According to Wikipedia: 

"Triage is a system used by medical or emergency personnel to ration limited medical resources when the number of injured needing care exceeds the resources available to perform care so as to treat those patients in most need of treatment who are able to benefit first."  In some ways, the situation which is emerging in the real estate community may necessitate the  practice the skill of triage to survive.

For most real estate practitioners, this is not a term we associate with the real estate industry.  After all, the ethical confines of our Code (Article 11) prevent us from representing ourselves in the role of other professions and/or experts whether they are lawyers, appraisers, accountants...etc. 

But sometimes, a practical discipline from another industry can be effective in helping us to understand more clearly the challenges that we face in our own.

And then there is this issue.  Making prudent professional evaluation about the viability of a transaction is a skill that is rarely taught. Most of us have an innate drive which pulls us to accept just about everything that has the potential of a deal and a paycheck in the future.  So, even when the reality of scarcity is stridently bearing down upon us, there's a tendency to avoid looking and responding to some pretty loud signals.

Triage was developed by the French on a philosophy which is largely alien to American popular culture...the concept of scarcity and the need to ration.  Living in the land of plenty has made most of us unaccustomed to dealing with scarcity.  If we don't have the money in the bank...well, there's plastic.  And if that's not enough...well, we apply for more plastic.  Now, that the well is drying up...Triage on a number of levels may be a skill that we all are forced to develop.  Agents, Buyers, Seller, Appraisers, Loan Originators etc, etc, etc.

An interesting story ran in the Rocky Mountain News in October of last year.  The article entitled "Real Estate Chief Targets Kickbacks" was a feature on Erin Toll, the newly appointed director of the Colorado Division of Real Estate.  About  a year prior to her appointment, Toll who was then Colorado's deputy insurance commissioner was riding her bike when she came upon a gentleman who had just suffered a heart attack while riding his bike.  Erin, being trained in CPR rushed to his aid and her actions eventually saved his life.  The man was Chuck Mayhew, a developer from New York who was in town to consummate a big real estate deal! 

In some ways, this event foreshadowed the challenge that Toll and many others in professional leadership roles are facing as they deal with an industry gone awry.   According to Erin Toll, Colorado's Chief Real Estate Cop: "Inflated appraisals are seen as one of the primary contributors to Colorado's dubious distinction of having the highest foreclosure rate in the nation, according to national reports."  It was interesting to note that while she started the Triage process in her former job by cleaning up the title industry in Colorado, she is now moving on to relieve crooked appraisers of their license and livelihood. Will real estate agents and loan originators be next?

Make no mistake, Toll is not limiting her focus in the clean up to appraisers.  She is targeting appraisers because with limited resources at her disposal, she wants to "attack the hard stuff first, go after the heart attacks not the colds."   Her reasoning in this course of action is that appraisers in Colorado have never been targeted in this way by law enforcement and she feels that their role in inflating the value of property was what made it possible for loan officers and real estate agents to perpetuate scams.

I don't know if I would have made the same decision that Toll made, but I do know that we will probably all be called to practice some Triage if we are determined to thrive in this market.  Another way of looking at it may be to call it "hard pruning."  It's very easy to carry excess weight if you're not going anywhere soon or in a hurry.  But the situation changes dramatically when the real estate is industry is changing very quickly and hurtling in direction in which a number of outcomes are possible.  Some of which are not very attractive.

Several years ago, a marginal buyer had a good chance of being approved.  It wasn't so long ago that almost every house SOLD as long as there was a sign in the yard.  With so many people buying homes, prices soared.  THIS IS WHEN our industry should have started practicing Triage.  That is... having the courage to answer some tough questions about where we were headed.  Questions that would place the quick and easy money on the back burner to do a slow melt while we looked critically at some very obvious fissures that were becoming clearly evident.

Failing to do so, we will increasingly find ourselves doing Triage on sicker patients.  One Broker described buyers who he has worked with recently like this:  "First you tie them up, bundle them up with every bit of string you can find to keep the deal together, and then...you gingerly roll the ball towards the finish line hoping the thing doesn't become unraveled just prior to close!"   A sad commentary isn't it...but who hasn't had a similar experience?

Real Estate in Triage Mode will force us to be more selective about who or perhaps better stated...what we can keep alive.  Lest you think this is all about the consumer...think again.  Real estate agents, mortgage lenders, appraisers, builders, surveyors and other related professionals will all have to re-think whether this business makes sense or not.  Making the wrong choices in selecting clients to work with may prove to be more devastating than not having a client at all.  Triage will create interesting and often difficult choices.  And it will eventually save lives and livelihoods.  It's just a matter of whose!

*Tune in for the next blog post as we explore this question.  Is Triage already impacting your business & you just didn't know it?

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