I had a fascinating conversation with a friend of mine who was describing her hellacious experience purchasing and ultimately foreclosing on a home. Since we, at WAV Group, solidly believe that we do not listen to consumers enough, I thought it would be fun to share her story, word for word, uncut, to help all of us understand what, at least one consumer, is thinking these days. Sobering words….I hope it inspires every one who reads this to think about ways we can “make it up” to those consumers that we let down…
I don’t know a lot about real estate, per se, and my only experience with it all was when my husband and I bought a house with a partner at the very glossy apex of the housing bubble in 2006. Marilyn Wilson asked me to share my perspectives on my home ownership experience so here goes…..
We had been coerced by a broker we knew to buy a house by convincing us that our sub-prime loan would easily be refinanced two years later, maybe even at a profit. Being young and dumb with no real sense of how the housing market worked and drunk on the hope of actually living a life that resembled our parents (step one get married, step two buy house, step three have babies), we went into the deal with our eyes wide shut. We told the broker we could only pay $4,000 per month in mortgage between the three of us, and he assured us that he had made that happen. When we got to the title company to sign our escrow papers, we noticed the mortgage on the paperwork was $4,450 per month. We should have walked away then, but we didn’t, and the surprises didn’t stop there.
Two years later we tried to refinance, as our broker and agent had told us to do (“no problem, housing prices are only going up!”). We went to bank after bank, and the answer was the same: the home we bought at $556,000 in 2006 now had the estimated value of $476,000. This drop happened over a period of nine months, and as each moment ticked away, that number grew smaller and smaller.
We had made a bad decision, and we knew it. We even knew it at the time we bought, but all the voices around us-agent, broker-were telling us to go for it, that it was a “no brainer” and we wanted to believe. How we wanted to believe. And since we were supplied no real tangible information about markets, housing values, etc., belief is all we had.
We tried to hold on but the interest rate on our home loan skyrocketed and the payments were now over $5,000 per month. We walked away, shamed and brokenhearted. Multiply my story by 3.4 million since 2008 and you get the picture. We’re a jaded bunch.
So I present you with this question: If one of the third party websites bought an MLS system and eradicated the real estate industry as we know it today- would consumers even care?
After the bursting of the housing bubble that left so many of us soggy and shocked, I wonder if consumers are now even more likely to enjoy the anonymous power of searching homes and calculating mortgages online without feeling pressured by a broker and/or agent. After all, for the consumer, wouldn’t it be easier if you were able to gather all of the information you wanted to know, not just about the actual property, but about the neighborhood, the schools, restaurants, etc. then calculate a potential mortgage payment, get prequalified for a home loan and then conduct the transaction, all in one place? Poof! Consumers just cut out the middleman. Sounds pretty hassle free, right?
As consumers become increasingly more and more research savvy matched with a healthy distrust of the industry, the reality of a real estate digital “box store” may not be too far off. As it appears from the outside, the only demographic that would truly be worse for the wear if the real estate industry were to go 2.0 would be the brokers and agents themselves.
Consumers, on the other hand, with the promise of an information rich and hassle-free home buying transaction, may indeed drive the market in this direction. In fact, it might even be cheaper-no brokerage fees and maybe even set commissions. In order to survive, brick and mortar real estate industry leaders will be forced to change their prime directive from “how can I sell more houses?” to “how can I better serve consumers so I can sell more houses?”
This is what we call in the policy world where I come from, a “focusing moment”. Focusing moments are beautiful things because they shed light onto the shadows and reveal them for what they are. For brick and mortar agents, brokers and MLSs, this is your focusing moment. We, as consumers, largely don’t want to buy our homes from an online home box store, we want to be led through the process, we want to make that human connection during one of the most intimate transactions of our lives, but our distrust and our need for instant and well-collected information are driving us into the arms of another. I, personally, want anything I can get my hands on that will make my next home buying experience an informed one. I want to see agent and broker reviews, I want transparency of information. The question to the industry now is; How bad do you want to win us back?