We Still Don’t Know Enough About Real Estate Transactions.
For most of human history, we knew very little about a whole lot of things: We didn’t know what our leaders were like behind closed doors. We didn’t know where celebrities vacationed. We didn’t know what our cousin we hadn’t seen in four years ate that day.
Then came the information age, the Internet, social media, smartphones—and now we know everything. You can argue that we know too much. Personally, I don’t care what my cousin ate today, and I don’t want to know what my friends and coworkers think about politics.
But, for all the information overload and noise in our lives, there is a huge benefit that comes with all that technology: transparency.
Restaurants can’t use good marketing to hide horrible service and bad food. Online reviews and Facebook posts will let the public know the truth. A used car that’s been in a bad wreck can’t just get a new paint job and a “new car smell” air freshener. Carfax will tell a buyer all about the time the vehicle was taken on a joyride before it ended up wedged into a tree.
The constant transparency that’s resulted from technology has been a big adjustment, and though it doesn’t always feel like it, it’s had a lot of good benefits. If you’re a consumer who’s willing to spend even five minutes on Google doing a little research, it’s much harder to get ripped off than it used to be.
However, that doesn’t mean every industry is as transparent as it should be.
One of the industries that still has a long way to go is real estate.
Of course, the murkiness of real estate and the housing market is well known. It’s been ten years since the housing crash, and the average consumer still has a hard time explaining what exactly happened. Most consumers still don’t understand what happened because individual real estate transactions lack so much transparency.
Put a different way, it is impossible for people to understand what happened when millions of real estate transactions went wrong if individual transactions are still shrouded in so much mystery. Sure, there are some improvements. Zillow is improving its “Zestimates” by using crowdsourcing, and more technology is coming out that automates appraisals, which will inevitably increase the objectivity and accuracy of those appraisals.
Still, our industry isn’t nearly transparent enough.
Despite the importance of the housing market, there is significantly less transparency in a real estate transaction than there is in a stock sale. Real estate professionals are required to deliver all offers to sellers, but that’s about the extent of the law. There are no requirements about how those offers are delivered, no open exchanges or platforms, and there are no requirements to confirm to a buyer that an offer has been sent.
I’m not arguing that buying and selling a house can or should be done exactly the way you buy and sell stocks, and I’m also not arguing that we should pass a whole bunch of laws to further regulate the industry. But on a micro-level, the lack of transparency has made the public believe real estate professionals are less trustworthy than lawyers, and on a macro-level, a lack of transparency in the housing market contributed to a near-meltdown of the world economy.
Here’s the truth: If we don’t fix our industry, eventually regulators and lawmakers will try and fix it for us. If another housing-fueled economic collapse happens, you can bet transparency will be forced on us—but it will be a type of government-mandated transparency that will likely make buyers, sellers, and real estate professionals all worse off.
That is exactly why our industry needs to embrace technology-fueled transparency.
We owe that to the public that puts its faith and trust in us—and we owe it to our industry. All of us in the profession know the difference a good Realtor® makes in a customer’s life. The reason we have the reputation we do is because too many consumers have been hurt by agents and brokerages that aren’t transparent. Because of that the first company to develop a platform that uses technology to provide true transparency will dominate our industry.
That platform will also allow good Realtors® to do what they do best:
Guide buyers and sellers through one of the most important financial transactions they’ll ever make with honesty, humanity, and good customer service.
President & CEO
Worth Clark Realty