How to Be a Top Producer

What is Important to Real Estate Brokers

I have no doubt that Tina Caul is correct about everything she says.  She is a master of client acquisition and script reading.  She calls this video Secrets to Becoming a Top Realtor.  But there is not one word about conveying real property in it.  Not one.

Message:  Becoming a top real estate broker has absolutely nothing to do with conveying real property.

At the end she says:  If you are a brand new agent, the first thing I would say to do is go learn a listing presentation script.  Not go learn the contract – Rather, go learn a listing script.  Not, go learn a neighborhood, study an appraisal or home inspection, take a technology or accounting class, attend a local re-zoning meeting, read a book on negotiation, etc.  You know, the whole range of knowledge and experience and expertise that is useful and helpful for serving clients.

No, no:  Go learn a script.

Why?  For these agents it is simply not about conveying real property.  For them, the entire business is client acquisition.  This is the ball game.

So I would argue that the reason brokers need scripts is because they are completely incompetent at conveying real property and have no desire to become competent.  Think about it:  If you are only marginally competent (at anything), you don't need a script to have a conversation about it.  Scripts are a crutch for the pretender.

Wondering where she turns for scripts and so-called coaching?  These guys.  Yes really.  Sure, they seem like a parody of everything wrong with the real estate business and how brokers conduct themselves.  But sadly, it's not parody.  Brokers use these methods because they work.

This says as much about American consumers as it does about real estate brokers.  In polling, Americans don't think very highly of brokers.  But I submit that the reason they think so little of brokers is directly related to the type of brokers they tend to hire.  If you hire a shallow, low-substance, script-reader, do not be surprised if you have an unsatisfactory experience.

Here, I would like to say, You get what you pay for.  But that tried-and-true adage does not work in the real estate business.  Because what brokers charge is totally divorced from their value proposition.  And if a broker uses a script to gain your business, they will almost certainly use a script to justify a high fee.  So in fact, the six-percenters are much more likely to be script-readers.

And the success of the client acquisition brokers does not go unnoticed by their colleagues.  As a consequence, transactional competence suffers industry-wide.  There is just no room for competence at conveying real property.

I do love Caul's honesty, but find myself asking:  Why is she giving away her store?  I mean this is not the first video of her's that I have shared.  I can think of no other broker who is willing to talk about these things in a public forum.  And I do not believe that she is being naively or inadvertently honest; she is way too clever for that.

I can only speculate, but it appears that Tina Caul is attempting to transition from real estate broker to real estate coach.  And evidently she believes that she must give away some free samples to make the move and recruit...er, clients.

In any case, it gives us a peek behind the curtains.

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Home Buying Today

My friend Richard sent me this last night.  Hilarious.  And not far off....

@johnsonfiles

Anybody else in this crazy fight for a home?? ##realestate ##housingmarket ##comedy ##funny ##realestatetiktok ##realestatehacks ##houseshopping ##fixerupper

♬ original sound - The Johnson Files

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Charles Ray Dawson Reviews The Competent Broker

Another Broker's Perspective

From his video I think you can tell, if Charles Ray Dawson did not like the book, he would have no qualms about saying so.  He describes the book as:  How to make money by being competent.  I like that.  Thank you for your kind words.

Find a detailed synopsis of the book here.

Charles mentions that he is going to do a separate video on dual agency.  I look forward to that.

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Shameful Artificial Urgency

I can just about understand the buyer frenzy.  They are losing houses because of tight supply and competing offers.  Competing offers that are stronger than their own.

It seems to me that the way to win the house is to make the highest and best offer.  Period.  But they've put together their own highest and best, and they fear it is not enough.  So they look for other things they can do.  Unnecessary appraisal addenda, dodgy letters to the sellers, poorly crafted escalation clauses, game-playing offer deadlines, and whatever else they can dream up.

Like I said, I can just about understand it.  But I don't think most buyers are getting very good advice as the business is absolutely rife with incompetence.

As for the sellers, it seems to me, what we have going on is various levels of artificial urgency.  The typical home in this market will get a double-digit number of offers, some of them even sight-unseen.  Well over the asking price and with five-figure nonrefundable Due Diligence Fees.

The sellers are clearly in the driver's seat.  There is no rush.  Take your time, let the offers flow in.  Too many showings one day?  Add a day.  Add an open house.  The sellers truly have all the time in the world.  Those buyers are not going anywhere, because there is no where else to go.

But that is not what we see.  Rather, what we see is the house goes active Friday morning and the sellers demand highest and best offers by Sunday evening.  Why?  WHY??

And that is assuming they leave the house on the market for an entire weekend.

Because worse yet, we see houses go active and then pending in hours.  We see houses sold during the Coming Soon period, where the buyer pool is severely limited.  Again, why?

This urgency is entirely artificial.  It is contrived.

And I just do not believe that this is coming from the sellers themselves.  In this market, no sentient being would accept the first offer.  Or even one of the first few offers.

No, this urgency is contrived by the brokers involved.  As a listing broker emailed me a couple of days ago:  Great bird/offer in hand, take it.

As if there will not be another, better offer tomorrow.  Look, I'm not talking maybe a better offer in a few weeks (those are never better).  No, I mean tomorrow.  And if not, that bird in hand remains in hand.  Give it a day or two.  Please.

That same broker went on to make the very astute observation that:  Selling is very stressful for sellers.

Well let's see.  Ten or more offers in hand, all above asking price, five-figure due diligence.  Hmm, that does not seem very stressful to me.  Rather, the sellers are in a most comfortable position.  But to be fair, I think what he meant is that selling is a hassle.  Especially with so much buyer interest.

I have long viewed open houses as a sham.  But in today's market they finally serve a legitimate purpose:  To get as many potential buyers in the door in the shortest time possible.  Yet many brokers still insist on individual viewing appointments creating and insuring more hassle for the seller.  My advice in this market is to have an open house every day, and if the hassle of selling is too much for the sellers, limit viewings to the open houses.  Problem solved.

But my guess is these brokers do not really care about the seller's stress or the seller's hassle.  The brokers have their own agenda.

Last week, I wrote about a couple of intentional reasons that brokers encourage this artificial urgency.  And if not intentional, we're back to incompetent.  I have always been amazed when brokers proudly scream:  Sold in one day!  As if it is something to be proud of.  But they are indeed so very proud of it.

It is incompetent and shameful.

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Bubble Questions

Are we in a bubble or is this the new normal?

How long will the current real estate bubble last?

Buy now and risk overpaying?

Or, wait it out?  Wait for how long?

And if we do wait now, do we not risk that the market will be even worse later?

As John Templeton famously observed, "The four most dangerous words in investing are, This time it's different."  And if we recognize that, we must assume that the bubble will burst...eventually.  Right?  But these things can go on longer than we anticipate.  And longer than some people can afford to wait.

We all know some of the causes, like record low interest rates and easier lending standards.  A record stock market.  Lots of cash sloshing around and an influx of foreign capital.  These are the usual suspects contributing to bubble inducing behaviors.

Less recognized and considered is the influx of millions of illegal immigrants and a government that tolerates and even encourages this.  This is not meant to be a political point.  But no matter what you think about immigration, nationwide our resident immigrants do use a portion of our housing stock.

But there are a few other factors that make me revisit the dangerous question:  Is it different this time?

Note, these are factors for my market, the greater Research Triangle Park area of North Carolina.  I cannot speculate as to what is going on anywhere else.  But here they are:

• Under-built housing stock.  This will take many years to correct.  And that is assuming that there is the political will to correct it, which I do not see.
  
  
• People fleeing high tax and high expense states and metro areas, looking for affordability, more responsible government, and quality of life.
  
  
• The extended lockdowns finally demonstrated that offices are no longer really necessary.  Meaning that people do not have to live within commuting distance of an office.

These are not mere bubble factors.  These are long term and perhaps permanent changes in the real estate sector.  They will certainly affect the real estate market for a generation.

Will the bubble burst?  Well, it always has in the past.

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Brokers and Time and Supply and Demand

Do brokers understand supply and demand?

So today we have extremely low inventory resulting in multiple offers for most residential properties.

And what do the brokers do?  They leave the homes on the market for just a few days.  The median days on market (DOM) count for my area is three days.  But you would be surprised how many houses go under contract in zero days.  That's right, the house is on the market, not for days, but for mere hours.

Why?  And, how?

Demand takes time.  That is, for all potential buyers to see a property, it takes time.  And if a seller wants the highest and best offer, you've got to give buyers an opportunity to see what they are buying.

But here's the thing.  While the seller may very well want the highest and best offer, the broker not so much.  It is not that the broker does not want it, it is rather that the broker does not care.  To the seller, a $10,000 higher offer is a vacation to Hawaii.  To the broker, it's three hundred bucks, tops.  Why wait through the weekend?  Just talk the seller into an acceptable offer and get back to your primary job, prospecting (client acquisition).

And worse, if the broker has lined up a buyer himself, where he makes substantially more money, often double, he has a perverse incentive to limit the access of other buyers.  We call this dual agency, and I would argue that it is impossible to get the highest and best offer in these situations.  I know Mr. Seller, we were going to leave the house on the market for the weekend, but I have this buyer with a solid offer, today.  These days, this often happens because the broker refused to cooperate with other brokers and their buyers.  We call this Coming Soon.

The end result is that brokers work less and/or get paid more.  Either way, the brokers intentionally limit demand.  It is not that brokers do not understand supply and demand.  I think they do.  It is that they are using it to their own advantage rather than to the advantage of their client, the seller.

Now, what is a seller to do?  Well brokers behave this way because you allow it.  Don't!  Tell your broker that you will be leaving the house on the market for a week.  Or at least, through the weekend.

As for dual agency, ask about it before you sign the listing contract.  And disallow it.  If your broker argues in favor of it, you are dealing with someone unethical.  Period.

Find yourself another broker.

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The Foggy Question of Broker Competence

Why incompetence is rampant in our business

When I first got into the business I did not understand.

To my naive eye, the brokers who did well did not seem to know or care much about real estate.  While this is not one hundred percent true, I noticed that the more successful a broker, the less competent they tended to be.  How could this be possible?  It just did not make any sense to me.

So I spent years observing, trying to figure it out.  And what I discovered led me to the distinction between client acquisition and conveying real property.  Here are the first three paragraphs from The Competent Broker:

Real estate brokers have two primary jobs:  Client Acquisition and Conveying Real Property.  These two jobs involve entirely different skill sets.  In fact I would argue that the type of person who is good at either one of these jobs, that has the skill set to make them good at it, is almost always not the type of person who is good at the other.  Many very successful brokers are quite brilliant at client acquisition, but not terribly competent at conveying real property.

To be successful in the real estate business, it is vital to have, or to generate, a stream of potential clients.  In fact, this is so important that brokers will concentrate their time, effort, and money, on this aspect of the business to the detriment of all others.  What you find is that the people who are most adept at this, do best in the business financially.  And this does not go unnoticed by their colleagues.

As a consequence, transactional competence suffers industry-wide.  Why become a better negotiator when you can make more money prospecting?  In fact, why learn basic accounting, why keep up with contract and paperwork changes, the law, best practices, building techniques, technology, etc.  The whole range of knowledge and experience and expertise that is useful and helpful for serving clients.

I think any discussion of broker competence must address this distinction.  Because when it comes to conveying real property, brokers see little correlation between this competency and success.  You see, conveying property is the expense side of the business; it does not make the broker any money.

There is however a direct correlation between competence at client acquisition and success.  Client acquisition is the revenue side of the business.

So the 20 percent of the brokers doing 80 percent of the business are focused on client acquisition.  This is real reason why incompetence is rampant in our business.

NAR points to other reasons, but I am skeptical.  For example, would more pre-licensing instruction help?  Maybe, maybe not.  But unacceptably low entry requirements are not the real problem.  This is perhaps even an intentional misdirection by NAR in order to justify high commissions.  Raise pre-licensing instruction to one thousand hours, and the same brokers will still seek out Mike Ferry types to coach them on client acquisition.

Plus, there is just no way that NAR can admit that its 250,000 top producing members spend the bulk of their time chasing business and very little of their time actually conducting business.  Stop and think about that.

To really understand this problem, we have to look at the incentives.

Competence is a choice.  In the business of real estate brokerage, this is an absolute.  Brokers have a duty to their clients to be competent.  A duty of competence.  And that competence must be purposefully acquired.  So competence is a character trait and a function of integrity.  If you want to claim integrity, you must first work on your competence.  You must choose to be competent.  It is not that brokers choose to be incompetent.  But they do choose to focus their attention elsewhere.  Competence simply falls by the wayside, unnoticed and unattended.

Making this choice, brokers demonstrate a complete lack of regard and respect for their clients.  I can think of no other business where so many of the so-called professionals hold their customers and clients in such low regard.  Surely this, too, is a question of integrity.

And you know what?  Regardless of what they proclaim, they do not care.  They’re making the bucks and there is precious little penalty for incompetence.

Since most of the revenue flows into these hands, the remaining eighty percent of the brokers scramble around for the crumbs.  Some are competent at conveying real property, some are not.  Competent or not, most don’t make it.

This leads to Gresham’s Law for Real Estate:  The incompetent, low integrity brokers drive out the competent, high integrity brokers.  Those brokers who focus on client acquisition drive out the brokers who focus on conveying real property.  Incompetence rages.

Whenever I write about these issues, I am met with condescension and derision and indignation.  Realtors absolutely love talking about their ethics and their professionalism and yes, their competence.  It is vital for them to maintain the illusion of these qualities.  So sincere discussion is rare.

And I do understand:  They are competent at what is important to them, client acquisition; they follow a Code of Ethics which allows single-agent dual agency; and they memorize scripts to mimic professionalism.  Their whole business model is dishonest.

Since consumers don’t enter the market very often, they can be terrible judges as to the competence of their broker.  As an example, I recently wrote about a neighbor who thought her daughter had a fabulous broker because the broker sold the daughter’s house in four hours.

So what’s the answer?  The only answer I know is to shine a light on the issue.  But that is far from sufficient – Because brokers immediately fill the arena with the fog of deception and misdirection.

The Game of Thrones tag line is:  Winter is coming.

I think that works great for the real estate business as well.  But perhaps we should tweak it just a little:

Zillow is coming.

They can’t get here soon enough.

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Scripts For Superstars

Mike Ferry wants to help me with my scripts

Got an email from the Mike Ferry Organization today:

Do you need to know what to say?  Do you want to learn how to effectively internalize the scripts and dialogues?  Do you want to learn how to set more listing appointments and get the contract signed?

I was reminded of the greatest real estate video of all time:

If you have read my book, you will already know, Number 4 (at the 4:54 minute mark) is my favorite.

Dear readers, before you dismiss these videos based on their sheer truffery and ridiculousness, please know this:  Real estate brokers eat this stuff up.  This is how they spend their time.  They are not experts on conveying real property.  In fact they care very little about it.  Rather, they are experts at client acquisition.  And they cannot even be genuine about that.

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More on Scripts

And how real estate brokers think

This past fall I wrote a brief piece on scripts, making my favorite point on the topic:  If you cannot trust someone to have a sincere and genuine conversation with you, how on earth can you trust them with something as important as a real estate transaction?

And that remains my primary thinking on the subject.  But what about the time involved?  These things require so much time.  Why not instead spend your time mastering the field of real estate?  Spend your time becoming competent at conveying real property.  Then, when you have a conversation with someone, you don't need to rely on some canned, memorized script.  You can have that genuine conversation.

But so many brokers need scripts because they are not competent and do not care about competence.  They only care about client acquisition.  And that is where they spend their time and where they become competent.  I assure you, client acquisition does not get your house sold.  And it certainly does not help you find and purchase a property.  In short, client acquisition is a totally different skill set than conveying real property.

What I love about this video is it demonstrates how real estate brokers think.  There's nothing terrible here.  There's no real gotcha.  If there was, she would never put this online.  But there can be no doubt about her single-minded focus on client acquisition.  So watch and ask yourself:  Do I want to do business with these people?

Some people, evidently many people, will watch this and say yes.  Tina Caul is very successful in this business.  And the thinking expressed in this video is pretty typical for our business.  So if they don't hire Caul, they'll likely hire someone who thinks this way.  But for those of you who, like me, find this approach sort of disturbing, demand something better.  There are alternatives.

Now, should I not post this for fear of losing business to Ms. Caul?  She is after all a master of client acquisition.  Well the type of people who appreciate her methods would never hire our firm anyway.

My favorite part is where she describes how brokers must go off script in order to respond to someone who says my grandfather died.  My God, throw the script out and have a real conversation.  Better yet, don't pick up a script, any script, in the first place.

Finally, there's one other interesting aspect to this video and some of her others.  By placing them on her public YouTube channel, she does not seem to care if her clients and potential clients learn that she is a big script-reader.  I have always thought that no one wants to be scripted, and that if they realized that you were scripting them, they'd be upset about it.

Maybe I'm just wrong about that.  Judge for yourself.

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Frightening Inventory Level

The Complete Collapse of Supply

Here is an interesting number to start our Tuesday:  306

I live and work in Wake County, North Carolina.  It is a large county with more than 1.1 million residents.  This morning, just for kicks and grins, I looked up how many homes are actively For Sale through our local MLS, in the entire county.  Of course this is a point-in-time figure, and it will change from day to day, and even from hour to hour.

Let me qualify this.  I looked up the number of re-sale homes, under a million dollars.  I wanted a true active figure, so it does not include any Coming Soon properties.  And I excluded properties with current Contingent or Pending contracts.  I also excluded new construction.  But this number does include all property types:  Detached, Attached, Condo, and even Manufactured.

Let me say, I have absolutely no idea what this number is on a regular basis.  No doubt it's seasonal.  But for mid-March, 306 seems frighteningly low to me.

We've all been discussing low inventory for a few years now.  But after the posts Multiple Over Madness and Four Hours or Four Days, I really wanted to get a handle on the current situation.  Sure, there are any number of ways to dissect the statistics.  But I think this one number pretty much captures the situation.

Update, 7:07 PM, Tuesday, 16 March 2021

As weekend sales are finalized and properties go under contract, our figure drops even further:

288

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Four Hours or Four Days?

The Immutable Laws of Supply and Demand

Yesterday, I ran into my neighbor out walking her dog.  Here's our conversation:

Neighbor  Hey, my daughter just sold her townhouse in Chapel Hill.  It sold in four hours; isn't that great!

Me  Hmm, four hours?  That seems irresponsible to me.

Neighbor  But, she got more than she expected.

Me  Well, I wonder what she could have gotten if she gave it four days instead of four hours?

Neighbor  But she was in a rush.

Me  What's the difference between four hours and four days?

I know the real estate market has gone crazy.  But people seem to have totally forgotten the fundamental laws of supply and demand.  If you limit demand, you simply cannot ensure that you will get the highest and best offer.  This is all the more true given the lowest inventory levels (supply) in recent memory.

The worst part of this is the seller has no idea what she could have gotten for her home.

Sellers:  You won't lose a buyer to another house, because odds are, there are no other houses.  Give it a week.

One point brought up in the Multiple Offer Madness post is that sellers don't want potential buyers traipsing in and out of their homes all day long for days on end.  No problem, make your agent earn their money.  Hold an open house for two hours a day – for seven days.  You might not get all the potential buyers, but you'll get most of them.

And you will have confidence that you really did accept the best possible offer.

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KB Homes Slashes Commissions

Congratulations to home builder, KB Homes.  Effective March 15, they are cutting commissions to real estate brokers to two percent.  At least here in my market.  Here is the email announcement:

So why congratulations?

Well let's ask the obvious question:  How much should a real estate commission be?  Or, how much is a broker's service worth?

Of course, it's debatable.  And brokers can charge whatever they like.  But that does not mean that buyers and sellers have to pay whatever the broker likes.  Sure, some brokers are worth more than others.  And some deals are easy, some are difficult.

Nevertheless, after a lifetime in the business, if I had to put a number on it, I would say that on average a real estate transaction should pay one percent to each side, plus expenses.  That is, one percent to the seller's agent and one percent to the buyer's agent.  Plus an accurate accounting of expenses related to the transaction.  For the seller, these expenses should only include marketing costs of the property involved and not any other marketing expenses of the broker.  For the buyer, only the search costs, and not the marketing expenses of the broker.

Most brokers will find this pretty radical.  But I am simply trying to match brokers' fees with their actual value proposition.

And just to be clear, I am NOT talking about any form of discount brokerage.  No, I am talking about full service.

But brokers are consistently paid much more than this.  Why?  Well they have perpetuated the myth that they are worth more.  And have frightened buyers and sellers into believing that if they pay less, something bad will happen to wreck their transaction, or otherwise cost them even more money.  It is a sham.

Let me quote from The Competent Broker:

I will tell you what many brokers will never admit:  Many of the services offered are commodities and should be priced as such.  And as we have discussed, many brokers offer only the illusion of Lexus-level service.  Their value proposition is minimal.  This certainly applies to almost all real estate marketing.

Also, and there’s no getting around it, this industry dynamic involves an element of work ethic.  Or lack of work ethic.  It is easy to get fat and lazy at six percent.  If the industry average commission was dramatically reduced, brokers would have to really hustle.  There’s a lot more hustle at Walmart selling household goods than there is at Nordstrom selling high-end handbags.  Now sure, Nordstrom has luxury offerings and a refined atmosphere and unmatched service.  But what you have in the real estate business is Walmart brokers waiting for (and insisting on) handbag shoppers.  They need to cut their prices, roll up their sleeves, and get to work.  Yes, really.

I also think that reduced commissions would lead to a more professional class of broker across the board.  With six percent commissions, what you find is many marginal brokers remain in the business who would otherwise have to find a real job.  If we dramatically reduce commissions, these people would be forced to leave the business.  Those remaining would be the true professionals.

But the real question is:  Why do sellers continue to hire these brokers?  It is, I think, a combination of factors that we’ve discussed.  The pretense of competence and authority.  The widespread, and often valid, stereotype of brokers.  And the illusion of high service.

There is also an element of fear.  Some sellers fear that if they hire the wrong broker, the broker might make an expensive mistake that the sellers cannot afford.  I get that.  But brokers prey on this fear.  So many of them are little more than snake oil peddlers preying on the nervous, uninformed, and credulous consumer. 

So with this book, I hope to convince you that six percent does not guarantee competence or integrity.  In fact, it might even reduce these sought-after qualities.  I have mentioned this a couple of times and I will again here:  If we want better brokers, the only way we are going to get better brokers, is for consumers to demand better brokers.  Please.

So with the above announcement, KB Homes is paying the buyer's agent two percent.  Double what I think it is worth.  But okay, what I think is only one opinion.  You decide for yourself.

In any case, I'd say KB is taking a step in the right direction.

Update:

Just for kicks and grins, I looked up the commission payouts from other new home builders.  Lennar, Pulte, Taylor Morrison, and Dan Ryan are also paying two percent.  Maybe it's a trend.  In this huge seller's market, how long before lower payouts reach the re-sale market?

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A Few Thoughts on Zillow

Zillow Buys ShowingTime.  Realtors Silent.

Last month I sent a question to an email group of North Carolina brokers:

What is to stop Zillow from opening dotLoop and ShowingTime to consumers directly?

Crickets.

No one wanted to even discuss the possibility.  Why?

Well the Realtor associations have scared brokers into silence.  The Realtors point to Article 15 of their Code of Ethics.  Let me quote it here:

REALTORS® shall not knowingly or recklessly make false or misleading statements about other real estate professionals, their businesses, or their business practices.

Does asking or speculating about a firm's possible future business model violate this article?  And even if it does, should we care?  Let's come back to this.

I am generally supportive of new business models in the real estate industry.  As long as they are honest, bring them on.  Because what this industry needs more than anything else is to be turned upside down and given a good shake.

Zillow currently allows homeowners to claim their property and then "list" it for sale on the Zillow website.  What's to stop them from adding a button to the property page that says Schedule a Showing.  Scheduled with whom?  Well, it could be the listing broker of course.  But it could just as easily be the homeowner.

With dotLoop, Zillow has a system for managing all the paperwork involved.  So again speculating here, why couldn't Zillow develop a system for negotiation between the buyer and the seller?  That is, under their Schedule Showing button, we might find another button:  Make Offer.  Again make offer to whom?  And again, it could be the listing broker of course.  But it could just as easily be the homeowner.

I included a whole chapter on how this could work in The Competent Broker.

Such a system would put the whole industry, as currently configured, at risk.  And you know what?  I'm all for it.  Even in 2021, we have way too many six percenters and way too few everything else.

Is this the path that Zillow is taking?  I have no idea.  But I have been writing about the possibility for over ten years now.  Zillow always denies it.  Why?  Well they make money selling both ads, and now with dotLoop and ShowingTime, services, to real estate brokers.  We brokers are giving Zillow the gun that they will ultimately use to shoot us.  Money.  That is, we are the ones paying them.  For now, Zillow's revenue comes almost entirely from the brokerage community.

But that is not all.

By refusing to talk about the possibilities and what Zillow may or may not be up to, we Realtors are giving Zillow cover to put this system in place.  Right before our very eyes.  And we have absolutely nothing to say about it.

The Code says shall not knowingly or recklessly make false or misleading statements.  I'm not sure whether my speculations cross this line.  But I can tell you that, in practice, Article 15 is used to shut down any discussion whatsoever.

And would not such a discussion be valuable?  Let me ask a final question:  Could it be that one reason our industry is so highly resistant to change is that we don't allow ourselves to openly discuss alternatives?

This is not a case of cognitive dissonance.  I want Zillow to succeed whatever it's up to.  I want a stronger, more competitive, and more consumer-friendly industry.  I think Zillow has a role to play.  Likewise Redfin, Opendoor, Move, and others.  But I also want the rest of us to have a chance to succeed as well.  We won't get that by sticking our heads in the sand.

The Realtor Code of Ethics?  It's really a Code of Silence.

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Buyers, Read This: Multiple Offer Madness

An Interesting Email Thread

And vital for today's buyers to understand.

These are actual emails that I received from fellow North Carolina Brokers-in-Charge.

Dates of exchange:  Monday, 22 Feb. 2021 – Thursday, 25 Feb. 2021

Format slightly edited for readability.  And to make it easier to read, I am going to reverse the order.  So you can read top to bottom...

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Monday, 22 February 2021, 8:31 PM

RE:  Multiple Offer Madness

2021 is a bit wild so far. 

The top numbers I've seen this year so far are 60 offers on one property and the most I've seen over list price is $100,000.

What are you seeing out there?  How are you managing?

Cameron Saemann

Second Story Realty

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Monday, 22 February 2021, 8:37 PM

WOW!

 

I thought 37 offers and $56,000 over list was nuts for this area.  When I schedule a hot property, I’m looking at the blackout on Showing time as a gauge of how hot it is showing and the potential of offers that will be submitted.

Carolyn Nelson

Realty One Carolina

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Monday, 22 February 2021, 8:43 PM

Ah, thanks for the reply.  Those numbers I quoted are for the Raleigh market.  I just realized I don't have my main signature on this email to show that. 

We do the same with showing time.  The requirement for non-overlapping showings has been helpful in a way in that it forces the schedule to blackout the appointments already taken, and you can generally see how many showings the property is getting, just like you said.

Cameron Saemann

Second Story Realty

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Monday, 22 February 2021, 11:58 PM

So here's the thing...we have to take some responsibility here for this madness.  Oh sure, we want to get our clients the best price as selling agents, and as buyer's agents we want to ensure that our client gets the house, but what will happen when this crazy bubble burst, when interest rates go up, and people begin to realize that they are locked into a home that they bought in a state of panic.  If home prices and appraisals are not in line with what someone has paid for their home, when and if they are upside down in their mortgage, who are they going to blame?  You know who!!! 

I stood in a home this past weekend that went on the market Saturday with the limit of 15 minutes to show it.  The listing agent provided the wrong lock box information and it took us 10 minutes to straighten it out with Showing Time.  The listing agent noted that all offers had to be in by 8 PM that night.  My clients looked like two deer caught in headlights.  They had literally 5 minutes to decide if they wanted to buy this home for which they would have to overpay, and knowing that it wouldn't appraise.  I looked them in the eye and told them that they should relax and walk away.  "There'll be other homes and more listings in a few days and weeks," I explained.  There was time...the world was not going to end if they didn't make up their minds in just a few short minutes.  I explained that there was always the possibility that a year or two down the road they might be upside down on the home value vs. the amount of the mortgage if things take a turn.  It was like I released the two of them from the middle of a  whirlwind.  They let out audible sighs and thanked me.  Later we sat down and discussed options.  I told them the pros and cons of making  an offer that is considerably higher and how this artificial inflation is actually not in anyone's best interest.  Even the sellers could get burned.  I am seeing that there are more deals that are getting canceled during due diligence.  Sellers might lose the homes they are wanting to move into because of cancellations.  The whole thing is insane.  It's up to us, the professionals to rope our clients in a bit...to calm them down so they aren't in some half-crazed buying frenzy.  Yes, they might miss out on a few homes, but it will give them time to consider their options, to make informed decisions and oh, by the way, if enough of us keep trying to control this situation, it will restore sanity for all of us.  

Am I dreaming here?  Or can we take back some of the control?  No one is enjoying this.  Sellers feel like their agents aren't doing anything to sell their homes and therefore they question why they should pay so much commission?  Buyers are angry because they have to pay so much and they keep losing out on homes so they blame their agents out of frustration.  The whole thing is ridiculous.  We are all feeling helpless but really maybe not.  Maybe we can change things by being the voice of reason.

Okay...I think I am through with my rant.  I'd love to hear from others.

Jessica Bryan

Real Living Carolina Lifestyles Realty

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Tuesday, 23 February 2021, 6:04 AM

Jessica,

You are spot on.  In my opinion the whole process started with our Government printing trillions of dollars with no basis throwing it out on public, bottom line interest rates qualifying lower purchase point clients to jump into 100k more homes, people making short term gains in “no reason stock market gains”, builders increasing the prices crazy with the excuse of increased material cost are the big balloon that is going to burst soon.

People prove again they have short memory forgetting 2000 & 2008.

Shiv Nunna

Nunna Realty

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Tuesday, 23 February 2021, 6:26 AM

Well said, Jessica.  I have felt this way for some time.  I have advised clients exactly the same.

Tim Devinney

New Native Realty

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Tuesday, 23 February 2021, 6:33 AM

I'm in Mooresville.  Same situation here.  I'm very concerned about the overinflated offers and ridiculously high DD  needed, just to ensure your offer stands out!

I'm also seeing an increase in BOM.  Whether it's Appraisals, issues with the home, buyer remorse after making a hasty decision just to be competitive...I don't know.  I also don't like the addendum agents are using stating 'if a property doesn't appraise, the buyer will make up the difference'!  No!

I'm not comfortable with any of it. 

My memory is not short!  I do remember 2000 & 2008!

Ok, now my rant is over!!!

Lucy Jacobs

The Lake Team

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Tuesday, 23 February 2021, 7:01 AM

Good conversation here.  I agree that it has gotten stretched to a point of everyone being uncomfortable.  And we are probably due for a pullback on prices and rising rates will help moderate some of the price growth.  But the money printing and markets can stay irrational a lot longer than we think they should.  And a lot of the growth we are seeing in the Triangle is relocations from large cities, the west coast and the NE.  There are many hot markets in the US due to rates but a large part of our pressure is simply not enough inventory for the number of new buyers coming to our area.   An appraiser friend of mine told me what I think is a record so far...home was listed at $990k in Durham and contract was for $250k over asking and $86k in DD money.  We didn't get it.. as if I had to say that :)

Mark Bonner

New Durham Realty