RISMEDIA, January 20, 2010—In preparing my presentations for the Triple Play Convention in early December 2009, I started thinking about the real estate market in 2008 and 2009 and how difficult closing a real estate transaction has become.
In speaking with agents and studying MLS statistics, I found that sale transactions were falling apart more often now than in years past, and falling apart for all sorts of reasons, some common and many not so common. I found that many expired listings were re-listing with another agent immediately after expiration. I found transactions being cancelled during the attorney review period, cancelled due to the home inspection, cancelled due to an under appraisal and cancelled due to mortgage denial.
Real estate is not a short-term process. A real estate transaction is not a one-step transaction. A buyer inquiry is not an automatic appointment. A buyer appointment and home showing is not an automatic contract offer. A contract offer is not an automatic accepted and signed contract. A transaction in escrow is not an automatic closing and a commission paid. Likewise, a listing appointment and presentation is not an automatic signed listing. There is no guarantee that a listing will be shown and sold. There is no guarantee that an under contract listing will reach the closing table and a listing commission paid.
Real estate agents do not get paid for just showing up, like many had in the real estate market between 2002 and 2006. Buyers are not making full price and higher offers, and lenders are not providing mortgages to every buyer, regardless of the amount of the down payment and qualifying ratios. Listings are not selling within days. Real estate transactions in escrow are no longer automatic future closings.
I started thinking about Murphy’s Law and wondered how it could relate to the real estate professional and real estate transactions. In Googling the phrase ‘Murphy’s Law,’ these are some results that impact real estate and that the real estate agent must think about and plan for in their daily practices;
-If anything can go wrong, it will; it can, it should, it will be your fault, and everyone will know it.
-If there is a possibility of several things going wrong, the one that will cause the most damage will be the one to go wrong first
-If anything cannot go wrong, it will anyway
-Left to themselves, things tend to go from bad to worse
-If everything seems to be going well, you have obviously overlooked something
It’s not Murphy’s Law causing all the problems, but the real estate agent and what they are doing or not doing that is contributing to not acquiring listings, not putting sale transactions into escrow or having escrow transactions fall through. When listings expire or sale transactions are cancelled, agents are truly working for nothing. Agents do not get paid because they just show up, have a real estate license and a driver’s license, are in the right place at the right time or just need the money.
Real estate agents get paid because they are able to obtain listing appointments and are able to prepare and present a marketing plan beneficial to home sellers. They are able to answer owner questions and overcome objections to list price and listing term during the presentation. They know how to market the home to obtain buyer inquiries and know how to market the home to MLS agents. They obtain and negotiate a contract offer to a signed contract, and then manage and process the transaction paying attention to all the details involved in getting the transaction to the closing table. Real estate agents get paid for what they know and what they do, or not paid because of what they