Many professions have an uphill battle as soon as they get their business cards. Real estate agents top the list of those who are not trusted from the start. Although most real estate agents who blog or have any web forum presence might defend themselves from hasty generalizations and ad homonyms I say most of what people voice is true. Too many years in this line of work has made one thing clear, a real estate license is easy to get and too many people have them.
The fall out from the sub-standard decisions and qualification procedures in the lending industry don’t help the general populous perception that real estate people are to blame. A paper by Yale University’s Robert Shiller analyzes the market turning points in our short US History (since 1880’2 anyway) by drawing key moments and elements out that led to the downturn and eventual revitalization of our real estate market for over a century. One of the many great points in this paper is that human perception plays a pivotal role in the actual performance of the market.
In short and further summarizing the scholarly perception of historical market trends of downward turning markets, there is always someone to blame.
In the 1880’s it was Real Estate Professionals (unregulated and unlicensed at the time, but guilty by association) in California selling tracts of land with speculative future growth and appreciation (somethings don’t change). A few people lost their shirts for not calculating the risks in the short term, doing their homework and trusting their own fate to the hands of someone who has a lot to lose if they don’t produce the buzz and sell, sell, sell. You have to ask why do we keep repeating our mistakes?
Contemporary vantage points suggest sub-prime lenders, shady brokers and appraisers and every vulturous real estate professional in-between is and was to blame for the current state of affairs. The finger has been pointed and we all fall helpless victims to the atrocities of bad business practices that happen to be cyclical in nature and a very common and consistent thread in our history.
The reality is that the general populous (those without a real estate badge or a business card with a long list of credentials named by confusing acronyms that the person virtually paid for to build credibility with before-mentioned) can conduct business without many of the go-between’s that collectively produce their own cards, credentials and badges. Just as you can fix the car yourself if you took the time to know how the engine works, anyone can buy and sell real estate without many of the real estate professionals. Granted some states require attorneys to preside over the transaction, but most just require the right documentation to complete real estate transactions.
So although many real estate professionals are responsible for scandelous things in letting our economy build too many homes for people who could not afford them and turn around and lend them too much based on ridiculous values, aren’t we all to blame for not understanding the loans documents we signed up for, for buying at the peak of real estate values and continuing to buy on the concept that “historically real estate values always go up” while getting into loans (that you had every opportunity to read through, understand and ask questions about) that adjusted into perilous rates in the short term all the while putting your trust in the hands of those who are there mostly to close the deal.
Short term loans and long term appreciation is a rough equation and those who saw the trouble coming actually told their clients to reconsider their desire to move forward into risky territory. What I have noticed in the vocational pitfall of real estate professionals and without coincidence is that those who built their business on trust worthy dealings, honesty and patience are those who remain in the business and have a referring fan base to support them.
Just as the market regulates itself in terms of supply and demand, so to will the real estate professionals be weeded out and the ones that really deserve your trust will remain. A wise man once said build your business on trust & patience, when you establish yourself as a trust worthy person and you are patient, success will come.
Remember, real estate agents and loan officers don’t come with the home you buy. They don’t have to live with your choices in loan programs and monthly payments. Just like a mechanic, there are some that design their craft so you keep coming back and there are some who you rarely have to visit and get your highest recommendation every time.