Increasing anger about real estate issues

What’s behind the increasing anger about real estate issues?

Did you know there is an anger epidemic in the U.S.? Dan Bowens of Fox 5 (New York) cited a USA Today study indicating that 60% of American adults polled reported they had angry or irritable feelings – which is a 50% increase from a 2011 poll. And if you are in a service industry, such as a real estate, you not only encounter the occasional obstinate client; but you can also find yourself engaged with bullies.

by Dan Krell © 2013

According to the American Psychological Association (apa.org), “Anger is an emotion characterized by antagonism toward someone or something you feel has deliberately done you wrong.” Anger can be used constructively to solve problems, but it can also cause problems that can interfere with thinking and “…harm your physical and mental health…”

Anger was common when the market declined: Many home owners were irate about deflated home values; many other home owners were outraged about their underwater mortgages, while others were furious about lenders foreclosing on homes. In fact, it was common to see foreclosures that were trashed by the owners as a way to express their anger.

Anger was also common as the market strengthened: Home sellers were irritated by buyer push back on price. Many home buyers were frustrated about multiple offer situations on some homes; while a few buyers were aggravated by the notion that they were no longer able to purchase foreclosures at steep discounts.

Regardless of the reasons for America’s reported increase in anger, the issue really isn’t the anger per se; anger is a useful emotion that can be productive. But rather, anger seems to be increasingly manifesting in irrational and aggressive means – even in the real estate industry.

A recent edition of Realtor® Magazine (Daily Real Estate News; October 20, 2013) reported that there are increasing incidents of physical assaults of real estate agents; attacks have been reported in model homes, open houses, as well as in their offices. Although these acts of physical aggression are increasing; the article did not report or discuss the more common verbal aggression, which includes threats and intimidation.

Anyone can get caught up in their anger and cross a line; agents, clients, neighbors, and even those who are engaged in a seemingly noble neighborhood cause are not immune. Fortunately, anger can be short lived and resolved; however, if the anger becomes all consuming – it may be time for mental health intervention.

The anger statistics didn’t surprise me. It seems as if we can find something to be angry about if we want to. However, it may be worthwhile, especially those who have been chronically angry and have lashed out at those who do not acquiesce or comply, to let go and be thankful for the good in our lives.

Goal Auzeen Saedi, Ph.D. sums it well (Why Are We Americans So Angry? Psychology Today; Millennial Media; April 30, 2013): “But what do we do with all of this anger? We let go. We forgive. We meditate and pray. We surround ourselves with loved ones…There are parts of all of us that could be made softer and kinder. We can learn to see the good in each of us that exists and teach our children to do so. Or we can continue to get angry, bully each other, make threats and demands. It is our choice.

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Disclaimer. This article is not intended to provide nor should it be relied upon for legal and financial advice. Readers should not rely solely on the information contained herein, as it does not purport to be comprehensive or render specific advice. Readers should consult with an attorney regarding local real estate laws and customs as they vary by state and jurisdiction. This article was originally published the week of November 25, 2013 (Montgomery County Sentinel). Using this article without permission is a violation of copyright laws. Copyright © 2013 Dan Krell.

November 20, 2013November 23, 2021

Realtor production or customer satisfaction – importance and meaning of rankings

What’s more important? The number of homes your real estate agent sells; or the customer service they provide?

“#1 Real Estate Agent.” “#1 in Sales.” “Top 1% Nationwide Producer.” If you’ve spent some time with real estate agents, you may notice how many tout themselves as being #1. And although some of these rankings are legitimately given by a recognized organization; many agents may be creating their own production ranking designation to use for marketing purposes.

by Dan Krell © 2013

Ranking designations are used in various industries to demonstrate a superlative product, or excellent service. One of the most recognized organizations that bestow ranking designations is J.D. Power & Associates. J.D. Power & Associates is most notable for ranking customer satisfaction in the auto industry, but they also rank satisfaction and other industries including real estate. In fact, you may see the J.D. Power & Associates ranking on a home builder or national/regional broker.

Production ranking is more prevalent in the real estate industry, however, and there are a number of organizations that rank the production of agents, teams and brokers. With the growth of the internet, unofficial production rankings can be found on many home search and real estate data websites. REAL Trends (realtrends.com) is a company that is dedicated to providing analysis of the residential real estate industry, and offers real estate data online; the site provides agent, team and broker production rankings in the U.S. and Canada

The National Association of Realtors® has been toying with the idea of adding a ranking system on the consumer home search site Realtor.com (operated by Move.com). The pilot program, called “AgentMatch,” has not been received well by many agents. There are concerns about the perceptions created by the displayed production statistics; some critics cite issues about statistics that may not be representative of production, which also may not tell the entire story behind of many transactions.

Another NAR initiative in agent ranking is a pilot program called the “Realtor Excellence Program.” Currently the program is being tested in several U.S. markets; and as a recent Chicago Tribune article (Realtor group testing agent ratings program, March 15, 2013; by Mary Ellen Podmolik) reported, it is being received well. What’s different about the “Realtor Excellence Program” from other agent ranking programs is that this program provides agent ranking through customer satisfaction. A quote from Laurie Janik, general counsel of the Mainstreet Organization of Realtors® says it all, “I’m looking at reducing liability. I want happy sellers and happy buyers…Right now we measure agent performance based on how many deals they did…But was (the transaction) a train wreck?”

This distinction between agent production and customer satisfaction is an important one. Although you might think that high volume production and customer satisfaction are not mutually exclusive, the relationship usually has some negative correlation; customer satisfaction typically takes a back seat when production goals increase. If a high volume real estate agent or team is invested in maintaining or growing their production, you need to ask about their commitment to customer satisfaction.

Many agents use national averages to determine that they are in the top percentile in production. Using these averages and stats, I also find myself in the “top tier” of various categories. Be that as it may, many consumers deem self promotion about production in a service industry as gauche and trivial. Many consumers are less interested in hiring agents whose focus is about being #1; rather, consumers want to be treated as #1.

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Disclaimer. This article is not intended to provide nor should it be relied upon for legal and financial advice. Readers should not rely solely on the information contained herein, as it does not purport to be comprehensive or render specific advice. Readers should consult with an attorney regarding local real estate laws and customs as they vary by state and jurisdiction. This article was originally published the week of November 18, 2013 (Montgomery County Sentinel). Using this article without permission is a violation of copyright laws. Copyright © 2013 Dan Krell.

September 12, 2013November 23, 2021

Dual agency debate continues; revealing results from recent real estate research

by Dan Krell © 2013
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Understanding representation in a real estate transaction can sometimes be tricky. You might think, after all, “If I work with a real estate agent, they represent me.” Not so fast; understanding whom real estate agents represent can be confusing in some situations, most notable is the concept of dual agency.

Maryland, like many other jurisdictions around the country, allows for dual agency. “The possibility of dual agency,” as described on the Maryland Real Estate Commission website (www.dllr.state.md.us/license/mrec/mrecrep.shtml), “…arises when the buyer’s agent and the seller’s agent both work for the same real estate company, and the buyer is interested in property listed by that company. The real estate broker or the broker’s designee, is called the “dual agent.” Dual agents do not act exclusively in the interests of either the seller or buyer, and therefore cannot give undivided loyalty to either party. There may be a conflict of interest because the interests of the seller and buyer may be different or adverse” [emphasis added].

Dual agency has been widely debated since its inception. And as the industry rapidly transforms, the issue is likely to continue to be a hot topic; for example, as real estate teams have become more prevalent in the marketplace, many argue that the potential for conflicts of interest in dual agency transactions becomes increasingly significant.

In his February 2010 Agbeat.com article (February 16, 2010; The Age Old Dual Agency in Real Estate Debate), Patrick Flynn states that although dual agency is legal in many jurisdictions, “…dual Agency is the ultimate no win scenario. Even if all parties agree in writing (and if you explained the likely pitfalls and risks to both parties…they never would agree) you simply cannot perform your prescribed duties…”

He continues to say that although there is potential for damage and irreparable harm to those involved in a dual agency transaction, most of these transactions close “without a hitch;” and the agent’s attention moves from common sense and integrity to the “little devil” on their shoulder that tells them, “Look at all the money you made!”

Recent research, investigating whether dual agency transactions are a result of agent incentives (e.g., money) or efficiency, suggests that the issue deserves further investigation to understand (among other things) the effects of dual agency, potential for conflicts, and to determine if buyers and sellers are poorly informed. Regardless, Brastow & Waller conclude in their 2013 study (Dual agency representation: Incentive conflicts or efficiencies? The Journal of Real Estate Research, 35(2), 199-222) that dual agency is more likely to occur at the beginning and end of a listing contract. When a dual agency sale occurs at the beginning of a listing, they conclude that it is a result of agent incentive and results in an efficient quick sale. However, when a dual agency sale occurs at the end of a listing contract it is usually due to agent incentive (e.g., avoiding loss of sale) and the home is more likely to sell for less.

Locally, the Maryland Real Estate Commission requires that real estate licensees, who are assisting you, provide disclosures describing agency relationships (including dual agency) “at the time of the first scheduled face to face contact with you.” Your agent can assist you in understanding dual agency, when it occurs, the potential issues of dual agency, as well as what should happen if you decide to not agree to dual agency.

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Disclaimer. This article is not intended to provide nor should it be relied upon for legal and financial advice. Readers should not rely solely on the information contained herein, as it does not purport to be comprehensive or render specific advice. Readers should consult with an attorney regarding local real estate laws and customs as they vary by state and jurisdiction. This article was originally published the week of September 9, 2013 (Montgomery County Sentinel). Using this article without permission is a violation of copyright laws. Copyright © 2013 Dan Krell.

August 30, 2013July 4, 2019

A glimpse into home buyer and seller behaviors

Buying and selling a home can be one of the most expensive and complex transactions you may undertake in your lifetime. Many are increasingly seeking assistance from real estate agents; according to the Highlights of the 2012 National Association of Realtors® Profile of Home Buyers and Sellers (realtor.org), eighty-nine percent of home buyers purchased their home through a real estate agent (a substantial increase from the sixty-one percent who indicated they purchased through an agent in 2001), while eighty-eight percent of sellers listed with an agent.

If you plan to hire a real estate agent, conventional wisdom dictates that you should interview several before choosing an agent. However, the logic is countered by the survey results. Approximately two-thirds of home buyers and sellers only contacted one agent. Additionally, a majority of buyers and sellers reported that the top means of finding their real estate agent was through a referral from a friend or family member. Forty percent of home buyers and thirty-eight percent of sellers found their agent through a referral from a family member or friend. First time home buyers were most reliant on their friends’ and family members’ referrals.

Repeat business was also a frequent way indicated in choosing a real estate agent. Although ninety percent of home buyers and eight-four percent of sellers reported that they would work with their agent again in the future; only twenty-three percent of home sellers and ten percent of buyers reported that they had worked with their agent in the past.

The internet is increasingly viewed as an important source of information for home buyers. Ninety percent of buyers surveyed indicated that they used the internet for their home search; the percentage rose to ninety-six for buyers under the age of 44.

Ultimately, your home purchase or sale falls upon the experience and skill of the agent you hire. Because of the increase in specialized transactions (such as short sales, 1031 exchanges, etc), it is probably a good idea to find out if the agent has the experience if your purchase or sale falls in this category.

A recent research study by Bennie Waller and Ali Jubran (“The Impact of Agent Experience on the Real Estate Transaction.” Journal of Housing Research 21, no. 1 (2012): 67-82) highlights the notion that an experienced agent can yield a better result than an inexperienced agent. They concluded that hiring a “veteran” agent will have a positive effect on your home sale. The data indicates that “rookie” agents, those who have had their real estate license two years or less, sell homes for less, take longer to sell homes, and are less efficient during the process.

Asking friends and family for referrals as well as calling the agent you previously worked with is a good way to find a real estate agent. However, vetting out potential issues can be achieved by asking the right questions before you hire them.

Regardless of how you find your real estate agent, it is probably a good idea to find out more about them. A conversation about their experience, knowledge, and expertise is probably a good way to start. Additionally, knowledge about the local market is extremely important these days as market trends have become hyper-local. Not understanding the neighborhood market can lead an agent to over or under price a home.

by Dan Krell
© 2013

August 21, 2013November 23, 2021

Home buyer’s privacy

In a time when there is increasing concerned about personal privacy, maybe it’s time for local Realtor® associations (such as the Greater Capital Area Association of Realtors®) to retire the Buyer’s Financial Information Sheet, or at least make major revisions to the form. The Buyer’s Financial Information Sheet is an invitation for abuse and misuse by those who may otherwise be well intentioned.

Sure, privacy laws have been recently enacted that prescribe protocols on the handling and disposal of sensitive personal information. However, there are no provisions to ensure that real estate brokers, agents, and those who have access to the personal data follow such precautions.

If you ask a real estate broker about the origination of the Buyer’s Financial Information Sheet, they might explain how agents needed a means to pre-qualify buyers in a time when loan officers’ pre-qualification letters had little meaning on their own. The tradition of a completed form portrays the buyer’s ability to purchase a home. Legal minds might go further to explain that the form may provide additional recourse for the home seller in case the buyer provides misleading and/or false information, and/or omits relevant information about their financial standing.

Today, many home buyers are pushing back (and rightly so) at the request to provide an abundance of specific financial and personal information to their agents, listing agents and sellers. For many home buyers, the resistance to sharing personal and financial information is not only because of discretion, but mainly because they feel the sharing of the information is redundant and ineffectual. Many home buyers have already provided similar (if not more) information to their loan officer so as to be issued a pre-qualification letter. Additional concerns include the use of buyer financial information to during contract negotiations.

Times change, and it’s time to take home buyer financial information out of the hands of real estate agents. The argument that sellers want to see the buyer’s ability to purchase is antiquated. Today, mortgage originators are licensed and take seriously approvals that are issued because consumers may have recourse; the loan officer usually performs a minimal level of due diligence.

Mortgage originators are required to undergo a federal and state criminal background checks for licensing. Additionally, lenders offer training on managing and disposing sensitive personal information; many lenders offer secure means of electronic transmission of sensitive data. Chances are that the agents involved in your transaction did not undergo a recent background check, much less the seller. But if you are asked to complete said form, you are expected to trust those who may handle and view it.

Additional problems that can occur when presented with the Buyer’s Financial Information Sheet include the compulsion by listing agents and home sellers to underwrite the buyer’s mortgage; they may indulge in deciding whether or not the buyer is mortgage worthy when they may be unqualified to do so. Additionally, listing agents and sellers are tempted to use the buyer’s financial information in negotiations; misguided sellers may regrettably lose a deal when they are told to hold out for a higher price from a buyer who may walk away from negotiation.

Protect home buyers and sellers: retire or change the Buyer’s Financial Information Sheet. Cash buyers can still provide proof of funds to purchase, while other buyers can provide a lender’s letter along with a “Buyer’s Financial Affidavit” that certifies that all information provided to their lender is accurate.

Original published at https://dankrell.com/blog/2013/08/21/home-buyers-privacy-an-argument-to-retire-the-financial-information-sheet/

By Dan Krell
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What’s behind the increasing anger about real estate issues?

by Dan Krell © 2013

What’s more important? The number of homes your real estate agent sells; or the customer service they provide?

by Dan Krell © 2013

by Dan Krell © 2013 Google+ DanKrell.com

by Dan Krell © 2013
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