Tuesday, April 26, 2011

I Know You Hate Us

Two Thoughts Rants for Tuesday
(well, technically, it is two thoughts)

Despite the fact, the profession I am in takes the #1 or #2 spot on nearly any of the "who do you hate" lists, let's talk a bit today about real estate agents.   During the course of reading today's post, feel free to shout uncontrollable profanities and throw things about the room.  I can take it. (you might be surprised at how much you and I would agree on as far as this subjects goes)

First let me clear up a few things in the nature of terminology.  There are real estate agents, there are brokers and there are Realtors.

A real estate agent is a person that holds a license in whatever state or country that allows them to participate in the buying, selling and leasing of real estate.

Real estate agents that have additional licenses that allow them to manage agents are called Brokers.   Real estate agents usually are independent contractors that work for brokerages (run by brokers).  There is a lot of confusion as well as misuse of the titles.  Who are agents?  Who are brokers?  By the way, the difference in license has no bearing on the quality of the agent. Lot's of really bad agents  have a broker's license. 

OK, last point to make, a Realtor is a person that is in the National Association of Realtors.  Here is the blurb off the NAR web site.

A real estate agent is a REALTOR® when he or she becomes a member of the NATIONAL ASSOCIATION OF REALTORS®, The Voice for Real Estate®, the world's largest professional association. The term "REALTOR®" is a registered collective membership mark that identifies a real estate professional who is a member of the NATIONAL ASSOCIATION OF REALTORS® and abides by its strict Code of Ethics.

So...why am I even explaining the difference? Because I am about to give you two reasons, why I am not loving the current state of  real estate and I want you to understand how this works so you can fully appreaciated why the system currently sucks.

REASON NUMBER ONE   -Thanks to the Internet and assorted TV reality shows most people are better informed buyers/sellers than they once were. I appreciate that to a degree. HOWEVER, a little information doesn't make everyone an expert in the field. I will tell you a goodly number of buyers/sellers now believe themselves to be "all knowing".   If I never heard the phrase  "I know all about [fill in the blank]  because I watch HGTV," it would be none to soon.

I got into real estate in the mid 1980's before the system broke down into the cesspool that it is today.  Back then, it was substantially less complicated. 

Knowing what a huge financial risk home buying can be,  I took it seriously (still do for that matter) to help navigate people into homes that were good investments, would appreciate in value, and add to the client's net worth in time.  Additionally some of the other aspects of my job were making sure that the homes were structurally sound, procuring money for my clients to be able to pay for the house with the best possible terms, and the least amount of unnecessary fees and keep all parties on track to get the whole deal done on time.

In order to do all of that, I got licenses in 2 states,(Kansas City is in both MO. and KS) which required me going to school then passing 2 different states tests.  After that I am required to take 12 credit hours for each state over every two year period.  Of course that is the minimum requirement so any given year I have taken (let's say 20 credit hours of continuing education)  25 years by 20 credit hours per year = 500 credit hours.  I am being very conservative here folks, as of my last renewal, I turned in 59 credits for those two years. 

The only reason I mention that is so you don't assume that I am a complete moron that doesn't know what the heck I am doing.  Frankly if I would have spent my time taking a different route with all that education, I could be doing a heart transplant on you.  Instead, I am being #1 on the hate list while acting as a pimp for a brokerage company.

OK, on with the story.  I am an ABR  (Accredited Buyers Representative) a CREN (Certified Real Estate Negotiator) and a Realtor,  which means I am an expert (in theory) at helping people get the home of their dreams. I work hard to know which house is the the best buy, best built and I will help you get it with the most logical secure financing, I can hunt down. (I am a zealot as far as getting you money) It also, means that my clients aren't paying the real estate commission. (to be fair, I have had listings from time to time so...ok..sometimes my clients did pay the commission but for today's story, I am talking about buyers)

Here is an example to add some credibility to my story. A couple I was working with last year after looking at a number of houses (quite a large number, actually), decided they loved a house on one of the busiest streets in all of Kansas City.  They picked this house off the Internet (where all good house hunters do their shopping) and I took them to see it.  I mentioned that the road that runs right past the front door has  more than 10,000 cars per day wizzing by it.  The people, let's just call them Mr. and Mrs. Stuart Pidd, were moving in from out of state but had relatives here.  According to them, the relatives didn't think that the street looked all that busy (good enough) so the Pidds write a contract.  They offered full price (against my advice, but really who the heck am I?)  and the Pidds got themselves a house. 

The Pidd's relatives also had a friend that was in the lending biz so they line up a mortgage for 5.6 percent with $9700.00 in closing costs.  Are you kidding me???? I call Stu Pidd and tell him I can get him 5.2 with $1800.00 closing costs.  No thank you, he says.   These are good friends of my sister.  I wouldn't want to make waves.
OK, can't say I didn't try. Next hiccup...  The inspection shows the roof is bad.  Turns out there are 3 layers of shingles with the bottom layer being rotten wood shakes with 2 additional layers of composition.  I could write for the next 2 days solid about what you  should want in a roof but let me condense.  You don't want this one.  Now I am all about still trying to find them a better house, in a better location but no they are insisting that this one is fine. (that is they are fine with the crappy mortgage and  they are fine with a crappy roof)  I suggest they ask the seller to pony up some money in lieu of the roof or make an adjustment on the full price offer.  No thank you, they say. (truly the house was over priced and in really bad shape, why wouldn't they want to negotiate a bit?)

Point number two has to do with the perceived notion of me getting wealthy helping people like Stu Pidd. 

$180,000  price of the house with a $10, 800. 00 commission to be divided as follows: $5400.00 to the sellers Broker and $5400 to the Buyers Broker. My broker (in this case the buyer's broker) will be giving me $3240.

(disclaimer: real estate commissions are negotiable and vary from transaction to transaction.  Brokers splits also vary from company to company and every agent can be paid differently. I am creating a  ficticous albeit, possible scenario.)

So lets do the math

170       Charge for my advertising by Broker (some costs come out per transaction)
100        cost of my KS license renewal annually 
100        Missouri license fee because the house is on the MO side 
355        Membership into the local Multiple listing system.  I have to have to do real estate here.
150         Charge by by Broker for office use
80           A couple of meals for Stu Pidds family
250         This fee is on all transactions here and I don't know what it is for.  No one does.
150         My errors and omissions insurance
972.00    My tax liability for this windfall.  I have to pay Missouri, Kansas and Federal
400.00    Part of my health insurance.  I have to sell another house or 2 to cover the rest
130.00    Gas in my car from running the Stu Pidds to see what they should have bought, this one
                               that they did buy, and assorted trips for inspectors, title company, lenders office etc.
50.00          Leasing costs for my Ekey and key box so I can get in and out of houses

333.00              so far this money has my name on it

OH WAIT...     the back door lock does seem to be working the day before closing.  We won't close say the Pidds.  The crappy roof they can live with,  but a bad lock... Hell no.

333.00 minus 100.00 for locksmith.

OK now  $233.00 has my name on it.   Ya hoo.  I am rich and still I am  #1 or #2 on the most hated list.
Isn't it great to be a winner!!! 

I am getting out of the biz for sure but what do I do with 1573 credit hours of education in real estate?

Before, ending this little rant of mine, let me say that there are some really bad agents just as there are really bad employees in all fields. Clearly, they have earned your disdain.  I, also, will tell you that I realize the fees are substantial on the selling side so I don't have a problem for some of the more capable of you to use alternative methods to sell your home. I do, however, believe that a GOOD agent  in most cases will sell your home quicker and usually get you a better sales price.   But do your homework.  There are a lot of e-sellers and lower priced options that are reputable and some homes all but sell themselves. Be wary, though, there are a lot of scams out there too.

Keeping with the theme of houses....Little Pink Houses

The Good....I have met some really nice people that have bought some really nice homes.

The Bad...You don't even want to know the bad. You are probably hating me already and I only complained about 2 things. Should I start about the forclosures and short sales???

The Weird..... All the web forums where people are debating their right to strip a house that is in forclosure.  I find all of this just WRONG.  I understand that people have been dealt an unfair hand.  BUT taking everything out of a house that has been forclosed upon to try to recoup some of their loses still is wrong. Stealing is stealing.  Really, how much are the sinks and bath tubs really going to bring?



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Bodacious Boomer said...

I had no idea you were a Realtor. We used to own a mortgage company back in the late 80's into late 90's.

We had great relationships with a handful of Realtors. Then of course, just like mortgage folks some Realtors are just morons. We had one argue with us at the closing table.


AngelBaby said...

Oh my and I thought I had a tough job, yours beats mine. I would be going crazy too. I hope you have a better day today.

Here's your click .........

Love and Blessings,

Wolfbernz said...

I can't imagine being in the real estate Business today! With clients like that I would just as well slam my head in the car door then deal with them...OMG!
It amazes me sometimes that when a professional gives advice the customer seems to do the opposite for whatever reason I don't know.

Being a home remodeler and builder I understand where you are coming from.

Click Click


Cperz said...

You Bodacious Boomer, you! I think you should be relieved to be out of the lending biz for now. It's a crazy market out there. AND I totally agree that there are some morons that make it even rougher to get business accomplished. The stories I could tell you....

Cperz said...

AngelBaby, Thanks as always for the click. The present R.E. market could make a person nuts, if you let it. As with everything you just have to do the very best you can and hope that is enough.

Cperz said...

Wolfe, You are always so nice!!! I work with a lot of builders and remodelers here and I know you see a lot of difficult situations,too.
Tough times call for strong people, I think. I like to think if we do our best that it will come back to us in a good way at some point.

Trina said...

I don't hate Realtors LOL I think you guys have a terribly hard job in this market especially.

Finding the right homes for the Pidds of the world is probably as frustrating as it is rewarding sometimes LOL

People like these Pidds must make you want to walk up and give them a big "Here's your sign!"


Cperz said...

Hi Trina, You're right there are clients that make real estate rewarding. I think that the market here that is just consumed by foreclosures and short sales have taken the joy out of it. I think I need to take a little break and recharge. Thanks for always being such a supportive friend and reader.

Anonymous said...

I would like to say that you (a.k.a. Realty related people) are not EVEN close to my top 10 most hated people/professions. You are welcome in my home any time (after the basement is done and schtuff is back where it belongs, and the house is cleaned, and, and...*snort*). I have to say, I don't really know how you do what you do. I started taking some realty courses when I first moved out here...I never finished, because I don't have the burn to do a GREAT job for people like you do. So...go you! And whatever new path you choose outside of that profession, you'll find it, likely, when you least expect it! xo

Anonymous said...

We have a very good friend who is a realtor and she has echoes everything you say. I was fortunate to choose a profession where only a few people in the world have any idea what I'm talking about. The down side of that is I have to explain it to people who haven't got any chance of understanding (though they sometimes don't know that).



Cperz said...

Hi Jewell, Funny person that you are, I would love to hear what 10 professions that are on your "most hated" list. Perhaps you could fill us in on a blog sometime. You are right about the "something will present" itself. On a few past moves out of MO & KS I have worked at other jobs and they just came my way in the oddest of circumstances. A couple of others I created for myself. I am taking a break to think it over...what shall I do with myself???

Cperz said...

I love the fact that you have a job that no one understands. My daughter and son-in-law are in the same boat. When a job is complicated enough or skill specific enough that the rest of us go la la la la la when you try to tell us what you do, that is priceless. Your realtor friend has my sympathy.