Real Estate is No Longer Local

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Mortgage and Lending with Mason-McDuffie Mortgage, Conventional Loans, Jumbo Loans, FHA, 203(k), USDA, VA, NMLS #138061 MMCD #1141

Real Estate is No Longer Local

 

Real Estate is local!  It's a term that's been thrown around for decades, and in fact, there's been a lot of truth to it for a long time, because the reality is that different locales have HUGE differences in not only how things are done, but what things are done, and by whom.

 

Want some examples?  In some areas everything is public water.  In others, cisterns and individual wells (And the potential issues and liabilities they present) are the norm.  In some areas of the country, transfer taxes are low and paid by a seller.  In others, they can be several thousand dollars in additional buyer costs.  Flood zones, municipal intricacies, and demographic pockets - all of these things vary tremendously from state to state, and even block to block within certain neighborhoods, so yes - real estate is local!  

 

Or at least it was

 

To an extent, real estate is still local.  But in many other ways, it's not.  We live in a world of high tech communication where you can not only talk with someone 3000 miles away ,but SEE them, on demand, as if they're face to face.  And we live in a world of increasingly available and accurate data.  Those local transfer taxes?  You can find them online, along with any special exemptions.  Same with real estate taxes, and common practices from state to state and county to county.  The internet, in many ways, has de-localized real estate.  

 

You can buy a property today with relatively high confidence, SIGHT UNSEEN, and have a tremendous experience with a real estate agent you've never met.  An agent I work with in Pennsylvania shared with me this past weekend that she's closed 3 sight unseen transactions in the past year!  Whereas NOT being a local lender used to be a hindrance to growing a business, it's now seen as a plus, because cell phones aren't the only thing that's moving to a more mobile-centric platform.  PEOPLE ARE, TOO!  A recent transaction left me with a 5 star testimonial that highlighted  "because we are out of town buyers it is a great advantage that John can provide mortgage services in different states and still maintain great customer service!".  Did you read that?  They didn't use me because of LOCATION.  They used me because of SERVICE.  

 

Now, part of that service is knowing the areas in which I work.  That's not always easy, but 15 states in, I've learned that there are certain things I need to know about every market in which I work - customary transaction processes (who does, and pays for, what), the general cost of an area and typical transaction fees when it comes to taxes and any other area-specific intricacies (like the preponderance of HOAs on the west coast, the sky high real estate taxes and associated homestead exemptions in Texas, and the ridiculous transfer taxes of Delaware that builders try to stick buyers with, but only in certain areas!).

 

Real estate is, in fact, becoming less local.  It was always local because only locals had local knowledge, but with more and more data becoming available and more uniformity coming into play in laws, documents, and processes, real estate is becoming less local.  You don't need to be with an agent to see a home - you can facetime with them.  You don't need to hand off documents or sign with pens - you can use esignatures and scan or take clear cell phone photos of nearly everything.  You no longer need a "local" expert to tell you about the town - nearly every piece of data is available at a county level online, and it won't be long before it gets narrowed down even more locally, to neighborhoods.  

 

The biggest piece of the equation, in my opinion, comes down to what most industry-relating things are coming down to - consumer experience.  Consumers don't want to work with a local agent.  They want to work with the best agent.  If they're local, that's a bonus, but what people care about is availability, communication, transparency, and trust.  That doesn't have to be found within the confines of a neighborhood, city, or even state.

 

In part, real estate is still local to an extent, but that isn't going to last - data and high level service will be more important than location in the future.  In the mortgage world, we can already provide a much higher level experience than most "local" lenders can, thanks to our data platform, technology that allows us to share our screens and "meet" people over the phone and computer, and above all else, the level of knowledge and service that we provide.

 

The real estate industry won't be far behind.

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Rainmaker
660,150
Laura Filip
Laura Filip Broker , Opening doors for All Seasons of Life - Whitesboro, TX
What can we do for you today?

John Meussner thank you for sharing this information with us. Just had a lender that was out of the area send me over a pre-approval letter with TN in the address and it should have been TX in the address. He continues to say to me that makes no difference at all and my statement it sure does make a difference. Change the state, please.  His response we will have to reject the entire client package and start over hmmm why is that. Well TX is different than TN..... I guess it does make a difference the state one is in and the rules of getting a loan. Would not suggest this lender in any transactions as he does not know the difference in states. Build a relationship with the lenders one works with, this is more than a numbers game. 

May 11, 2019 07:59 AM #7
Rainmaker
1,135,573
Sheri Sperry - MCNE®
Coldwell Banker Residential Brokerage - Sedona, AZ
(928) 274-7355 ~ YOUR Solutions REALTOR®

Hi John Meussner - In Sedona, our real estate transactions have not been local for decades. In the sense that it is people from outside the area on another state who are purchasing a home. 

In Arizona, without getting into the weeds, a buyer can pull out of a contract if they have not seen the home. I only write a contract if the buyer has seen the home.

I have found that as for mortgages, the competition nationwide which includes the internet has really changed just in the last handful of years. 

May 11, 2019 08:05 AM #8
Rainmaker
33,741
Sarah Layton | Copywriter & Inman Star Contributor
Best Real Estate Writer, a Layton Media brand - Bradenton, FL
I provide real estate content marketing services

This is such a valid and interesting point and topic.

 

Often as I push people in this industry to understand and accept that it is NOT AN OPTION to accept the internet's influence on real estate consumer behavior, most are still emotionally attached to the way they wish things still were, and to their own detriment.

 

As much as everyone wants to believe they are invaluable as a real estate agent that simply isn't true. 

 

I know just like everyone else that most of the time people would be wiser or better off to hire an agent but our opinions don't matter. It is the consumer's opinion, priorities, and demands that matter.

 

Of course, I know that all of you need someone like me to generate inbound leads and clients and that you are not capable of doing for yourselves what I would do for you. However, most agents, lenders, etc. don't understand that. It requires education. The buyers and sellers of today have been violently educated that you are not a requirement for buying a house any longer. They can get their own loan online, they can find the perfect house or sell their house online, and they can do it quickly. It may not be the best way but they don't know that. Cold-calling and door-knocking are outdated and a BIG FAT WASTE OF TIME and NOT IN YOUR BEST INTEREST in the digital age of marketing but you guys wouldn't know that without education. Still, many will hold on to those tactics because that is what they have been taught. 

 

There is no difference.

 

Here is the point: Those people that align themselves with the evolutionary and pivotal changes that progress every day are the ones that will win. Those that don't but remain stuck on the notion that they aren't now considered an extra and unnecessary expense in the process of buying or selling will continue to watch their sales dwindle until they die altogether. 

 

It's time to get much more grateful for every client that doesn't choose to go their own way.

May 11, 2019 08:13 AM #9
Ambassador
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Margaret Rome, Baltimore Maryland
HomeRome Realty 410-530-2400 - Pikesville, MD
Sell Your Home With Margaret Rome

So glad to see this post featured. I used to be totally against out of state lenders. But working with you gets nothing but raves from clients. You are as hands on as any local lender. Thanks for your exceptional service. 

May 11, 2019 08:15 AM #10
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Jeff Dowler, CRS
Solutions Real Estate - Carlsbad, CA
The Southern California Relocation Dude

Hi John:

So gald to see this important topic featured, and that Carol included it as well. The world of real estate has changed in many ways, and continues to do so. Being local isn't essential, provided the service and knowledge is there.

Enjoy your weekend!

Jeff

May 11, 2019 12:06 PM #11
Rainmaker
217,264
Janice Zaltman Realtor, LEED AP
United Realty Group - Boca Raton, FL

Hi John:

 I agree with you yet one of the first things that people ask me when I am introduced is what area that I specialize in. Have sold throughout multiple counties and yet many buyers and sellers prefer working with someone who knows their community. Many aspects of real estate are data driven.  There still is value to knowing the in's and out's of different communites. A home is only as good as the community and people who are in it. HOA's are  big deal here also. 

May 12, 2019 07:36 PM #12
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Wanda Kubat-Nerdin - Wanda Can!
Prado Real Estate South - St. George, UT
So Utah Residential, Referral & Relocation REALTOR

Congrats on the 5 star review, that is fantastic John! Our industry is evolving but will always be a people industry. Out of area and local clients still rely on local professionals for insights and information they cannot get from a data platform or digital formula. Now, lending, it definitely is not local anymore!

May 13, 2019 06:42 PM #31
Anonymous
Susan Spica

Things change, but I wonder how well you can represent a client if you don’t know about the area and what your client needs to know in order to make a good decision. I serve a second home resort vacation market. I have dealt w out of area agents for years, most of the ones I’ve dealt with are new agents, because the good agents are busy in their own cities and know that referrals are a great way to represent a client and build a relationship w other great professionals. I’ve seen some real screw ups because agents don’t know about lake levels, LOMA letters, dock permits, set backs, HOA rules, rentals, boating laws to mention a few. The internet can’t tell you everything. When you represent someone, you should know the area and the property your selling. Referrals are still a great option, and I wonder if agents really are concerned about representing a client or making a bigger commission check. I know some of you don’t agree, that’s fine. Just my point of view. I would love to serve your clients by referral and you’ll have a client that knows you have their best interest at heart.

May 13, 2019 06:54 PM #32
Rainmaker
2,724,561
Laura Cerrano
Feng Shui Manhattan Long Island - Locust Valley, NY
Certified Feng Shui Expert, Speaker & Researcher

We kind of live in a time where we can go wherever you want to go and it’s just up to our convenience really.

May 13, 2019 07:28 PM #33
Rainmaker
555,350
Nathan Gesner
American West Realty and Management - Cody, WY
Broker / Property Manager

I agree...to a point. We still need local agents that understand the market, can recommend a good chiropractor or biking trail, and that understand more than just algorithms when helping someone find a home.

None of us know what the future holds but I'm certain real estate will be much, much different in 20 years. Those that are watching and preparing to adapt will be just fine.

May 13, 2019 08:15 PM #34
Rainmaker
1,451,784
Georgie Hunter R(S) 58089
Hawai'i Life Real Estate Brokers - Haiku, HI
Maui Real Estate sales and lifestyle info

Great post and comment thread too.  Being adaptable to the changes will be important going forward.  My seatbelt is on and I'm ready for the ride.

May 13, 2019 11:37 PM #35
Rainmaker
3,146,426
Endre Barath, Jr.
Berkshire Hathaway HomeServices - Beverly Hills, CA
Realtor - Los Angeles Home Sales 310.486.1002

Call me old school but in California you better have your Knowledge Base in order if you are representing buyers or sellers or you will find yourself in a huge liability... So I smile when the Redfin agent who claims to be local but is based in San Diego is trying to represent a Land Buyer in Bel Air...Endre

May 14, 2019 12:06 AM #36
Rainer
468,049
Kimo Jarrett
WikiWiki Realty - Huntington Beach, CA
Pro Lifestyle Solutions

Unless the buyer is an investor and the property qualifies for his maximum investment criteria without representation, nobody IMO is going to purchase a primary residential property sight unseen.

The median sfr home in Orange County is about $650k, you need a local agent to advise you if you're unable to inspect the property and most women won't buy a primary residential home without inspecting it regardless of the price and they are the decision makers, aren't they? Endre, #36 sums it up best.

May 14, 2019 02:28 AM #37
Anonymous
Tom Phelan

Question, as the Internet provides more and more information about Listings often resulting in the Real Estate Agent coming into the loop much further down the sale process, perhaps to present an "Offer" (Redfin is changing this) do you think the 6% commission will hold?

And please, don't side-step the issue by reciting by rote, "Every commission is negotiable ... bla, bla, bla .."

May 14, 2019 04:17 AM #39
Rainer
358,048
Olga Kellen
English-and-Russian.com, English-Russian Translation & Russian Internet Marketing - Hallandale, FL
Author of Amazon E-Series "Selling to Foreigners"

Properties and Realtors are local, but Buyers are all over the Globe...

May 14, 2019 07:38 AM #40
Rainmaker
391,025
John Wiley
Right Move Real Estate Group- EXP Realty - Fort Myers, FL
Lee County, FL, ECO Broker, GRI, SRES,GREEN,PSA

Interesting post.

I will say that real estate agents must be careful. NAR Code of Conduct restricts agents from operating outside their area of competence. This means that you would not want to offer a CMA for an area you have no experience in. 

To not be aware of this could mean a problem with liability down the road.

I prefer to refer.

May 14, 2019 10:28 AM #41
Rainmaker
579,288
Carolyn Roland-Historic Homes For Sale In Delaware and S. Chester County PA
Patterson-Schwartz Real Estate - Wilmington, DE
Carolyn Roland, GRI, CRS

All this discussion is interesting, but I still believe a Realtor has to know the area and its types of homes before claiming they are knowledgeable and able to represent well buyers and sellers. I have no problem with referring out leads. 

May 14, 2019 01:49 PM #42
Rainer
117,678
Adam Feinberg
ANCHOR ASSOCIATES - Manhattan, NY
NYC Condo, Co-op, and Townhouse specialist

Most lending in Manhattan is Portfolio loans. As a result, I do recommend buyers use someone local. That said, if the buyer has someone they trust, I will work with the lender and if they are a large bank- I will recommend that they partner with someone from a local office here (and I do offer introductions if possible). We have had bankers from other states/regions that came in thinking they can easily adapt, not understanding the market here and we have had to align their base with what works here. 

May 15, 2019 08:46 AM #43
Rainmaker
492,826
Mary Hutchison, SRES, ABR
Better Homes and Gardens Real Estate-Kansas City Homes - Kansas City, MO
Experienced Agent in Kansas City Metro area

interesting perspective.  this industry is changing so fast, we won't be doing business the same way 15 years from now.

May 15, 2019 08:06 PM #44
Rainmaker
485,220
Paula Hathaway, REALTOR, LBA
Douglas Elliman Real Estate - Southampton, NY
...The Most Informed Agent In The Hamptons!

John: I find this comment very insightful:  "data and high-level service will be more important than location in the future" Where in the world did you learn that? Who is telling you that or did you make that up? That comment is very dangerous IMHO--statistics show that millennials, those who have bought more houses than any other demographic in recent years have an enormous number of buyers with "buyers remorse"....Why? Because they purchased houses without seeing them--they bought them online and no one bothered to tell them how much it would cost to mow the lawns in their chosen neighborhoods--nor did anyone bother to tell them the cost of maintaining a home in a particular neighborhood! (This according to an Inman News report) The costs were prohibitive to them after they moved in! No, I don't think so! Local experts are still sought after and no one will ever convince me that the largest purchase that a person will ever make will be done disconnected from a human being---no, you are so off the market here. I can tell you are no real estate agent! Pardon my disbelief but it is really so surprising to me that you can say that with authority when you do not sell real estate!!!

May 17, 2019 03:19 PM #45
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