Tag Archives: real estate

The future of NAR: Action will be the measure, not words

This post was originally published on Inman News:

Key Takeaways:

  • Fat cats don’t have time to write key takeaways.

I just spent a few days in Chicago with the National Association of Realtors. During my travel, I thoroughly enjoyed Brad Inman’s description of our “fat cat (leadership) gathering.”

As I dined on velvety cream cheese airline crackers aboard the luxury Orange Line into town, I thought about how thrilling it was. I was in the company of the “thousands of NAR ghosts who love the suite life, sometimes travel first class and are experts at finding the best restaurants on their member-paid boondoggles.”

Sitting through a 90-minute working lunch on better engaging our members and supporting our volunteer leaders, I surveyed my conference chicken and steamed broccoli feast. I reflected on the free drink ticket in my jacket pocket for the evening’s festivities. I had to admit that this really was the Ritz.

Speaking of Ritz, even the snack crackers seem to be material evidence when NAR’s new CEO, Bob Goldberg, is discussed these days. Inman said Goldberg’s suite was “larger than an average apartment in New York City and was stacked with more treats than a 7-Eleven. It looked out over the Chicago River with Lake Michigan views that might give rise to grand visions, delusions or both.”


Bob Goldberg’s fat cat candy suite

I imagine that Goldberg’s suite was bejeweled in Reese’s Pieces and Diet Cokes that glittered in the lake’s reflection. If anything signaled delusions of grandeur, the snack bar was it.

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This event might not have compared to the big-ticket galas or the six-figure checks that certain portals lavish on MLSs, but the shiny cardboard cylinders filled with savory oval potato crisps were some kind of wonderful.

Disruption: What’s in a word?

Goldberg has been talking about “disrupters” frequently, and there’s been an attempt by some to paint it as a show of fear or a victim mentality. I’m not sure if these folks actually listened to his interview with Andrew Flachner or his address to the Leadership Summit.

Goldberg’s message was to embrace the disrupters, the innovators, the change agents — and bring them into a bigger tent.

I don’t know Goldberg well enough to tell you exactly how his tenure will go as NAR’s CEO. Action will be the measure, not words. But as of right now, he’s saying all the things that membership is asking for.

There’s another notion making the rounds that we should stop saying “disruptor” because “innovator” is a better philosophical choice. Although I appreciate the intent, it’s a bit like me telling my kids that crying never fixed anything, so we’re just not going to have it in our home any more.

Great leaders don’t create SWOT analyses and refuse to fill in some of the boxes. Sometimes disruption is elegant innovation that should be embraced and partnered with. Sometimes it’s just cheapness at scale or brute force taking market share.

Sometimes disruption is an unending airport serpentine of passengers waiting for a single dog to smell their bags because somebody at TSA said, “today, let’s do it differently.”

This the other part of the disruption conversation: disrupting the status quo of your people. Goldberg has tasked the NAR staff and leadership to get out in the field and serve members, to know members and to measure members’ satisfaction with the trade organization.

If you haven’t had a chance yet, watch Goldberg’s speech. Listen to the promises, and hold him to them. Hold us to them. We want nothing less.

Focusing on people

Two consecutive Ubers canceled my 6 a.m. trip back to the airport because they couldn’t find one of the biggest hotels in Chicago. I swallowed my fat cat ego and hailed an old-fashioned cab.

It gave me a minute to conjure up the kind of big shot figurehead quote that I read every morning in my Wealth Magazine at the spa: “If your people don’t understand where they’re supposed to be going, all of the technology in the world won’t get them there.”

Excuse me while I light up a Cuban and sign some royalty checks.

All kidding aside with Inman, his final conclusion is spot on and actually much like Goldberg’s philosophy.

“With no shortage of good intentions, big ideas and devoted volunteers and staff, my advice is to stop asking your members to ‘support NAR.’ The slogan should be flipped: How is NAR supporting the everyday Realtor?”

We’re starting off on the right foot. Those who’ve already written Goldberg’s chapter may be in for a bit of disruption themselves.

Sam DeBord is managing broker of Seattle Homes Group, VP of Strategic Growth for Coldwell Banker Danforth, President of Seattle King County Realtors, and 2018 Vice Chair of the National Association of Realtors’ MLS Policy Committee. You can find his team at SeattleHome.com and SeattleCondo.com

Defensible Business Strategy for Uncertain Times

This article was originally published in RE Magazine:

Defensible strategy for real estateThe speed with which our world is changing seems to be quickening. Whether technological, political, or economic, the forces that surround the way we live our lives and run our businesses are shifting swiftly.

This environment can be exciting and frightening when trying to run a stable business with a predictable income stream. As real estate professionals, we know there is no such thing as a “normal” year or a “steady” revenue model. But building in some insurance can reduce uncertainty.

What can we focus on to secure the core of our businesses when new tools and models seem to attack our value proposition from all sides?

The answer is often clouded by the frenetic activity in industry media. Bots with artificial intelligence are answering buyer inquiries. Tech startups are buying properties sight unseen with automated valuations. Investment capital is funding companies who list properties with new and unheard of commission models.

They all miss the REALTOR’s most defensible and foundational asset: personal relationships.

The answer is obvious with a bit of reflection. There is no technology that will steal away your neighbor whom you helped replace her mailbox. There’s no texting service that will have a draw stronger than your monthly happy hour connections. A personal call and conversation with a friend-of-a-friend about his son’s recent graduation will always trump an automated purchase offer from the new “I buy ugly houses” guy.

There’s a reason we have coaches, classes, and conferences to remind us of these things. If every REALTOR heard it one time and focused on growing a sphere for the rest of his/her career, we’d all be building the strongest businesses possible. We are human, though—we get distracted. That’s easier to do today than ever.

Every chance we get to remind ourselves is a good time to re-focus our efforts on building human relationships.

So here’s just another reminder if you’re feeling unsettled about the future of your business: connect.

Call, email, get toe-to-toe.  Schedule it. Without a system, it won’t work. If it’s not repeatable, it’s not a plan. If you don’t have a plan, you don’t have a business.

It’s not flashy, but there’s also very little barrier to entry. Identify your system for connecting with more real people, and put it on your calendar. Find your wheelhouse. Whether it’s networking, chit-chatting, volunteering, cold-calling, praying, or happy-houring, put the value into your sphere that they give back to you.

For the REALTOR who is concerned with what politicians, technologists, disruptors, and the economic winds of change have in store for the real estate market, this is the path to some peace of mind. You can’t control which billionaire takes a stab at your livelihood next, but you can be sure you’re building up your interpersonal defenses. That’s concrete, it’s straightforward, and it provides some certainty in an uncertain occupation.

Your defensible business advantage is your people. Support them and they’ll do the same for you.

Sam DeBord is Managing Broker for Seattle Homes Group, President of Seattle King County REALTORS, VP of Strategic Growth for Coldwell Banker Danforth, and 2018 VP-Elect of Government Affairs for Washington REALTORS. His team sells houses and condos in Seattle and Bellevue.

Seattle’s shortage of homes for sale foments disruptive bidding wars

This article was originally published on WSJ Marketwatch:

The headlines read “Seattle’s real estate market is hot!” Under that glossy surface, Seattle real estate’s inventory dearth is a growing, unruly mess.

Home prices in King County rose 12% in February, but that’s no longer an attention-grabber. They rose 18% in the same period one year before.

Inventory is at just 1.1 months. The number of available homes for sale dropped 21% in one year. These crisis-level numbers should be astonishing, but they’ve begun to seem unremarkable. After all, inventory dropped 26% in 2015, 17% in 2014 and 10% in 2013.

The shock has worn off. We’ve been inundated with double-digit noise for so long in the Seattle real estate market that we’ve almost become numb to it. While that’s understandable, it’s also problematic.

King County is issuing 200 new driver’s licenses every day to people moving in from out-of-state. That doesn’t include in-state migration and in-county natural population growth. Meanwhile, the county is only issuing building permits for 27 new housing units per day.

The diverging trend lines of people and homes get further apart by the day, month and year. Prices rise swiftly.

Residents get squeezed. They “drive to qualify”. They live further out, commute longer distances, create more traffic gridlock, spend more on transportation, have less time to spend with their families and experience a diminished quality of life.

There’s no risky financing housing bubble to blame like there was a decade ago. Employment and in-migration in King County is forecast to rise exponentially in the coming years. These are people with real jobs, verified income and real down payments. There just aren’t enough homes, so prices continue to soar.

Consumers are often surprised to hear that Realtors aren’t always excited about skyrocketing prices. We’ve gone so far as to create a media blitz and conversation starters about how we can add balance to our market at HousingTranslator.com. You’ll see a push for smart housing policy measures on the web, radio, even on the side of buses. Important discussions about creating more housing options in the greater Seattle area aren’t being had often enough and we intend to change that.

We work and live in the same neighborhoods as our clients. Our neighbors and customers feel the same strain on their housing options, commute times and lifestyles. Higher prices due to artificially constrained supply aren’t good for any of us.

As organized real estate groups push for flexibility for greater housing development, we’re often told by those who influence public policy that “We can’t just build our way out of this,” or “Supply and demand don’t apply to this issue.”

The laws of economics are not optional. The population is growing, and demand for housing must be met. Let’s look at the region’s dire housing situation as if it were a different necessary amenity for our residents.

What if the region’s garbage collection services were already maxed out by its current residents? What if, despite population growth, we gave up on building out our waste management services to support our new residents? If some of our residents don’t like the look of more garbage trucks, can we simply deny economics and ignore our population’s growth?

If we try, there’s a day when the garbage service just can’t finish picking up the growing amount of waste that the population is creating. The trucks leave the last 1% of garbage on the sidewalks. They won’t catch up the next week, either. We’ll fall another 1% behind. After just one year, garbage trucks would be leaving more trash on the sidewalks than they’d be picking up. The unmet need for services would continue to become more extreme as the population expands and services, in relative measurement, shrink.

That’s been the story of Seattle’s compounding housing woes, and we’re many years into the process. We can’t clean up today’s problems because we’re still not providing enough housing options to service the population growth from years past.

If the analogy sounds a bit hyperbolic, that’s the intent. Something has to cut through the blasé coverage of Seattle’s real estate outlook.

Bidding wars are the rule. Attorneys and software engineers can’t find homes to buy. That’s not tugging at anyone’s heartstrings.

Higher income residents eventually resign themselves to outbid someone on lower-priced homes, though. These folks force the middle class to find other options — teachers, small business owners, etc. There’s nothing left for middle-class buyers to do but drop down a price category and outbid working-class home buyers. There’s no denying the linkage. We see it every day in the business. Buyers keep bumping each other down, but there’s nothing left at the bottom.

Every new housing unit, high-priced or low, creates more breathing room in the housing ladder. It’s an undeniable domino effect. Thoughtful concern for low-income residents necessarily requires a desire to create more housing units across the entire spectrum of pricing.

The repetitive stories about rising prices in Seattle may lull some to sleep, but the strain on the region due to lack of housing development is snowballing. Affordability of homes at all income levels needs to be addressed if we want to keep our businesses happy, our residents employed and housed, and our transportation systems working efficiently. More people plus more jobs equals more housing units needed. There’s no back-door formula to change this equation.

We can build our way out of this problem. We can also do it intelligently, by preserving legacy neighborhoods and increasing density in urban centers near transit hubs. Change is inevitable. Political myopia and willful ignorance will not improve the path that the Seattle region’s housing stock is headed down.

We’ll be at least 10,000 units further behind next year. There’s no time for nonchalance in light of our repetitively gaudy housing numbers. From a long-term perspective, they’re downright scary.

Residential building can’t keep pace with Seattle’s surging job market

This article was originally published on WSJ Marketwatch:

Surveying the dozens of towering cranes growing into Seattle’s skyline, one might wonder if there’s a housing boom that will eventually crash as it did in the last Seattle real estate downturn. It’s a reasonable reaction for an untrained observer, but it’s also a dangerous one for the region’s ability to plan for accommodating smart growth.

Seattle was recently cited as the top U.S. city for construction cranes, with twice as many in action as New York or San Francisco. Viscerally, it feels like a building boom that could outstrip demand.

The problem is that, by and large, the city isn’t building housing. Of the 16 new high-rise towers being built in Seattle, just two of them are condominiums. Between Seattle’s three new condo buildings, the city is adding about 1,000 housing units. New apartment buildings are only bringing online around 2,000 new units in the short term. Meanwhile, King County issued 71,000 new driver’s licenses to people from out of state in 2015. Most of these people will work in the metropolitan core. The numbers aren’t adding up.

Seattle’s rate of housing construction continues to fall behind the region’s population growth. The demand for housing comes from a changing local environment. An ever-increasing population of technology, health-care, science and other workers are relocating to the area for its booming employment market.

In the current environment, with robust job growth and a nationwide spotlight, Seattle is experiencing rapid price appreciation. Double-digit gains have become the norm, squeezing the ability of the average resident to live in the core. This creates great stress on the transportation system as residents move further out and commute back in to the city.

Seattle’s growth isn’t a new story, but defining its size and impact is often difficult. Companies are often tight-lipped about hiring numbers. Based on multiple reports, though, just four local companies are planning on hiring an additional 10,000 employees in the coming year. There’s phenomenal job growth throughout the region across dozens of large organizations, but by simply focusing on Amazon AMZN, +0.49%  , Google, GOOG, +0.60% Facebook FB, +0.78%  , and Microsoft MSFT, +0.51%   the region needs to build an additional 10,000 housing units within a reasonable commute distance to keep our housing situation from becoming more constricted.

What about that forest of cranes? It seems that most of Seattle’s construction is focused on offices for the workday employees as opposed to homes to house them within close proximity. Amazon is nothing less than a phenomenon. It occupies 10 million square feet of commercial space in Seattle, and it seems to announce plans to build a new tower every other month. The company is hiring as quickly as it is building offices.

Many of these new residents will want to buy homes. While the growing city requires greater density of housing, condo construction lags far behind population growth. There are a scarce few condo construction projects coming to market, and few in the planning phase. Between Insignia, Gridiron, and Luma projects opening between 2015 and 2017, less than 1,000 new condos will be available to purchase.

Developers blame the lack of condo construction on onerous regulations that put tremendous liability on the builders of condos. The costs of construction, and the virtual guarantee of being sued in the current environment, render most Seattle real estate projects unworthy of condo development.

Smart growth requires the region to encourage density in the locations where employment exists. Local officials need to embrace the links between housing supply, development costs and the ability to provide affordable housing and reliable transportation for citizens at all income levels. The price of housing has always affected the ability of the entire spectrum of residents to live in a healthy environment and have a reasonable work commute.

Seattle needs more housing. It needs higher-end housing that’s in demand by our new residents to slow the rapid price increases due to constricted supply. It needs moderately priced housing to keep its long-time citizens within reasonable distances from their employment and ease transportation issues. It needs affordable housing to keep our residents who are being stretched to their limits in safe environments where they can continue to work and grow without the fear of losing everything.

It’s time for Seattle to talk seriously about what will ultimately decide our fate — supply and demand. There is no band-aid or legislative work-around that negates the laws of economics.

The conversation starts with supply. Everything else is a game of musical chairs.

Seattle home-sale market provides small hint of slowdown

This article was originally published on WSJ Marketwatch:

Home buyers in Seattle might be able to breathe a bit easier. The Seattle real estate market is still red hot, but the rate at which its inventory is shrinking has been slowing.

The number of homes available for sale in the greater Seattle area has shrunk about 13% year over year. That news on its own sounds like bad news for buyers. Compared with the 20% drops that we’ve seen over the past 18 months, though, it looks like a positive trend. Sellers may finally be getting on board and listing more homes for sale.

Available inventory in the Seattle real estate market has been under two months for over two years. That’s not a healthy market, and it has pushed double-digit price increases across the region. A balanced market would have 4-6 months of available homes. Sellers are concerned that after they sell, they’ll have trouble finding their next home in this competitive market. It becomes a self-reinforcing cycle. The summer slowdown we’re seeing right now may finally be reversing that trend a bit.

That’s the feeling on the streets from many real estate brokers. From the MLS board to the Realtor association and brokers’ offices, the general murmur is that while the market is still very hot, we can feel a bit of a slowdown in the air. Some buyers are giving up. Some aren’t willing to waive all of their contingencies any longer. Cash buyers still win, and big offers still prevail, but buyers are negotiating a bit harder and sellers are playing along.

King County, at the heart of the Puget Sound real estate market, could use that relief. The median Seattle home price rose 15% over the past 12 months. At $505,000, that pricing is out of reach of many middle-income residents. Still, the influx of technology jobs and the lack of new construction create a demand for homes in the upper pricing tiers of the market.

ondos are scarce. King County has 0.9 months of available condo inventory for sale. Seattle condos are like a black hole. The inventory just keeps imploding upon itself.

With this kind of price appreciation comes bubble talk. The price increases are dramatic. There will be a slowdown at some point, but our situation is vastly different than it was before the 2007 peak. There are 10,000 new technology workers coming to the Seattle metro this year from just four companies. They’re making good money. The mortgage system now verifies income, employment, assets and ability to pay.

In short, the last bubble was built on false credit. Home buyers today have cash, large down payments and good jobs. Seattle’s population shift is a major factor in a long-term reshaping of the city’s real estate market.

A bit of a slowdown would be welcome in the Seattle real estate market. Just don’t expect prices to go down any time soon. The fundamentals for today’s buying frenzy are solid. Seattle has become a more valuable place to live.

Artificial Intelligence (AI) in real estate: Negating or monetizing an agent’s experience?

This article was originally published on The Real Daily:
by Sam DeBord

Have you ever emailed or texted someone, and subsequently opened Facebook on your phone to immediately see that person in your news feed?

You read the entire terms of service when you downloaded that app, right? So you remember agreeing to every bit of your phone’s hardware and software recording and interpreting the signals that your everyday actions are creating (just nod your head yes—it’s watching you right now).

Artificial Intelligence is seeing tremendous growth in consumer-driven industries. It is the ability for software to learn and adapt to consumer behavior via live feedback. Cars, websites, wearables, and apps are becoming more intelligent and adaptable.

We’re seeing huge advances in the affordability of AI software that match the exponential growth of hardware’s computing power.

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Simultaneously, human labor in developed countries is increasing in cost. Minimum wage laws, increasing liability, and rising health care costs are pushing employers to replace labor with technology. McDonald’s employees become kiosks that order Big Macs. Chase Bank tellers are replaced by apps that scan and deposit checks. Companies like Circuit City and Borders Books shutter their stores as websites more efficiently serve their customers.

How AI intersects with RE

Intelligent software has massive potential for creating technology that changes labor markets. Real estate labor is a natural target, and a couple of recent pieces got the ball rolling this past week.Russ Cofano penned a broker outlook that viewed “cognitive computing” not as a threat to labor, but an asset to the baseline of real estate’s agent intelligence:

“So here’s the question. What if cognitive computing enables agents to be better professionals and make better recommendations to their clients? What if access to cognitive computing power, and the data necessary to power it, becomes the 21st century equivalent of the MLS utility?”

Further, Cofano states, “Cognitive computing has the potential to add massive value to the real estate brokerage value proposition and do for agent professionalism what no other initiative could touch.”

While the piece focused on the superior delivery mechanism (Upstream vs. the MLS), it provided support to the idea that brokers could adopt intelligent data systems to improve agent capabilities industry-wide.

Not surprisingly, a different take came from Rob Hahn, focused on the costs of repetitive labor and the likely evolution:

“The $6 billion question is where real estate brokerage services fit in the spectrum of services if we put McDonald’s order-taker on the one extreme and the Chief Engineer of Nuclear Fusion Reactors on the other extreme in terms of specialized skill and knowledge.

I think most of my readers know the answer. Real estate is far, far closer to McDonald’s than it is to McDonnell-Douglas.

…rote procedures and manual inputs are being displaced by technology. Why would it be any different for the rote procedures and manual inputs in the real estate business?

Answer: it won’t.

Those real estate agents who survive will have to be ‘upskilled’ and focus on niche areas or ‘be equipped to handle smart systems.’”

Comparing two views on AI

So we have two very different views of software intelligence’s effect on real estate agents. In one, brokers might adopt cognitive computing measures to improve agents’ core capabilities to serve consumers. They improve and survive as a unified group of forward-thinking adopters.

In another, AI wipes away the entire foundation of repetitive services performed in real estate. This debases the masses of agents and eliminates the need for their services. It leaves only the specialized practitioners above water when it’s done.

It would be remiss of me to gloss over the McDonald’s analogy. The skills that allow agents to survive in their occupation can’t be crammed into a single linear comparison. It seems prudent to point out that the comparison of rocket scientists, real estate agents, and Egg McMuffin order takers should be complex.

In recent real estate history, replacing a repetitive procedure in the sales process with software has simply changed the sales process. It hasn’t removed the sales person. There are graveyards full of real estate labor would-be disruptors who have a poignant understanding of that history.

artificial-intelligence-REAL-ESTATE

The intrinsic skills that keep real estate agents strongly entrenched in the industry seem to center on two things:

  • Personalized intelligence (unique local knowledge, negotiation, transactional experience)
  • Personal relationships (emotional IQ and sphere building)

The latter is almost invariably ignored in real estate labor disruption conversations, yet it’s probably the single greatest barrier to disruption. People list with people. Sellers’ top three requirements for a listing agent are reputation, honesty, and trustworthiness.

AI is the intrusive stalker in your phone. Thelma is the amazing woman who comes to book club and walks with you on weekends. H.A.L. 2000 can’t touch her in terms of trust. This should be the overriding theme of every disruption conversation.

On to bottling knowledge

In the future, personalized intelligence might be a different story. If part of the value of exceptional agents comes from what they know from experience, the way they negotiate, and how they interact with clients, how much of that could be learned by an exceptional AI platform?

Could exceptional agents allow themselves to be profiled by their devices and capture that intelligence to monetize it? Would brokers be able to conglomerate the practices and intelligence of their best agents to provide a unique set of processes for their agents and answers for their clients that aren’t available to the general public?

It might not be as crazy as it sounds. Think about the vast amount of information that could be gleaned from one agent over a single year with all of his/her devices in “AI learn mode.” Spoken word, tone, movement, visual cues, timing, location data, digital communication, social engagement, contract negotiation—all of these and more could be processed into a database describing when, where, and how top agents interact with their environments to close more sales transactions.

Who owns the AI?

While the aforementioned could be done on an industry-wide basis to inform brokers as a whole, it might also be led by savvy top producing agents or brokers who would profit from it as a differentiator. Melded with predictive analytics on consumer behavior and market statistics, the right set of personalized intelligence could tell an agent when and where to meet a consumer, and how to begin interacting with that person to provide a greater likelihood of a client and a sale.

Of course, until personality can be direct-ported into the agent’s brain, we still need a human with emotional IQ to show up and close the deal. The creation of a relationship might be initiated by data, but it’s going to be sealed with emotion.

ThelmaRealtor software version 2.5 could be an AI profile that’s sold to brokers or new agents as a foundational of intelligence for their careers. Whether these benefits and profits go to the real Thelma, her brokerage, or the industry depends on who adopts the technology first.

Back to the people

If that’s all a bit too much sci-fi, let’s get back to the basics. There are huge opportunities for the brokerage community to leverage greater technology and AI to improve how they do business. Those that do will have valuable differentiating tools and skills.

Still, Thelma v. 2.5 isn’t going to wipe out the physical agents on the ground. Technologists with armies of software agents will continue to stare at screens, while real life agents are cementing unbreakable relationships with real people. Consumers will work with agents they view as trustworthy, no matter what amazing intelligence is dangled in front of them by H.A.L. 2000 Realty.

It’s true that consumers want more intelligent real estate transactions. Before that, though, they want trust. AI has great prospects for helping brokers and agents improve their business intelligence, but it’s not going to take the human element out of the transaction any time soon. The real Thelma’s role may change, but she still owns the most valuable, subjective, and defensible portion of the real estate transaction: the relationship.

The Millenial Mortgage Myth

This article was originally published on the National Real Estate Post: 

Millenial Mortgage MythMillenials, if we’re to believe media revelations, are an information-empowered generation that seek less human interaction. They don’t need a real person to guide them through financial transactions. They simply want devices and software to automate the processes for them.

There’s plenty of truth in the cavalcade of hype surrounding technology’s influence on consumer behavior. The connectedness of our devices causes us to become more disconnected from the need for interpersonal service. Young consumers who grew up in an atmosphere where it was easier to ask Google than grandma have been trained to seek the efficiency of an application over the advice of a trusted advisor.

The fascination with this mindset, though, becomes a self-reinforcing cycle. Millenials crave efficiency via technology, the media locks in on that generational persona, and businesses cater more and more to removing the human interaction from their services. The snowball keeps rolling downhill, growing in size and speed.

Not All Technology Is Gain

Sometimes, though, everyone loses when we cater to the preconceived notion of efficiency through automation. There are many processes that are improved by diminishing the level of personal interaction. In other cases, the human experience, knowledge, and flexibility that’s only possible through direct interaction is necessary to deliver a quality experience.

That has been our experience in the mortgage financing world. As real estate agents, throughout our careers, we’ve interacted with mortgage lenders. They’ve proven to us, and our clients, that they have the skills and responsiveness necessary to make our transactions run smoothly. We’ve built up a level of trust with our most qualified lenders and those of our associates.

We recommend a list of these professionals to our clients because we understand the alternatives. We’ve seen the bad actors in lending. We’ve watched transactions go sideways. We’ve experienced fly-by-night operators and inexperienced rookies who botch transactions that put home buyers and sellers out in the cold. We know how expensive, painful, and inconvenient mistakes in the mortgage lending experience can be.

Technology has improved much of the processing and underwriting functions of modern mortgage companies. But as much as we love technology’s influence on the efficiency of our industry, we often cringe at attempts to use its influence on the selection of a mortgage lender.

Online Reviews: A Risky Selection Criteria

We’ve been told that millennials trust reviews as much as they trust advice from their friends. While online reviews are great for easily described products on Amazon, in today’s climate, they’re a poor way to judge a mortgage professional. Much like how real estate agents game the online review system for oodles of five-star reviews, mortgage lender reviews are a wasteland of trumped up data. The vast majority of lenders have no reviews on any given platform, so consumers are choosing between a select number of marketing-driven review profiles.

Most consumers don’t know this, though. Younger consumers trust reviews, so they trust Yelp. They trust Zillow and LendingTree. They trust whichever app has helped them buy the best bike accessory or webcam. It doesn’t work out as well for mortgage providers.

Anecdotally, we’ve had three recent transactions where our young buyers did their own research online and selected a lender of whom we’ve never heard before. These lenders came highly recommended from online review sites, so they were selected over our preferred lenders.

None of them closed on time. Twice, we had to “save” the transaction with one of our preferred lenders at the last second.

Our situation isn’t unique. Sit down at a real estate conference and ask a group of agents how they feel when a client selects a lender based on online reviews. The overwhelming response will be a groan. We’re not suggesting lenders to our clients for any sort of financial reward or kickback. We make money, and we make our clients happy, when transactions close according to plan. That’s our only incentive in guiding the lender selection process.

So the next time an app developer, industry consultant, or mortgage company owner says that we need to distance the personal connection of the lending process more to enable millennials, push back. That may be what they say they want, but we know better. Sometimes the best referral is done with a phone call to a trusted adviser.

Don’t believe the myth that millennials don’t need our personal advice. Get in front of your clients’ lending education process early, and explain the gaps in the information available to them online. Reinforce the importance of working with someone who has a track record and level of experience that everyone involved in the transaction can trust. Don’t give in when your clients say “I found a great lender on Yelp.” They’ll thank you for it later.


Sam DeBord

Sam DeBord is a managing broker with Seattle Homes Group and Coldwell Banker Danforth. He is 2016 President-Elect of Seattle King County REALTORS® and has been featured in Inman News’s Top 101 In Real Estate and the T3 Swanepoel Group’s Top 20 Social Influencers. His team sells homes and condos in Seattle and Bellevue.