Yes, I know it is months until Halloween but I have heard so many horror stories lately, that I just could not wait. Do you like horror stories? I have four to share with you about real life real estate agent and lender scares that I'd rather you avoid.
So Much Real Estate Horror!
Looking back over the past few months of transactions, I have never in my 22 years of real estate experience seen and experienced so many agent and lender horror stories.
Why does this matter to you? Whether you are a buyer, seller, landlord or tenant, these situations affect you in terms of time, money and emotional stress.
Let's take a closer look so that you are prepared and protected as much as possible.
1. Professionalism in Real Estate? Bah Humbug.
The traditional real estate brokerage business model is not built upon a foundation of professionalism or customer service. In fact, it exists to directly oppose customer's needs.
Traditional franchise brokerages are about "quantity" of agents, not quality. The owner of the brokerage is a corporate entity usually in cahoots with the National Association of Realtors and MRIS (the Metropolitan Regional Information System) and makes money off of agent membership fees, i.e., the more agents the better so that more membership fees are generated.
Professionalism and quality of agent are secondary. Yes, there are training programs, but they usually emphasize lead generation, not contracts, negotiations and the responsibilities that come along with being a fiduciary to your client. The manager of the office is a salaried employee who gets paid regardless of individual agent productivity. Recruiting new agents is the priority for these managers who would rather have 100 agents who each do 2 transactions a year (not much experience or commitment level among these agents) as opposed to 8 agents who each do 25 transactions per year (this requires commitment and experience and is usually better for the customers).
So who would you rather represent you in the largest financial investment of your life? An agent who is "nice" and maybe has a few transactions under their belt? Or a true professional who is committed to their career and to your success?
Choose your agent wisely, do not be distracted by the name of the brokerage. It is the agent who matters so check out their credentials closely.
2. A Maryland Real Estate License Does Not Mean Expertise For the Entire State of Maryland!
Just because agents have a real estate license for the entire state of Maryland, does not mean that they have the expertise to help you all over the state of Maryland.
It is shocking to me how many agents and brokerages do not limit their geographic areas or demographic niches. What do I mean?
As a fiduciary and a professional, our job is to provide you with the best service possible. Sometimes that means saying that "we are not the best people for the job" and referring you to a professional who can truly look out for your needs. As a prior corporate lawyer, I am shocked and saddened at the agents who try to BS their way through a transaction only to have it come crashing down later and demoralizing their client, costing the client so much unnecessary time, money and emotional distress.
Would I allow one of my agents to represent a client in Montgomery County? No. We specialize in the Baltimore metro area and surrounding counties.
Each jurisdiction has its own laws and disclosures and we want to make sure we represent our client thoroughly and properly.
Are we legally allowed to work in the Washington DC suburbs of Maryland? Yes, our license allows it but I, as the broker, do not. It is a disservice to you, our client and would open all of us up to lawsuits, frustration and a poor customer experience. Yet we see agents venture into unknown territory every day, without disclosing the downside to their clients. It is sad to see.
Agents, why can't you just do the right thing?
3. Lenders - What a mess!
And you thought the agent/broker model was broken? It is time that someone looked at the mortgage process. Many "lenders" are nice, likable people who are good at making you feel good but not good at delivering straight talk and the truth and, in this market, you need straight talk.
Why do they approve buyers without verifying assets and income? Why do they allow the agents to submit contracts with unrealistic loan commitment and settlement deadlines? Or without checking the specifics of the loan with their underwriters and appraisers? Why do they not answer their phones or deliver information in a timely fashion? And then they ask for constant extensions without accounting for your out of pocket costs and stress.
I can't answer all of these questions. All I can tell you is to choose your agent and your lender wisely. There are so many parties and so many moving parts in your transaction that you need a professional team to get you to closing on time and with as minimal stress as possible.
4. Real Estate Transactions Are Complicated And Most Agents Cannot Handle Complexity.
We were shocked this past month to have an experienced, coop agent on the other end of a transaction that we discovered was totally incompetent. We assumed (I know this is a bad word) that since she had years and years of experience that she would understand the intricacies of the deal. We were wrong.
Here are the facts:
- The seller was a corporate out of state entity, i.e., not emotionally invested in the property at all.
- The home had a current tenant living in the property so, I assume, there was a written lease between Seller/landlord and tenant that needed to be reviewed PRIOR to putting it on the market.
- Our office represented the buyer.
Without going into all of the details, I will just sum it up to say that this agent was in way over her head. She did not understand the current lease, had her Seller sign a sale contract without properly notifying the tenant regarding vacating the property, did not properly communicate the details of the transaction to her out of state Seller, did not check on the property, and was shocked when everything fell apart. But we weren't. We handle complicated transactions every day and take a lot of time and care to make sure that we pay attention to the details.
All of the delays, frustrations, anger and out-of-pocket damages could have been avoided if:
1. The agent truly understood the intricacies of the deal and all of its documents, or
2. Had admitted she was in over her head and referred it out to a professional.
Unfortunately, neither of the above happened and all parties suffered in terms of time, money and emotional distress.
Why So Much Real Estate Horror?
Why is all of this happening now? I have a variety of theories that I can elaborate on at a later date. But the problem is bigger than me or Yaffe Real Estate and is going to take a long time to solve.
In the meantime, please, please, please choose your team wisely. A true real estate professional will help manage your expectations and navigate the process so as to minimize your stress. Though we can't make everything run smoothly, we can at least educate you so that, based on honest information, you make the best decisions for you and your family and you go in with your eyes wide open.
Sorry to vent, but we truly care about you and your experience.
Have you had a horror story lately? Share it with me. Let's learn from it so that we can all prepare better in the future.
Image Credit: Halloween Horror Nights: Gothic on flickr by Boogeyman13