Standardized, Computerized, Personalized. The evolution of real estate.

We Skillshare to learn and adapt.  How recent was it when the value of our business was possession of a private data base of real estate for sale? Property was the commodity. Information in 1988 was only accurate up to two weeks earlier. Gradually computerization decentralized the data from one giant computer to the single shared machine in individual offices.

Data, the commodity of real estate, gradually moved closer to up to date. First  by the week, then to within a day.  The public wanted access to data. Our industry refused. was released. Consumers could peek at data. To get more they had to call us. We have always held a pay to play attitude toward the consumer. We have always been in the business of “capturing leads”. The consumer  did not accept The industry didn’t trust it. Realtors couldn’t figure out how to monetize the service. was a loser.

The rights to the platform and it’s operating brain were relinquished.  Zillow stepped up,  joined our organization, and quickly flipped the perspective. The value is not in the data we put into the brain, the value is in the data the brain collects.  Zillow delivered the service the public was eager to get.  Exclusive access to King Data was reduced to a day for the Realtor. Today it’s seconds, or maybe not. The public wants to be able to tell the consumer “Hey, I’m thinking about selling.”  We tell the public, decide and we will give you a platform to reach the consumers.  Zillow responds with “Make me move” and the public is given what they want. Again.

What do we do with members who share what they know to give a consumer an edge? We penalize them with punitive fines. Our value, we believe, is in cooperation for our mutual benefit. The value of delivering data for the benefit of the consumer is not only unrecognized, delivering data to the consumer is penalized. Standardization is demanded by us for us.  Zillow gives the consumer a computerized, personalized platform.

Consumers, not property, are the valuable commodity in the transaction. Zillow figured that out. We now pay Zillow to share their consumers who are interested in our property.  They realized monetizing was not in the ability of the brain of the computer to store and standardize data, it is in it’s ability to personalize, organize, and distribute data on people who are interested in owning what we’re selling. Zillow uses technology to deliver information to the consumer. In exchange the consumer would freely give what we demanded they share, their personal information.  Does the consumer trust Zillow? For good reason we are seeing consumers have every reason to not trust tech giants with their private data. And still, they do.

Our standardized data on real estate is given away.  We pay an outside firm to share the people they meet who are interested in our data (property). Our property is actually used to attract consumers who are sold to our competitors at a price we won’t pay to keep what we considered valuable: exclusive access to data.

Where is the uproar? It didn’t happen. Paying to play is now the norm.

in the early years of the 21st Century an idea to change real estate licensees from an agency model to a facilitator model.  The legal industry was in favor of turning us from agents to facilitators.  We feared the consumer would see less value (worth less in fees) in a facilitator than agent. We fought to remain agents.  Facilitating was left for computerization.  The public wants personalized facilitation. We want standardized agency.

We retain our right to fill in blanks of purchase contracts at the objection of the legal industry. To keep that right we require accuracy in the service. To be accurate we restrict our work to standardization. Fill in blanks, check boxes of standardized forms in an increasingly personalized business. Our profession is point and click.  We think we have value in our ability to explain a standardized form. In fact, 100% of computers have the ability to accurately explain the forms and they can do it better than 99% of the licensees. To top it off, computerizing the drafting and presenting of offers allows including real estate legal advice and interpretation.

Soon. Very soon ,computers will analyze, evaluate, and explain financial qualifications of the parties. They will interpret and summarize the commitment and intent of the buyer and seller.  The decision of which offer is the best offer for the seller can be done with present technology. To craft a better offer, the computer will personalize the contract to match the buyer and seller’s most important requirements.

The trait the computer excels at compared to humans, is the computer listens and understands the parties. No suggestion is made until the computer has received and processed the information from the consumer. Do we do that? Not well. We present and tell people what to do based on what we always do or only heard.

A computer is able to facilitate a transaction between the most ready, willing, able buyer, with the ready, willing, and able seller who has the property that best matches their desires.  Agency is not what the consumer wants from us. They want personalized facilitation. They want ideas to help them get their offer accepted in competition. They want a way to connect with the seller on a personal level. The seller’s want safety. They want to reduce their risk by getting into contracts with the most able, prepared, and committed buyer.

The future is bright for Realtors. The ones who learn, adapt, deliver to the consumer what the consumer demands will thrive as our industry moves from standardized to personalized. We can, if we want to, be the better facilitator. We can be better at  crafting personalized offers, eliminating risk, and facilitating smooth transaction. We  can meet this demand if we move from standardized and computerized, to personalized and computerized.

Agency they can get from attorneys. For now.






Title Insurance Contingencies Merit Consideration

To get to closing we direct our attention to the inspection, appraisal, and financing contingencies.  Another condition of the Offer receives very little attention and yet it’s a very big hurdle. The Title Insurance contingencies, page 7 of the 9 page WB-11 Residential Offer to Purchase, pose a serious risk to a successful closing.

Provision of Merchantable Title Lines 348-352:  This contingency requires the Seller to provide a Title Insurance Commitment to Buyer or Buyer’s attorney, NOT LESS THAN 5 BUSINESS days before closing. The commitment shall show  evidence that the title is merchantable (Suitable for its purpose) to the standards as stated in lines 326-334.

Here’s where things get risky. Title Not Acceptable for Closing, lines 353-359, allow the buyer to object to title BY THE TIME SET FOR CLOSING.  Once the buyer objects, the closing is extended to allow Seller a reasonable time to clear the objection. The buyer’s obligation is to permit the Seller no more than 15 days to resolve and the closing is extended AS NECESSARY.  (Uncertainty).  If the Seller is unable to remove the objection, the seller must notify Buyer. Once the notice is received, buyer has 5 DAYS to to waive the objection. Unless the buyer takes the affirmative step to deliver written notice and waive the objection, the offer becomes Null and Void.

Without seeing this happen in person, it’s easy to see the problems sellers are facing until this contingency is satisfied.  Which raises the question, Are buyer’s giving notice of satisfaction of the Title Commitment contingency or are we walking into closing with the buyer holding the right to object before the Time Set For Closing?

I have seen an attorney use the Title Unacceptable for Closing contingency used by an attorney to force a seller to release a buyer who objected to Covenants and Restrictions, when there was no contingency to approve Covenants and Restrictions.  The attorney stated the Covenants would be an exception to the title insurance policy and the buyer would find that exception objectionable…hence, we may as well part ways now.  What? Wasn’t “recorded building and use restrictions” an agreed upon exception per lines 326-331?  The lawyer’s argument met no objection from the Seller’s attorney (maybe to simply move on)  and the buyer was released.

Maybe the Title Contingency is an exit clause we should pay more attention to.

Are you in the home business or contract business?

Some Realtors are in the home business. All Wisconsin Real Estate Licensees are in the contract business.  Maybe for most people the home business is more appealing than the contract business, but you may not do the home business long without learning and continuing to learn the contract aspects of the business.

Study Contracts at Harvard From Your Home  Online learning from the finest institutions in the world is an opportunity previous generations could not even imagine. Several years ago universities began experimenting with online learning by offering free courses to the world. They learned how to make on-line learning efficient and appealing.

Lawyers and will be law students are registered for the Contract Law Course at taught by a Harvard professor. I started the course on Friday. It’s a learning experience for me and I love the contract part of the business. I won’t finish with a degree, but I am learning, and that’s what I am after.

There is only one commission

If I buy a house from the listing agent, without involving another agent, should I expect to save 3% of the purchase price  (approximately 1/2 of the commission total) because there is only one agent to pay?  No. There is no half of a commission. Sorry real estate bloggers. You’re explanation to the public is wrong, and some of those people are paying a high price to find out commission does not work like you think it works.

To understand the commission distribution method in a real estate transaction, you have to recognize that there are multiple contracts involved in the transaction. Each of the contracts is an agreement to cooperated, and compensate based on criteria the buyer has no part in deciding.

MLS Contract: Each Firm and their agents belong to the RASCW-MLS. To be a member you agree (by contract) to cooperate with all firms and compensate the firm who procures the buyer for your listing.   Procures. Keep that in mind. It’s important.

Listing Contract: A seller of real estate contracts with a firm, agreeing to terms of service, obligations of the broker and seller, etc. One aspect of the agreement is compensation. If the listing broker charges a commission of 6% of the purchase price, the fee the owner is obligated to pay is 6%. There is the one commission.

Let’s say the sale price of a house is $300,000. I am the listing agent. You are the buyer. This imaginary person next to me is the seller. At closing the seller pays my firm $18,000.  If there is a cooperating firm in the transaction my broker will deliver a check for 50% of the commission. It’s still one commission. That’s a cost of doing business in a cooperative MLS. My firm then splits the remainder of the one commission with me based on my commission split agreement.  If there is no cooperating firm, there is no other firm to pay.  That’s the agreement the broker has with the seller. One commission. Six percent.

There is no buy side and sell side commission.  Real estate bloggers who talk about two commissions or buy side and sell side are confusing the public. Time and again buyers offer less than they have to thinking there is a commission to save, and they come in second or third or worse in competition. The listing firm is paid by the seller and the listing firm compensates cooperating brokers. It’s as simple as that. Or is it?

What about a buyer agent? When the buyer has a contract to compensate a buyer broker for real estate services there is an agreement/contract between the buyer and the broker for compensation. The buyer agrees to pay the broker a stated amount. Assume it’s 3%. The buyer is obligated to pay the firm 3% when they close on a house. The contract provides an opportunity for the buyer to have their 3% buyer broker fee reduced by the amount the broker is able to collect from the listing broker, and or the seller.  Without getting to deep into the weeds, it is a rare transaction where the 3% the buyer is obligated to pay isn’t paid to the buyer broker by the seller or from the offer of compensation made by the listing firm to cooperating brokers.

As a buyer entering this Seller’s market, you may want to decide what is most important to accomplish. Getting an accepted offer on the house you want or learning that the 2 commission idea is a myth and settling for your second, third, or worse choice house. You can own the home you want. Be the buyer who everyone wants, and let the myth believers help make your offer look even more attractive.

Tax Law: What it means to real estate professionals

NAR on Tax Law and Impact on Real Estate Agents

First I’d like to be clear. I do not think this tax bill is reform in any way. It’s a terrible law seriously impacting the most vulnerable people in our society at the advantage of those of us who need the least.  I’m sharing this link for the benefit of the real estate licensee professional who provides a service and provides for their family on the income they earn.

We’ve heard the alarms of the National Association of Realtors® over the limitation of the property tax deduction. It’s clear the law is unfairly favorable to the smallest percent of Americans. We heard there was something in the law to give the small business owner an incentive to hire.  What we had not heard was an explanation of what defines a pass-through business eligible for the 20 percent deduction.  Thanks to the National Association of Realtors, and the Wisconsin Realtors Association, we now have clarification.


The 20 percent deduction is available to non-personal service businesses. A brokerage service is a personal service business, and a real estate firm is a brokerage. You would think we do not qualify for the tax deduction. No.  We do. The NAR (yes, lobbyists) made a deal and an exception was granted for the real estate industry. (Firms and agents). With a limit on the amount of income eligible to the claim the deduction ($157,500 individual-$315,000 couples filing jointly), independent contractor real estate licensees are eligible for the deduction.

Check with your lawyer and accountant to verify the info is correct and what will be your best method of participating.

More information is available through the NAR web site link above.

Property Damage After Acceptance Prior to Closing

An easy to happen and complex to navigate situation licensees address is property damage after acceptance and prior to closing.  The WB-11 Residential offer to Purchase begins to address this on lines 206-215. In compliance with Wis. Stat 706.12, unless this provision is not part of the Offer, the parties have expressly agreed to who has responsibility (buyer or seller) to repair the damage and under what conditions the contract may be terminated and parties released.

WRA on Damage after Acceptance
When the licensees become aware of damage which occurred after acceptance and prior to closing decisions have to be made regarding disclosure, damage assessment, repairs, closing date, and resolution.  The prudent licensee will be careful to direct their clients to legal counsel to interpret their rights and obligations, and to their insurance companies to determine their coverage. The parties will look to the provisions of the Offer to determine the avenue they will take to move forward or to separate.

Attorneys may advise their clients to maintain their right to remain silent on the new condition, make the necessary repair and proceed to closing.  Because  the buyer may have recession rights when they receive an amendment to the RECR with previously undisclosed conditions, sellers may be advised by their attorney to not amend the RECR or issue a new RECR.  Even though a seller may not have disclosure obligations, the licensees do. A Disclosure of Material Adverse Fact form is available for licensees to disclose conditions they are aware of.

Occupancy May Change Everything

Buyer pre-closing occupancy is a condition which may alter the buyer’s rights and seller’s obligations for repairs, expenses, and resolutions.  Pre-closing occupancy is a seriously risky proposition. The Addendum O (Occupancy Agreement) has been modified to make it easier for licensees and parties to incorporate occupancy provisions into offers.  I wonder if that’s a good idea considering the complexity of the issues involved with occupancy. Anything which contributes to parties avoiding consulting their lawyer is not an advantage to their safety. Just my opinion.

Water Everywhere

It happened here in 2008 and it will happen again. Spring is flood season in Wisconsin. Frozen ground, rain, melting snow, clogged drainage sewers, rising river levels are the perfect storm conditions for property damage after acceptance and prior to closing. It’s never too soon to sharpen your skills in the disclosure of defects and conditions responsibilities.  Heavy rain is the forecast for today through tomorrow.


Would you rather learn or be trained?

Learning is what we do for ourselves. Training is done to us. Maybe that’s why learning opportunities promoted as training sessions are unfilled with experienced employees or professionals.  Continuing education isn’t a big draw either. Education is learning, but it’s not something people who have arrived agree they need. That’s why CE is mandatory and not voluntary.

A company with a culture that places high value on learning will attract learners. People who learn develop insights, skills, and wisdom they won’t get in training or Continuing Education.  Learners stay ahead of change. They embrace new technology if for no other reason than it’s something new to learn.

Would you prefer to be represented by a person who is continually learning, or one who just got  out of training, or attended mandatory continuing ed?