Real Estate Transactions Are Now On the Top of the Stress List
By Jeremy Conaway, NWREporter
It may or may not come as a surprise to most real estate professionals that it is now public knowledge that, with respect to stress, participation in a real estate transaction is now on par with death, terminal disease, divorce, airline travel and computer repair.
An article published in the October, 2015 edition of the Harvard Business Journal by Leonard L. Berry from Texas A & M University and Scott Davis from Rice University reports that services such as cancer care, airline travel, computer repair and home buying and selling can trigger powerful human emotions. Even more surprising is the fact that the vast majority of the entities and individuals delivering these services are not sensitive to the level of stress their consumer experience generates. Nor are they provided with the training necessary to either demonstrate sensitivity or reduce the amount of stress for which their performance is largely responsible.
By this point some readers will be rolling their eyes and not so subtlety pointing out: Hey, what's new? This is the way it has always been, this is the way it will always be and as a hyper busy real estate professional I can't be responsible for the client's mental health. Buck up consumers!
While there may be no lack of support for this macho position hopefully there will be a few souls who will want to better understand the big picture because there is one. Let's start with a few facts. First, this is not our parent's real estate marketplace. A strong argument can be made to support of the idea that as a market we are in the last vestiges of that era in which real estate agents and sales representatives have the absolute power to design and deliver the consumer real estate experience. From a consumer and regulatory perspective we are now in a new era in which the only thing that matters is what experience the real estate consumer gains from their buying, selling and transactional experience and how they can customize that experience to make it a positive one.
This effort is not without support and facilitation. Leading the charge are the new generation consumers themselves. As a starting point they are no longer in a mood to be victims of provider centricity. They have ceased to see their physicians or their real estate service providers as the center of the civilized world. Empowered by the "Internet of everything," their peers and friends, they enter the transaction fully prepared and committed to avoid the transactional woes of the old experience.
The second level of facilitation for consumer centricity will come from new age regulators such as a federal agency known as "the Bureau." Twenty-five years ago this term would have been applied to the awesome powers of the Federal Bureau of Investigation (the FBI). Today the term "Bureau" applies to the Consumer Financial Protection Bureau, a five year old agency that has already earned its bones by bringing order to such high annoyance consumer experiences as student loans, car loans, payday loans, credit cards and, most recently and currently the consumer mortgage experience.
The "Bureau" is absolutely data driven. Not the data represented by tens of thousands of old musty files hidden away in a basement, but the data of an agency whose primary data mentors in 2010 were Google and Apple. Every one of the consumer complaints either generated or received by the Bureau has been captured, verified, analyzed, catalogued and stored in a system that allows for fast reference and almost instant incorporation into the initiatives necessary to respond to the consumer's plight.
A review of the Bureau's recent activities relative to the real estate industry discloses a systematic approach to preparing to regulate all real estate industry activities including those of brokers and agents. The Bureau has already moved to regulate the appraisal, title, mortgage, the transaction sectors and even the allied business elements of the brokerage sphere. Essentially the only element required to close this regulatory circle is pulling in the brokerage and agent. When that moment comes, and in all likelihood it will, the Bureau will be armed with an overwhelming amount of sterling quality evidence in the form of both its own investigations and observations and literally hundreds of thousands of direct consumer reviews (read complaints).
Yet another source of facilitation and support for a consumer-centric movement in real estate may come from the federal and state courts in the form of judgments and decisions impacting the long standing status of the real estate professional as an independent contractor. While the basis in law of such actions have to date been in agency law, there is a strong likelihood that as these actions work their way up the judicial and regulatory ladders, issues regarding public safety and consumer rights will begin to enter the case. The recent decision by the Oregon Public Utilities commission determining that Uber driver/partners are in fact employees brings the national score to two in favor of employee status and two against. There are at least two lawsuits also pending on the subject.
Still another source of documentation regarding the possibility of less than stellar consumer experiences being delivered can be found in the records of on and off line agent ranking and rating programs. Not all consumer reviews are converted to numeric scores and numbered star rating scores, as is the case with the Houston Association of REALTORS® program. Some agent ratings are used to populate very precise databases regarding specific agent behaviors. Industry wide there are well over 1.5 million such reviews. These databases may ultimately come back to haunt the industry and its participants.
Returning to the initial focus of this column, what should brokers and agents do to lower their vulnerability to the side effects of what is clearly a highly stressful and unsettling consumer real estate experience? The primary answer to this inquiry is very simple. In some way demonstrate that the brokerage or agent gives a damn.
The easiest way to meet this basic test is to undertake some manner of rehabilitative behavior. When the moment comes and one must defend one's self the simplest solution is to be able to establish with a dedicated file that the brokerage and its agents were knowledgeable and sensitive to the problem. Set about identifying the specific emotional triggers that are set off during the consumer's experience. Determine which have to exist and which are merely manifestations of an agent's power. Develop tactics for responding quickly and effectively when intense emotions arise. Enhance the consumer's control over the real estate buying, selling and transactional experience. Train agents and others within the brokerage who are in regular contact with consumers to respectfully communicate with clients and customers to strengthen their confidence. Most important of all, establish a record of not being too busy to assist.
These are disruptive and difficult times. They call for appropriate levels of management and behavior modifications. Don't wait for the knock on the door. We can do this.