We need to be more patient with our clients, writes regular Inman columnist and indie broker Teresa Boardman. Our Realtor rules are often obscure, byzantine and confusing to consumers.
Teresa Boardman is a long-time columnist with 400-plus Inman columns under her belt. She writes about her real estate observations and experiences as an officeless indie broker in Minnesota.
When I look at all the rules there are for Realtors both local and national, I can understand why consumers might get a little frustrated with us. Realtors control and define the existing home marketplace.
Consumers mostly don’t care about our rules and some of them are in the best interests of the real estate agent or broker and not the consumer.
If I try to put myself in their shoes, I can see how some of our rules benefit us more than they benefit consumers or our customers. By rules, I mean business practices and Realtor rules and sometimes even the code of ethics.
On the one hand, we tell consumers that Realtors are honest. At the same time, some Realtors engage in dual agency transactions.
The real estate agent in the open house works for the seller, but at the same time he/she works hard to get buyers interested in buying any house.
Sometimes the agent holding the open cannot answer simple questions about the house, yet the interested parties assume that the agent at the open house knows something about the house. Chances are it isn’t the listing agent holding the open and consumers don’t understand that open houses are for agent lead generation and are not a necessary part of the home sale process.
Rules favor the agent and not the client
Realtors speaking out against shady but legal business practices are in violation of our code of ethics. We must file a complaint against the other party through our state Realtor association. The proceedings are out of the public eye.
Sometimes people want to see what our contracts look like before they hire us. Our state association has a rule against sharing any of the forms with anyone who isn’t part of a transaction.
Real estate contracts are proprietary and are part of the Realtor value proposition and make it hard for consumers to buy a house without our help especially homes listed by Realtors.
The exclusive buyer’s agency contacts state that the buyer is supposed to work with one agent, and they may have to pay their agent even if they use the services of another agent.
The contract favors the agent who doesn’t have to be exclusive. She can work with several buyers who are all looking for the same type of house in the same neighborhood. In fact, a buyer can find a house for sale and let her agent know and that agent can sell it to another buyer without breaking the contract with either buyer or breaking any rules.
If a buyer wants to see a house, he/she can call the listing agent. Why wouldn’t someone who wants to see a house call the listing agent? How would a consumer, customer or clients know anything about procuring cause and why would they care? It isn’t their problem. They just want to see the house and maybe buy it.
I have listened to many agents rant and rave because their clients bought a house without them. The clients went to an open house without having signed a buyer’s contract. They were not really planning on buying a house and bought it on the spot with the help of the listing agent.
Consumers often don’t act in their own best interest because they don’t understand how the real estate business works
A couple of years ago I had clients who were actively looking to buy and then they stopped for a few months due to a job change. Shortly after our contract expired, they found a house they wanted to see but they did not want to “bother” me. They worked with the listing agent and bought the house. Why would they be under any obligation to follow our rules? What is in it for them?
I remember the nice couple who were my neighbors. They visited a model of a warehouse renovation project. They called me a year later when the project wasn’t even started, and they could not get their deposit back. They said they did not know they could have worked with me on the purchase and that I could have helped them. How could they be expected to know this?
On their own homebuyers do a lot of things that I would advise against. I just had a client send a pre-approval letter directly to a listing agent. Usually, the pre-approval letter goes to the buyer’s agent and is included with an offer.
These buyers have already let the listing agent know that they plan on making an offer and that they are working with me. That is how these buyers want to do business. They are creative outside-the-box thinkers that I have no control over.
Filling out a purchase agreement form designed by the state association takes training, skill, and practice. In Minnesota, we tend to include everything that has ever gone wrong in any home purchase/sale that has ever happened and integrate it into the forms. I am sure there are plenty of valid legal reasons for the wording on the forms, but I also think we could do much better.
How is a consumer supposed to know if a contract is being used correctly and what their exposure is? Few contact a lawyer. They instead rely on someone who may have never written an offer before using contracts they may not understand, with all their advice coming from someone who makes money if they transact.
There are rules that only exist so that we know how to split the commissions so that we get paid. Our clients do not understand the inner workings of our industry. Heck, they don’t even understand that one real estate company web site has the same listings on it as another, or that those listings do not all belong to the company with the big web site.
I meet people who “know” that Zillow is a real estate company. They are not going to read up on how it all works. They just want to buy or sell a house. Please forgive them if they operate outside of our standard business practices, or if they just don’t understand the rules, and want to show everyone their pre-approval letter.
Many of our rules simply do not matter to our clients. Sometimes they feel like the rules come between them and their real estate goals.