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Affiliated Business: What I should have said

By
Real Estate Agent with Integrity Real Estate

Sometimes it's easier for me to write on my outside blog than on Active Rain.  There are so many different personalities and diverse groups on this site now that I find myself holding back at times.  While politeness is always a good thing, guarded restraint definitely is not. 

Hopefully, none of us set out to intentionally harm other members of the community.  I certainly do not.

A couple of days ago, I shared some of my thoughts about affiliated business.  A fair number of you had asked me to so.  One of my favorite outside blogs even boasted that the post had been made.  There's a problem, though, that you need to know about.  I confess to having altered the draft of the post by watering it down and shortening it considerably because I feared my words might inflame, or offend, some of you.  I cheated you and I cheated myself.  It won't happen again.

With that being said, the broad and general tone of my post obviously offended someone who was kind enough to read it.  It wasn't my intent.  In an email, I was accused of seeking approval rather than promoting dialog.  The word "egotistical" was used to describe not only myself, but the community at large.  Blogging, it seems to me, is inherently egotistical; as is all marketing; as is all selling.  It's the nature of the beast; it is what it is!  At the age of forty six, I've come to the realization that I'm more heretic than saint and that personal vices are part of the deal.

 With tens of thousands of potential readers on this site, a blogger can no longer worry about what others might think. Those days are gone.  It's detrimental to the creative process to try to cater to the whims of so many.  Do me one favor: if you don't like what I have to say, move along without attacking me personally.  I don't need it, or desire it, and you don't either.  Life is too damn short, and too damn precious, to have to contend with the toxins spewed by others.

The truth about affiliated business: I despise it because it encourages bigness in an industry that's best left localized.  Think of me as the greatest advocate of the Community Choice in Real Estate Act.  While I fully embrace the spirit of the proposed federal bill, I wish that it would offer protection to mortgage brokers, title companies, abstractors, and appraisers, and well as real estate brokers.  The NAR deserves credit for its lobbying efforts; the trade associations for the related industries should be ashamed of themselves.

I fully understand the importance of economies of scale in any industry.  But, selling real estate is more closely related to a professional endeavor than it is a manufacturing operation.  To be accomplished successfully, it requires a significant degree of skill, judgment, experience, compassion, and the time honored personal touch.  Efficiency and effectiveness are best attained through training individuals not by outsourcing to centralized processing centers.  Call me provincial, I don't care.

At some level, I don't blame real estate brokers for trying to improve profitability by offering "bundled services" as an ostensible convenience to consumers.  It's important, however, to contemplate the long-term implications of opening that particular door.  It represents the sunset of the reign of local real estate brokerages.  Keep in mind: federally chartered banks are perfect candidates for affiliated business and it's a simple matter of congressional funding that keeps you from having to compete with them.  Big banks have the ability to decimate your business in the same way that Wal-mart has virtually eliminated local merchants.  They have an existing relationship with every consumer and a "point of contact" opportunity unlike any other.

I'm bothered by bigness in real estate because it "dehumanizes" a process that should remain fundamentally humane
.  Purchasing a home is innately different than buying a flannel shirt or a hammer.  I really don't care that I have to spend a couple of extra dollars for proper representation when making the most important purchase of my life.  Yes, homeownership is that important and that unique.  It transcends the ordinary to touch the heart and the soul of those who embrace it.

I often tell audiences that acting as a fiduciary in a real estate transaction is tantamount to being a clergy person.  Matters that inherently involve fiduciary responsibilities are best left in neighborhoods and communities.  I rue the thought of a consumer having to call a customer service representative in India to find out how their home purchase is coming along.  Can you image?  But, affiliated business will follow that trajectory if left to its own volition.  

Support the spirit of the Community Choice in Real Estate Act by supporting locally and independently owned mortgage brokers and title companies.  Make certain that your title company is using only local abstractors.  Ultimately, it's your chosen profession, and consumers' interests, that you're protecting.

Comments (17)

Mott Marvin Kornicki
Waterway Realtors® • Notary Public & Apostille - Sunny Isles, FL
Miami Notary & Apostille 786-229-7999

Well said.

You did not need any explanations.

 

Regards,

Jan 23, 2008 04:06 AM
Greg Knowles Santa Barbara Ca.
Fidelity National Title Group-Santa Barbara - Santa Barbara, CA
Ed, eloquently put! Blogging, Email, the written word, is full of interpretation that probably isn't there. I do think the readers as well as authors need to understand that and taking things personally is really silly. As you said life is too damn short. Carry On, you do a terrific job and your passion for what you believe is great. I don't always agree with your side, but that is what life is.
Jan 23, 2008 05:00 AM
Fran Gatti
RE/MAX Integrity - Medford, OR
Managing Principal Broker - RE/MAX Integrity

Ed,

I think I've read most of your posts and egotistical is not a word I would have ever thought of to describe you.  Humble, helpful, informed, giving, those words come to mind.  Keep up the good work and please, continue to give it to us straight. 

Jan 23, 2008 06:00 AM
Erica Crowell
eRealty Inc. - Wake Forest, NC

I agree and disagree.  We're all entitled to our opinions and business practices.  I love to watch and listen to others.  I know every marketplace is different.  Our buyers in my market are very tech savvy.  They look for advanced and streamlined customer service relationships, but it does have to be face to face.

I've found a ABA that works well for my business because I don't have to "learn" how to be an expert at everything.  It works for me and I know in depth how the process has worked in the past and now.  It's "outside" of a traditional ABA but it's a RESPA complaint partnership.  I do work but I also have a loan coordinator who's my "sidekick/partner".  I personally encourage my clients to shop around, I just provide another source.  I don't give them and closing costs help or benefit to "steer" them my direction.  I feel that is creating a ethical no-no!

Ed, I'd like to hear how you view a Joint Venture vs. and ABA?  Do you think it's okay for builders or bad for all?  I think choice for the consumer the key with either of these relationships.

 

Jan 23, 2008 06:14 AM
Ed Rybczynski
Integrity Real Estate - Havre de Grace, MD
Your Source for Local Real Estate

Hi Erica

I'm glad you didn't take this post personally as it wasn't intended that way.  I applaud your ingenuity and entrepreneurship and am certain that you offer real benefits to your customers.  It's not you that I'm worried about.  I'm truly concerned that the very concept of affiliated business is going to attract global players into the market.  I'm not at all convinced that federally chartered banks can be kept at bay much longer.

The title insurance industry exemplifies my fears.  The industry, now classically oligopolistic, is comprised of only five players and dominated by two of the five.  Two short years ago, no one would have believed that title searches could be offshored to India, Israel, Panama, etc.  Well it's happened and it's created an astronomical number of stress points for all but the largest of title companies.  Most title operations are unable to provide the price points and delivery times that the market now demands. Title insurers are essentially eliminating their agents because technology has presented that option along with the accompanying cost effectiveness and profitability.  But, will consumers reap the benefits?  I don't believe that they will.  In fact, I believe that consumers will suffer horribly through increased costs and reduced services.

I believe that the same "Wal-mart effect" is destined to pervade real estate brokerages and mortgage brokerages.  The door is now opened.  Affiliated business signals the end of locally owned players.  You have to understand that I believe that agents like yourself offer the best possible mix of services to consumers.  I'm concerned that affiliated business will ultimately subvert professionalism to business efficiencies by eliminating personalized service and those who offer it.  In theory, affiliated business is a model that offers limitless benefits to consumers, but in practice it doesn't appear to be the case.  Professional endeavors can't be quantified in the same fashion as manufacturing operations.  Managed health care is an example of the dreadful quagmire that results from an attempt to standardize the medical profession.

In my mind, joint ventures and AfBAs are opposite sides of the same coin.  The end game is identical. 

I'm skeptical about AfBAs formed by builders.  I think they should stick to their primary business and leave title work and loan origination to the experts.  It also seems that there have been an inordinate number of RESPA actions filed against builders involved in affiliated business.

Thanks for commenting. 

Jan 23, 2008 06:57 AM
Ed Rybczynski
Integrity Real Estate - Havre de Grace, MD
Your Source for Local Real Estate

Fran - Thank you.  I understand the my posts are typically opinionated and portray something other than the happy feeling that's commonplace on this site.  With the influx of so many new people, it's inevitable that swords will be drawn on occasion.

Greg - Thanks.  I enjoy the spirited debate that we've established amongst ourselves and other members of the title industry.

Mott - It's always a pleasure.  I hope that you're well and that all is good in Florida. 

Jan 23, 2008 07:13 AM
Erica Crowell
eRealty Inc. - Wake Forest, NC

I too am aware of several actions against builders.  I don't take offense to much.,. I just like to listen and learn from others!

I do see the points you make.  It's always tough to make a broad statement when there are so many factors.  Good points!

Jan 23, 2008 07:29 AM
Lenn Harley
Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate - Leesburg, VA
Real Estate Broker - Virginia & Maryland

Goodness.  We can't be concerned about differences of opinions in our posts.  If we all thought and practiced in an identical manner, we would either always all be right or always all be wrong.  Obviously we're neither. 

As long as folks are civil, I welcome opposing views.  I might and often do learn.  As long as they are civil.

Read my post of this a.m. about title insurance in New Mexico.  It didn't get featured so it's off the radar.

Lenn

Jan 23, 2008 07:45 AM
Diane Cipa
The Closing Specialists® - Ligonier, PA

You are fighting the good fight, Ed.  You do so with civility and a lack of arrogance that some might misinterpret.  My style is always more "in your face" and "slap you upside the head" but converts for good practices are what we are looking for and whatever it takes to get that message across, let's do it.

I love this phrase:

"acting as a fiduciary in a real estate transaction is tantamount to being a clergy person"

The consumer, whose trust we carry, deserves ethical and moral care.  These are families, not files.

 

Jan 23, 2008 07:53 AM
Fran Gaspari
Patriot Land Transfer, Inc. - Limerick, PA
"The Title Man" - Title Insurance - PA & NJ

ED,

Always refreshing to visit here...keep 'preachin', brother...shout it from the rooftops!!! Thanks,   Fran

P.S. BTW, In response to Lenn's request I just posted another version of similar content!!!

Jan 23, 2008 08:59 AM
Missy Caulk
Missy Caulk TEAM - Ann Arbor, MI
Savvy Realtor - Ann Arbor Real Estate
Ed, once again, out of the ballpark. Thanks for your continual committment to educate all of us. 
Jan 23, 2008 11:23 AM
Chris Griffith
Downing-Frye Realty, Bonita Springs, FL - Bonita Springs, FL
Bonita Springs Listing Specialist - Agent
Ed, don't hold back.  Ever. You are brilliant and a leader.  Your value can't be measured by the comments of the negative souls on this network.  Don't ever, ever, change or I will have no reason to come back here.
Jan 23, 2008 12:37 PM
Joan Mirantz
Homequest Real Estate - Concord, NH
Realtor, GRI, CBR, SRES - Concord New Hampshire

Ed...It's weird...when I saw you had posted again tonight I said to myself. It's good to have Ed back after his prolonged absence!

Figures you would have had someone on your case!

In my book, only very in-secure people feel the necessity of putting down others. And there is definitely a difference between disagree and put down!

As for the subject..we still have many smaller title company's around us. I tend to gravitate to the ones who make the least mistakes! i also worry about the mega offices. We are an independent with 9 agents...we even answer our own phone and set up our own showings...service is our Mission! But, I do feel that we are being nibbled at when we aren't looking!

Jan 23, 2008 02:24 PM
Ruthmarie Hicks
Keller Williams NY Realty - 120 Bloomingdale Road #101, White Plains NY 10605 - White Plains, NY
I worked in a place with affiliated services. All I can say to a client who chooses this route is "caveat emptor." My experience with it was not good and I felt very pressured to push my clients towards the  "in-house" people even though I preferred someone that wasn't in-house.  NOT GOOD.
Jan 23, 2008 08:44 PM
Neal Bloom
Brokered by eXp Realty LLC - Weston, FL
Realtor CRS-Weston FL Real Estate

Ed,

First of all anyone who writes a blog that can be seen better know that someone won't always like what is written and always will be offended somewhere. I have been luck to have only gotten a few negative responses but not negative because they disagree on the subject...thats ok but when you are attacked in a forum it should be kept behind the scenes and those people are just wimps because they would most certainly be afraid if they met you in person.

It's very easy to hide behind the keyboard...move on if you don't like it. As far as practicing RE....all of those factors come into play and sometimes a little luck too. But I believe that the luck part comes in after attempting to work hard at it. I have never been handed anything in this business and sometimes early on would feel a bit jealous of the ones that did. But now I know what I'm worth and if you don't like me then move on. I can't please everyone...no one can.

Jan 23, 2008 10:47 PM
Dawn Rodriguez
HomeRun Title - Hollywood, FL
HomeRun Title - Title Insurance Company

I couldn't read this and not comment. You absolutely amaze me Ed. Every time I see a new Blog of yours, I get excited and have to immediately read it. Not that I leave comments on all but I enjoy them. I'm going to confess, sometimes I have to get out the dictionary!

Please don't ever hold back. I'll 2nd Chris in saying there will be no need for me to come back. You have so much to offer and I hope one day we'll get to meet.

We're one of those small companies you mention and I too despise AfBAs! I could be wrong but don't Small Businesses make up the majority of businesses in the U.S.?

Jan 25, 2008 05:05 AM
Dave Woodson
Dave Woodson - Chesterton, IN
Not the Average Agent
Great as always Ed
Jan 26, 2008 08:00 AM