A Beautiful Cataclysm!

I remember when I burned the woods down.  My friend and I were playing in the large, unused cow pasture that stretched out across the street from my family’s home in the country south of Jacksonville, Florida.  We we 1o-ish, I think and were playing cowboys or pioneers or something like that.  We decided we needed a campfire and, of course, had a match.  I remember seeing the flames leap to an ever widening circle, my friend and I stamping and swatting and doing everything we could think of to slow them down, then finally turning and running across the field toward the safety of home.  By the time we climbed the fence by the road our little campfire was roaring through the woods and across the long meadow we’d just come through, shooting flames a dozen feet in the air.

I ran into the house, grabbed the phone and called the fire department.  “I just looked out the window and the woods across the street is ON FIRE!’ I said.  They were there in a matter of minutes.

The firemen did little to stop the fire.  Their efforts were aimed more at containing it, keeping it from jumping the street, and the gawkers from getting too close.  Mostly, they just let it burn itself out, leaving a charred, smoking mess where once tall grass grew.  As they repacked their trucks, questions were asked and soon my friend and I were isolated apart from one another and asked what happened.  I burst into tears and confessed the whole thing and I think my friend did too.  Our stories matched because we told the truth.

I was sure we were going to jail or court or worse . . . but instead we were scolded and turned over to the sternest force in our universe, our parents.  I was on restrictions for three months.

It’s funny what happened next, though.  As the days and weeks went by, as a little rain fell on that blackened pasture, new life sprouted.  Soon the whole meadow was covered with the lushest green grass anyone had ever seen.  It was beautiful!  And no trees had been permanently harmed.  It was as if our unused cow pasture became a little Garden of Eden, a joy to behold in the wake of our wickedness!

And that’s the point.  Sometimes the aftermath of cataclysm is new life and great beauty.

There’s been lots of gnashing of teeth this week about the joining of Trulia and Zillow and what it means for the real estate industry.  Most see it as devastating.  “GodZillow” they call the new company.  But that is a rather naive reaction.  Truth is, this event is just one more step in a process that began in the mid-80s: the elimination of real estate agents and brokers as we know them.

As the real estate industry gradually lost its strangle-hold on listing and sales information, as that information became more and more available to consumers via an explosion in consumer technology, as real estate practice and procedure became more and more standardized, Realtors – who used to rule that roost – have become increasingly irrelevant.

40 years ago, if you wanted to find a home you called a real estate agent who did deep research with proprietary tools only Realtors could access, put you in the car and drove you from home to home until you bought.  It was almost impossible to make a move without an agent.  Today, consumers have access to the same information, do their own research, drive by listings that look interesting on paper and call the agent with a list of homes they’d like the agent to open for them.  The agent’s most important role in the home search process is to open the door.

Real estate purchase agreements although still State specific, have become so standard that typical home transactions involve merely filling in the blanks and getting the signatures on the right lines.  Financing continues to be complex, but few real estate agents today even bother with it.  They usually just turn the qualifying and decision making around the mortgage over to their favorite lender.

What I’m getting at is on the buyer’s side, the agent’s job has gotten far easier and less involved.  But commissions? They’ve stayed the same.

This is true on the seller’s side as well, where the agent’s primary job at time of listing is to help the seller make good decisions about price and staging.  With the maturation of the Internet as a vehicle for exposure, the marketing playing field has leveled between competitors.  Your recently listed property is plugged into the MLS where it is syndicated out to dozens of online real estate portals.  Easy.  Again, your agent is very important helping negotiate a deal, estimating your net proceeds and solving problems as they arise between contract and closing. Still, it is a much smaller job than it used to be . . . but the commissions have stayed the same.

You might end up paying, say, $18,000 to sell your $300,000 house.  Think about that for a moment!  How long does it take you to earn $18,000?  Forget the commission % – what % of your EQUITY is that $18,000?  Is there any fair value for value exchange in this transaction?  Are you getting $18,000 of value for the commission you are paying?  Or are you paying it because you haven’t yet seen the better alternative?  And won’t you be jumping ship as soon as one appears?

And Realtors, the answer to that last question is:  YES!  No matter how much they love you, no matter how great a job they think you did, no matter what a nice review they gave you on Zillow, if they could find a way to do it without paying you $18,000, they would.  And every year we get closer to a world in which they can.  Real estate agents and brokers as we know them are rapidly becoming irrelevant.  In five years they will be extinct.

That’s the cataclysm, the fire storm.  Here’s the new life, the beauty, the Garden of Eden on the other side:

Right now the new way to sell your home is blossoming as the old model crumbles.  It is based on the bizarre notion that it costs no more to sell a $500,000 home than it does a $300,000 home . . . so everybody pays pretty much the same thing (and we’re talking a dollar amount here, not a %).  It’s rooted in the reality that selling real estate is not rocket science and Super Star agents who do 20 deals a year (whoopie) are not intrinsically necessary for the business to function.  It’s focused on creation and refinement of systems that get most of the work in a home transaction done, logically, efficiently, with a minimum of surprise and drama.

That’s the green grass on the other side of the cataclysm.  It is called Help-U-Sell.  And if you’re are serious about not just being in business, but thriving in the new world, you’d be wise to take a look.  I don’t even work for them anymore – but if you’d like an overview, I’d be happy to share one.

 

 

 

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