The Cost of Losing Personal Service in Real Estate

Dec 13, 2021

Many years ago, I began purchasing single family homes for investment in Arizona.  I had found a terrific residential real estate agent whom I trusted and over the past ten years, we have bought a number of homes that he found. He helped me find the right people to remodel and maintain the homes, he managed the care and of all the leasing, and he continued to advise me on when to buy and sell.

You could say my real estate agent and I had formed a partnership. On the finance side, I had my relationship manager from Bank of America. I could call Seta who was in San Francisco and she would arrange financing for me with just one phone call.  She knew all about my finances and knew how much I planned to put down– she would do the rest.

Both of these partnerships have made me a lot of money. I curated my own team and was able to buy outside of California, without any issues.  If something went wrong, it was always taken care of.

Today, what I had developed would be much harder to duplicate. There are excellent residential real estate brokers, but I’ve seen the personal relationships between brokers and clients diminish. One reason for this are mega franchise brands.  Firms like Compass, which is rapidly becoming the largest real estate brand in the U.S., is pushing technology tools as a way to better service its clients.

On the financing, side the “Setas” of the world no longer exist.  Banks do not allow a single person to have that kind of authority anymore. And with government regulations today, they would not have the ability to find or buy a property on my behalf.

Sadly, we’ve lost the personal touch. Technology takes information and tries to put it into the hands of the end user (the buyer)– without the need of a single person. The challenge is that the real estate agent and the lender knowledge cannot be replaced with data. Having more information by the end user does not mean that they are in a better position to close a deal. When they do not have that personal helper– who has the experience you lack to get the job done right?

Real estate and banking have traded in personal support and relationships for expansion and acquisition. Believing they could service more people, but in turn, lack quality of service.

But, you have to start with me and those that do what I do. In the past, I could move much more quickly and buy homes with professionals supporting my effort throughout the process. I bought homes faster, which means that I began feeding the food chain faster. My buying a house, my money for my real estate agent, as well as my lender, but I also was able to employ contractors, permit expeditors, inspection personal title companies, insurance companies and eventually was able to provide improved housing to my renters.  In other words, I was able to spur the economy a lot faster with my efforts.

This was more to create bureaucracy in real estate as banking stymied the growth of smaller investors.

The cost to get started is already high, but the challenges to get individuals in the industry to help you has been replaced by a mobile app and a chat room.

Photo Credit: Adriaan Bloem Flickr via Compfight cc

 

Written by: Hans Hansson

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