Are you Cheating your Sellers by using a Lockbox?

I think using a lockbox is a terrible idea. As a seller myself, I would not allow them. I also wouldn't want to list with any agent who suggested they were going to use one. Leaving the sale of my home up to someone who simply has a code to come into your client's house is a bad idea - especially when they didn't LIST with the "other" agent. They listed with YOU!

Here's a posting that occurred on my company site (www.matthewferrara.com) back in But since Toula Rosebrock recently opened this topic with her blog posting on lockboxes (upset that some agents don't use them) I thought I'd offer another perspective:

The Sellers.

When a seller lists their home, they select a “listing agent,” someone whose job it is to learn everything they can about the property - its features, financial components (like taxes, cost to operate), unique items, etc. The listing agent is supposed to turn that information into a value proposition - a “benefits” statement  which becomes the cornerstone of marketing tjat tells potential buyers “why” they want to live in that particular home. The listing agent’s knowledge of the property is combined with their knowledge of the seller's desires and sale tolerances - to create a unique-to-the-property sales "proposition."

Thus, the most qualified person to sell the home is the listing agent.

Now, we all agree that the listing agent is more qualified to sell the home than the seller: So why would we believe that a co-broke agent, who knows barely what's on the listing sheet - and certainly not more - should be better to do it as well?

Imagine, if you will, the absurdity of this process: An agent, who knows virtually nothing about the property shows up with a buyer, who likewise knows very little. Certainly, they both have some “information” from the MLS listing sheets or internet (which are usually quite pathetic) and focus on basic data such as room “dimensions” and heating or garage spaces. Nothing much more than what any uninformed person could perceive using basic senses like sight, touch or smell.

This "showing" agent - not one hired by the seller and who has likely never seen the property before (they never attended the broker-walk-through) enters the property by unlocking the electronic lockbox. And together, an minimally-informed agent and inexperienced buyer take a product tour of a commodity with very little to guide them other than a basic “window sticker” called the listing sheet. At best, they can say they “like” the kitchen or they “hate” the rug. But other than that, there is no “sales” going on because the only person with the knowledge to create a sales “event” is absent: the listing agent. 

Not absurd? Think of it like this. You want to buy a new car. So you call Uncle Lou who has been a “car buff” his whole life. He reads up about the car on the internet and prints out a basic spec sheet. Then you and Uncle Lou go to the local dealer. You walk into the showroom, select a key from a hook on the wall, and then jump in the car - without the car dealer’s sales agent. You and Uncle Lou can determine if you like some elements of the car - how it feels, how it smells, how it takes a corner - but are you really learning anything about the commodity? What about its special features? Do they jump out on their own? Can you decipher the controls during your 5 minute test drive? Can you intuit the maintenance features or service requirements? Without the sales person, you’re left to ’selling yourself’ based upon your limited knowledge of the commodity. And you’re no expert. You’re just the consumer.

This is why lockboxes are terrible for the real estate sales industry. If - and it’s a big “if” - you’re being hired to conduct the sale of a property for a seller, then a lockbox is a direct abrogation of your duty to represent the seller's best interests. It’s a sales cop-out. It actually absolves the listing agent from having to be present - to conduct the sales presentation - with buyers who have determined preliminary interest in the property.

In fact, lockboxes transfer the duty to sell the property from the hired agent to the third-party showing agent. And the co-broke agent doesn’t know anything about the property; or the seller; or the sales opportunities that would potentially induce the buyer to make an offer. All they can rely on is whether the buyer “likes it” enough to make an offer.

Sellers should be furious. Lockboxes are undisclosed “escape clauses” in their sales agreement. I wonder how many listing agents sit in a presentation to a potential seller client and fully disclose:

“Mr. and Mrs. Seller. After I put your home in MLS, I’m going to let completely uninformed agents show your home to potential buyers aided with nothing more than my incompletely filled out MLS listing sheet. Doesn’t that sound like a great way to sell your home?”

It's almost as bad as when listing agents send surrogate agents to do their open houses for them, but that’s a story for another posting. Yet it’s fairly clear that the widespread acceptance of lockboxes - which were designed to make the agent’s life easier by eliminating the need for them to be present - can arguably be against the best intereste of their client.

Lockboxes have created a standard of practice that is anti-seller because they are anti-sales. The person most qualified to make the sale has been absolved of their duty to be present during the sales event. Makes you wonder why sellers continue to employ listing agents. Why not just attract buyer's agents... oh, right, that's called an MLS-assisted-FSBO... and agents hate those too... Wasn't there a proverb about having cake and eating it too?

Are we too busy to be present at our client's home when a buyer comes around? Doing what, exactly? I think there's no justification. Sellers hire their agents to sell; not leave it up to others to do the selling for them.

As usual, the inescapable conclusion is we still do many things done in the real estate industry that are designed to NOT sell homes. Listings online without photos aren’t hard to find. Agents without a Blackberry don’t return buyer inquiries until they "get around to" checking their email. Agents waiting for other agents to make their sales for them. Countless lazyman traditions - now including the insidious lockbox - coddle and perpetuate outmoded standards of practice that makes one wonder: Does anyone actually sell homes?