find buyers for their properties and enter the real estate agent whose job it was to know everyone. The real estate industry was born out of necessity as people slowly started to disconnect from each other as cities grew.
Back then, real estate was all about lifelong relationships. The way agents differentiated themselves was on their level of service. Agents that have been around for a long time have told me stories of cleaning houses for clients, digging ditches, painting, etc. Going the extra mile in that form was the differentiation. It wasn’t about being a better negotiator, knowing the landslide areas, where there are well problems…none of that was the focus of real estate agents for the most part.
The MLS didn’t exist so it was all about what information you held on listings and what you were willing to do to get a house sold. MLS’s started to form in the late 1800’s and was just an informal meeting of brokerages where they agreed to pay another agent a fee if they brought them a buyer. From there, the MLS’s spread. The nature of the real estate relationship changed from an agent needing to know the buyer and seller, from the agent only needing to know other agents. This was the original Google+ group.
As MLS’s became the dominant way of doing business, holding those listings close to the chest became the power of being a real estate agent. The reason to hire an agent was for this access. Agents built their businesses by being friends to everyone, and the portal to active listings. It wasn’t like someone could just google you to find you again. As the Internet came into play and MLS’s starting allowing listings to get disseminated on the net, knowledge of the listings themselves became useless information. This move was controversial in real estate because there was the underlying assumption that this knowledge was the entire value of what a real estate agent had to offer. Knowing all the real estate laws was less of an issue due to the lack of complexity of transactions back then.
As buyer agency came into play in the 1990’s, real estate contracts extended from 1-2 pages to our current 10 pages, plus about 20 additional addenda to use depending upon the nature of the transaction. Notorious Rob stated in his post,
The reason why “relationship” was such a dominant theme in real estate marketing, I think, is this focus on service, rather than on expertise.
Real estate has shifted from being all about which agent was willing to go all out and clean your house to the current what do you know to represent a clients desires. Real estate is a knowledge based business and less about being your best buddy for life. With access to so much information, it is clear to me that what consumers want from the real estate industry is an advisor and not a socialite for life. While many sellers may appreciate me cleaning their toilets, I think they’d prefer that I spend my time staying up on real estate laws, market conditions, and things that may impact the sale of their home beside a dirty kitchen counter. They are paying me to take the time to know what they need to know. Hopefully most people already know how to clean a toilet and if not, chat with your parents about that problem.
Relationships are an integral part of life, and so to say that real estate isn’t a relationship business at all, of course isn’t true. You can’t get business if people aren’t aware that you exist, but that doesn’t mean that every client wants to hang out with me at a local coffee shop. Not everyone wants to tweet or Facebook with me after a transaction. Not everyone wants to get my newsletters, or have me call under false pretenses of being your friend to see if you have any friends that want to buy and sell a house with me. Some people just want me to help them buy or sell a home and then be left alone. In my opinion, a good real estate agent will know the difference and respect a clients’ desire to not be married to their agent for eternity.
Now, it doesn’t mean consumers are looking for abrasive people with no social skills to be their real estate agents, and some clients become very close friends with their real estate agents. I think if real estate is going to survive as a profession, it has to shift from a “hey I’m really nice and will love you forever, so hire me” focused industry to one of skill and knowledge with a good house-side manner. It is what the consumers want and quite frankly after the debacles of the boom, it is what they deserve.