Real Estate Round-Up: Easier, Faster, Cheaper
Last updated 7/1/2019 at 2:59pm
All aspects of people’s lives are changing more rapidly than many people can fathom. Just the other day, when I started my car, the onboard computer informed me that my left rear tire was low, 7 pounds low, to be precise and that all my other tires were slightly lower than the factory recommended 33 pounds of pressure.
I was impressed and thankful for the information because, by sight, the tire looked exactly like the others.
On top of that, by that evening I received an email reminding me of the low-pressure tire, with recommendations on how to remedy the problem. I didn’t question it, I promptly took my car to Pro-Tire, Indy Performance to repair my tire.
When I shared my story with the owner, he asked me if it bothered me that I was this connected to an artificial intelligence. In this case, “No,” I was thankful, but it did run around in my thoughts throughout the day… the benefits of AI, and the entire “Big Brother” aspect versus the benefit of personal service.
A day does not go by that I don’t receive an article telling me that clients want the real estate transaction to be easier, faster and less expensive. This interest is a product of Wall Street investing into real estate tech companies.
Technology companies want people to believe that by automating the process, they can eliminate the pitfalls and the Realtor, thereby making the transaction easier, faster and cheaper.
I cross reference that message with the input we receive from clients, and I am not sure that model is what clients really want.
Where am I going with this? Just like the app in my vehicle, there are apps in real estate that automate some of the activities Realtors previously provided. There is an app that will make appointments with sellers for showings, rather than the listing agent making the appointment with the seller.
There is the automated valuation model which places an estimated value on your home. Zillow was the first on board with this tool, with its Zestimate, but there are many other apps that provide the same estimate of value. This was meant to provide an accurate assessment of value that was purely based on recorded sales in the general geographic area.
Realtors provide a better, more accurate, knowledge and experienced based version of this when they create a comparative market analysis for you. The difference is, the Realtor can identify the differences between an updated property and one that is not updated and apply the value accordingly.
I am not debating whether the real estate transaction is challenging or not. It is comprehensive and specific. The purchase agreement is 10 pages long. The listing agreement is four pages long. There are countless disclosures that can be included with these two documents, based on the specifics of each property, making the average purchase agreement package 30 to 40 pages long.
The contracts are updated and amended based on new laws or lawsuits, so that principals and brokerages alike, are fully informed and as much as is possible, protected from lawsuits in the future. So how can this process be made easier, faster or less expensive?
If a buyer or seller subscribes to the real estate “tech firms” philosophy, then automate everything possible and eliminate much of what is considered standard practice, like inspections and repairs, and thereby, they can remove the Realtor from the transaction.
The only thing is, unless sellers are willing to accept less for their homes in the name of expediency, and unless buyers are willing to accept homes that they have not fully vetted, it’s difficult to speed the process along.
If disclosures and inspections were removed from the process, a transfer of real estate could be accomplished in 17 to 21 days. If the buyers are not getting a loan for the purchase that time frame could be reduced to two days. But then, who bears the risk, if something goes wrong after closing? If you ask me, it sounds like a recipe for litigation.
So, here’s my question? Does the seller or the buyer really want the transaction to be faster and easier, and if so, what risk are they willing to take, and what protections are they willing to give up, in order to accomplish this?
As for cheaper that puts the bullseye directly on the Realtor. An experienced, knowledgeable Realtor sells between 30 and 40 homes a year. That experience is what the Realtor brings to the table in every transaction and provides the guidance for sellers and buyers as they make their decisions.
I’m not talking about an onboard computer alerting me that a tire is low. I’m talking about dealing with a septic system that is compromised or finding a solution to navigating and coordinating a concurrent closing or resolving an issue that shows up on the title report.
Buyers and sellers can rely on automated procedures or rely on agents who only get involved when there is an issue, who don’t know them or the property. Or they can work with their Realtor who has been with them every step along the way and pay them for that irreplaceable, experienced and committed fiduciary partnership they have with their clients.
So, Fallbrook, weigh in on this: Do you really want it easier, faster and cheaper, or is this more a case of Wall Street money creating a storyline that moves the market in a direction that only benefits Wall Street?
Kim Murphy can be reached at [email protected] or (760) 415-9292 or at 130 N. Main Avenue, in Fallbrook. Her broker license is #01229921, and she is on the board of directors for the California Association of Realtors.