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#362198 - 01/01/11 07:01 PM The Greatest Threat to Real Estate
Devil's Advocate Offline
Veteran Member

Registered: 01/03/05
Posts: 538
Loc: Ontario, Canada
THE GREATEST THREAT TO REAL ESTATE

As we know it today, is "Consumer Education", with consumers taking more control over their real estate transaction.

Imagine, a consumer listing their property for a flat fee on MLS and adding that it is “Broker Protected” in that they are willing to pay a buyer’s agent 2.5 % of the gross transaction proceeds on completion, together with applicable taxes.

Imagine that, such a seller advising that all offer be made 72 hours irrevocable (for their lawyer to read) and that all deposits to be made by certified cheque within 24 hours of acceptance by the seller, in-trust to the designated stakeholder for both buyer and seller.

Imagine, if complete control of the compensation was removed from the listing broker, and that the listing broker was offered only 2.5% of the gross transaction proceeds and a similar amount on closing, payable to a bonafide buyer’s agent representing the buyer, in a fiduciary relationship and directly from the balance of funds due on completion.

Imagine, that both parties to a transaction must be independently represented in a fiduciary relationship, or they don’t get paid, meaning no more double-ending a transaction, no more permissible conflicts of interest.

Imagine, the buyer’s lawyer holding all funds in trust as stakeholder for both buyer and seller.

Imagine, consumer’s with standard offers of their own, drafted in their best interest by lawyers, and their buyer agents required to present and negotiate the terms of the buyer’s offer or be in breach of their fiduciary duty and thus forfeit their rights to compensation or possibly sued for damages by their principal.

Imagine, buyer’s insisting on a fiduciary relationship only, and the corresponding documents reflect that.

It has been noted, that some buyer’s agents in preparing their buyer’s initial offer, are drafting the offer in the very same way it which they drafted offers as a sub-agent of the seller, and that will probably change after they are successfully sued for a breach of fiduciary duty and damages, plus a complaint being filed against then with the Real Estate Council of Ontario.

You make have noticed that trade associations are in favour of the status quo and have not done much in the way of teaching agents the various deletions and/or amendments to be made to the trade associations current standard forms, when representing a buyer, other than perhaps financial and/or inspection clauses, but not much in the way of specifically buyer weighted clauses that would protect a buyer. Buyer agents are left to learn that on their own.

Unblievable, as it may seen, the time may actually come, when agents may either have to shape-up or ship-out.

(This was originally posed under "Is Change Inevitable"

IMPORTANT NOTICE: This information is provided as basic educational information by the author and is not a substitute for the advice of an expert and/or the advice of a Lawyer. There is NO representation as to legality, accuracy, correctness of the herein information and the reader is strongly urged to consult a lawyer in the relevant jurisdiction to ensure accuracy before acting on this information

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#362200 - 01/01/11 07:19 PM Re: The Greatest Threat to Real Estate [Re: Devil's Advocate]
Doin' bpose Offline
Major Contributor

Registered: 01/26/09
Posts: 3349
Loc: Old Dominion
Originally Posted By: Devil's Advocate
THE GREATEST THREAT TO REAL ESTATE

As we know it today, is "Consumer Education", with consumers taking more control over their real estate transaction.

Imagine, a consumer listing their property for a flat fee on MLS and adding that it is “Broker Protected” in that they are willing to pay a buyer’s agent 2.5 % of the gross transaction proceeds on completion, together with applicable taxes.
That has not been my experience down here. An educated consumer is a wonderful thing and it has not been a threat in any way. Very few people have taken advantage of the flat fee system here. Those that did are pulled from the FSBO class. Most people do not have the time to sell their own home. Of those that do, few have the experience to do so---even if they have the knowledge.
Ever see Spies Like Us where Chevy Chase tries to perform an apendectomy by following the steps in a book? Just a simple procedure. Pretty soon we'll all be doing them.
_________________________
I can't. I'm going camping.

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#362219 - 01/02/11 10:40 AM Re: The Greatest Threat to Real Estate [Re: Doin' bpose]
broker Offline
Major Contributor

Registered: 08/16/04
Posts: 2066
Loc: Cary, NC
comsumer education + consumer empowerment = change. bank on it.
_________________________
the real estate industry is changing...

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#362221 - 01/02/11 10:45 AM Re: The Greatest Threat to Real Estate [Re: broker]
Doin' bpose Offline
Major Contributor

Registered: 01/26/09
Posts: 3349
Loc: Old Dominion
Originally Posted By: broker
comsumer education + consumer empowerment = change. bank on it.
That's quite different from what the OP said. I never asserted things would not change. Change is the only constant in life. I simply disagree with the view that an educated consumer is a threat. That is not correct.
_________________________
I can't. I'm going camping.

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#362228 - 01/02/11 01:25 PM Re: The Greatest Threat to Real Estate [Re: Doin' bpose]
Pikes Peak Offline
Major Contributor

Registered: 12/15/04
Posts: 2799
Loc: FL
Consumers here don't like getting attorneys involved in their normal real estate transactions. Fiduciary duties and limitations are tought by very competent real estate attorneys in continuing education classes to agents all the time.
There is not enough money to be made by real estate attorneys, in these transactions, that's not where their "bread and butter" is. The additional layers of attorneys in the transaction, normally slows the process to the dissatisfaction of buyers and sellers. That is not progress. Until attorneys are willing to work like agents and that's what the consumer expects here, they will be at the periphery of the transaction.

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#362235 - 01/02/11 04:55 PM Re: The Greatest Threat to Real Estate [Re: Pikes Peak]
broker Offline
Major Contributor

Registered: 08/16/04
Posts: 2066
Loc: Cary, NC
what will the definition of "normal" be in the future? if a consumer is faced with paying a 3% buyers agent commission vs. a $1,500 atty fee - that might change things... especially if the atty. also can get the closing work and increase their fee.

who knows what the new normal will be.
_________________________
the real estate industry is changing...

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#362236 - 01/02/11 05:11 PM Re: The Greatest Threat to Real Estate [Re: Pikes Peak]
Devil's Advocate Offline
Veteran Member

Registered: 01/03/05
Posts: 538
Loc: Ontario, Canada
Different Attitudes & Procedures Abound

Locally: Lawyers are more than happy to review a buyer’s offer prior to presentation, or if representing the seller, to review the buyer’s offer prior to acceptance by the seller.

In each instance the lawyer will modify all offers in the best interest of their client, as the failure to do so, without the express instructions of their client, will subject the lawyer to severe discipline by the law society.

Most all the lawyer will provide the aforemention service, in relation to a real estate transaction, at no additional cost to their client, other than the agreed upon flat fee, of approximately $650.00 for a purchase transaction or $550.00 for a sale transaction, plus the necessary disbursements and applicable taxes.

Locally: Currently, all closings and conveyance of title are done electronically and are only acceptable when conducted by lawyers, as agreed and authorized in the (Standard Form) of Agreement of Purchase and Sale, and to aid in reducing real estate and/or mortgage fraud.

This is not to say that the aforementioned applies to any other jurisdiction, as each jurisdiction may have their own procedures and fees for handling such matters.

Further, it is recognized that lawyer’s in providing their real estate services, may benefit by extending their client base, which may lead to other legal work on behalf of their client in the future.

Important Notice:] This information is provided as basic educational information by the author and is not a substitute for the advice of an expert and/or the advice of a lawyer. There is NO representation as to legality, accuracy, correctness of the herein information and the reader is strongly urged to consult a lawyer in the relevant jurisdiction to ensure accuracy before acting on this information .

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#362239 - 01/02/11 06:07 PM Re: The Greatest Threat to Real Estate [Re: Devil's Advocate]
Pikes Peak Offline
Major Contributor

Registered: 12/15/04
Posts: 2799
Loc: FL
"Normal". 20 years as an agent doing 25 to 50 transactions a year and only having an attorney involved maybe 3 or 4 times due to a clients or customers divorce. That's normal to me.
The problem with most attorneys is that you can't communicate with them on weekends and Holidays.

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#362251 - 01/03/11 08:05 AM Re: The Greatest Threat to Real Estate [Re: Pikes Peak]
Bigtoe Offline
Major Contributor

Registered: 10/14/07
Posts: 2238
Loc: Outer Banks
Every transaction I have ever been involved in had an attorney for the seller and an attorney for the buyer. One thing in common with virtually every transaction is neither the buyer or the seller is willing to call their attorney up and ask questions. Without a doubt, I can say that the public is afraid of attorneys and the associated expense, real or perceived.

The few times attorneys got involved in the process the deals would have died had there not been agents involved to smooth things over.

Attorneys are not taught to negotiate a common ground. Attorneys thrive on conflict.

On another note, the flat fee company in our MLS does a good job of taking $500 from people before they get foreclosed.

and on another note, if it wasn't for change this business and life itself would become tedious at best. In the 21 years I have been selling real estate I don't remember a time when things were not changing. Some of us embrace change and go with the flow, while other just complain and worry about it instead of being proactive. Change is good.
_________________________
Your Outer Banks real estate agent. Helping people buy and sell OBX real estate since 1989.

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#363779 - 01/17/11 08:59 AM Re: The Greatest Threat to Real Estate [Re: Bigtoe]
Kristi Leak Offline
Member

Registered: 08/26/10
Posts: 175
Loc: US
I have to agree with bpose on this one. Just because consumers are more educated and have more educational resources readily available to them does not imply that they will start eliminating agents from the process.

Almost everyone here on the forums could find a manual online detailing how to change the oil on their car, or how to perform standard repairs/maintenance. Now, how many of them are in their driveway changing their oil, and how many continue to take their car in to a mechanic?
_________________________
Apartments for rent Boston

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#363809 - 01/17/11 10:36 AM Re: The Greatest Threat to Real Estate [Re: Kristi Leak]
broker Offline
Major Contributor

Registered: 08/16/04
Posts: 2066
Loc: Cary, NC
I would say more and more people are changing their oil and doing maintenance on their car. Problem with autos is that things have become harder to access and more complicated by technology - so many are forced to go to a shop. You literally need a $5,000 computer to troubleshoot and fix some issues. The average consumer is not inclined to go out and buy one.

Conversely, things are getting easier on the real estate side - not harder. Many consumers will continue to use agents but the need to do so is slowly diminishing. At the very least things will become more specialized and the cream will rise to the top. That's opportunity for serious practitioners.
_________________________
the real estate industry is changing...

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#364193 - 01/20/11 09:29 AM Re: The Greatest Threat to Real Estate [Re: broker]
Lakeshore Lad Offline
Member

Registered: 01/06/11
Posts: 31
Loc: Holland, MI, USA
The thing we are all forgetting is that we provide a service of marketing know-how, and professional negotiating skills. Not all sellers and buyers are comfortable with talking money between each other, and many sellers and buyers want to remain anonymous. We still have the most powerful marketing tools and follow-up skills of any profession out there, and know how to use them. Sales will always be a viable profession, because humans still buy on emotion...we know what triggers that emotion. I know how to speak English, but not necessarily how to teach it. Are you saying the need for teachers will be eliminated as well? Just because you know something, it doesn't mean you are good at it.

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#364199 - 01/20/11 11:18 AM Re: The Greatest Threat to Real Estate [Re: Lakeshore Lad]
jsteinhomes Offline
Member

Registered: 01/18/11
Posts: 280
Loc: Montgomery County, PA
Fewer and fewer people you run across every day show a proper mastery of the English language. Imagine them trying to negotiate a legal contract to purchase a home.

Agents and Realtors provide a vital service. When my wife and I shopping for our first home back in 2008, we found homes we wanted to see and were interested in personally very easily by ourselves over the internet. However, getting appointments to see those homes, negotiating a great deal for us on the home we wanted and securing financing for that home (leading to an easy closing) would have been extremely difficult without the professional we chose to lead us through the entire process.
_________________________
Joshua Stein, ABR, e-Pro
Coldwell Banker Preferred - Conshohocken

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#366261 - 02/09/11 01:51 PM Re: The Greatest Threat to Real Estate [Re: jsteinhomes]
Jim Boad Offline
Member

Registered: 08/02/07
Posts: 185
Loc: Seattle/San Diego
I love educated buyers and I feel they make my life and job easier. Now there is a difference between an educated buyer and a KNOW IT ALL buyer. I am not a fan of the know it all's.

My most recent experience with a know it all, he read on a forum that if you go to a new build alone you can save on the commission. 3 days in to the deal he came running to us for help because he had just put down a large non refundable deposit on a project that was bankrupt and not going to complete much of the work and there were many other issues as well. The other thing is he got absolutely no break for being unrepresented he only got in to trouble.

Now my educated buyers don't act like this. They come to me with financing in place, the communities they want to view homes in and already know about the shopping and schools in the area. These are a dream client indeed.

So I love educated buyers.

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#369616 - 03/11/11 03:34 PM Re: The Greatest Threat to Real Estate [Re: Jim Boad]
LongTimer Offline
Member

Registered: 01/07/11
Posts: 10
Loc: Wine Country, CA
I have seen the consumer getting more and more savvy over the past 35 years...at least they think they are. You should still sit down and talk to buyers and sellers about what should happen and when in the transaction process. Just to make sure everyone knows.

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#421508 - 03/11/13 10:45 PM Re: The Greatest Threat to Real Estate [Re: Devil's Advocate]
Joe Hayden Offline
Member

Registered: 03/10/13
Posts: 52
Loc: Louisville, Kentucky
I believe in the consumer... The role of the internet and information will fall back into a balance once the consumer realizes that information is useless if it is incorrectly applied or interpreted.
_________________________
I am the team owner and manager of the Joe Hayden Real Estate Team - Your Louisville Real Estate Experts!

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