A hundred years ago, I was in college. After a long and deliberate process of considering viable fields of study (involving a thoughtful analysis of the boy-to-girl ratios of each), I chose civil engineering. Engineering, it turns out, indeed involved a lot of boys but also a lot of numbers.
Mostly, though, it involved a lot of rules, or as we called them, equations. Remember the right equation for the right situation; plug; and play. That’s how I tended to approach it. But then there was Sherman. He was in a different area of engineering — the magic kind where you had to take certain things on faith, like the fact that a bunch of random wires carrying who-knows-what could actually power a blow-dryer — or Bill Gates.
And maybe it was because of the more conceptual nature of his classes that Sherman didn’t bother with memorizing the equations. He didn’t rely on rules for finishing his homework. He just looked at the problem, started with what he knew to be true (those stupid numbers), and developed the solutions himself.
In 1983, Sherman was hired by a little start-up company that rhymes with "Qualcomm" and today is reportedly sipping fruity drinks on his own Mediterranean island. I eventually became a real estate agent. I will let you draw your own conclusions, but that’s not the point.
Or maybe it is. The real estate industry is a big, bureaucratic, afraid-of-being-sued machine. So our brokers have their own equations: prescriptive procedures that we are required to follow in completing our homework. The gold star is the paycheck, and in order to get one of those things, most brokers thump their agents upside their heads with checklists until all of the basic reasoning skills run out both ears.
It all boils down to problems and solutions. Where checklists are concerned, the solution is always the same regardless of the actual problem, and that becomes the problem in itself. Pretty soon you find that you have established a culture of soldiers responding to executive orders instead of an organization of innovative, critical thinkers. And then we wonder why students in our major tend to fall a little to the left of the progressive curve.
That was a big lead-in to a small nit I have to pick, but come on, people. Think! Take our disclosures. Yes, we need them. Yes, many are statutory mandates. No, horizontal stripes are not becoming. But, don’t be afraid to put on the old thinking cap once in awhile!
My favorite examples of real estate by rote come after closing. I recently got a call from an agent saying she had misplaced the buyer’s loan prequalification letter. She needed it for her file … in order to get paid. At this point, I am asking myself, "Why?"
The loan has funded. The deed has recorded. The buyer has already exchanged all of the socket wrench sets he received at his housewarming party for several bottles of tequila. Is there any question that he is qualified to get financing?
BUYER: "Your Honor, I submit that my home purchase should be voided and that I am entitled to damages because there is no evidence in the file that I am qualified for a loan."
JUDGE: "But you got a loan! On the other hand, there was a checklist. The court awards the plaintiff $40 million and a week on Sherman’s island for pain and suffering."
One of my ongoing battles with the rational-thinking impaired is a California disclosure called the Seller’s Property Questionnaire. This is a little disclosure that grew from three pages to four a couple of years ago. In doing so, it incorporated another disclosure, the Supplemental Statutory and Contractual Disclosures. At the risk of boring the socks off of you, the point is that today, if you use the former, you are also in effect using the latter.
It is a tidy little twofer deal. Except, in about half of our transactions, I get an 11th-hour call from the agent or their transaction coordinator saying they need both for their files in order to get paid. Forget that they really have both; they also have a checklist with an invisible yet implied advisory at the bottom cautioning against independent thought. The checklist always wins.
Banks are no better. My latest example from the "Let’s do everything three times" file involves electronic signatures. I am reluctantly resigned to the fact that a few hold-out lenders still won’t accept electronic signatures on the purchase agreement, but we keep using the tool because it is legal, it is efficient, it is environmentally sensitive, and our clients love it. …CONTINUED
Yet we never know in any given transaction what the lender will or will not accept. Sometimes, it is a lender who accepted electronic signing last week who now considers a signature stamp to be the sign of the devil. In these cases, I just assume they updated their checklists.
This week we ran into one of those lenders. The lender rejected the electronic signatures (three weeks into the transaction, I might add) advising that "wet signatures" would be required on the contract and all addenda. Fair enough. So I e-mailed the contracts to the out-of-town seller. He printed; he signed next to his previous signatures; he scanned; he faxed; and I e-mailed once again.
One week later, I received my new instructions. According to the bank, "The purchase contract is not acceptable because the electronic signature stamps are still visible." I could just hear the conversation that led up to this revelation. "These look good. The husband signed, the wife signed … wait a minute, Jim. I can still see them! They are still there! Eiyeee!"
Also there of course were the signatures penned by a real, live Bic Rolling Writer, but apparently someone at the bank decided that there was some imminent threat of cross-contamination. I was tempted to return the third set of contracts with stick figures and a proof for the Pythagorean theorem scrawled in the margins just to test my own theory that this would have been OK, but I couldn’t risk being wrong. My client’s ink cartridge was running low.
Every single day, I see brokers using redundant forms because it’s "policy." Mold disclosures, Megan’s Law, supplemental taxes and a host of other horrors of homeownership advisories are all now routinely addressed in triplicate because we have been discouraged to think. Consequently, I see agents more concerned with filling in the blanks on the contracts than filling in the blanks with their clients about what it is they are having them sign.
Yesterday I received an offer on one of our listings that included an REO (bank-owned property) disclosure signed by the buyer. This is the form that says in bold type at the top "for properties being sold by a lender after foreclosure." Only, this property wasn’t bank-owned — unless there is a lesser-known bank I am unaware of named Griswold Family Trust.
"I’m so used to having to do these, I just did it out of habit," said the agent. "Did you not explain the contract to your client before you had them sign?" I thought. "Were they not even slightly curious, or did you just shove a pen in their hand and start the egg timer?"
I am all for risk avoidance, but failure to think may be at the core of so many of our shortcomings. So mired in procedures are we that the big brokers still rent space to archive the equivalent of several dozen rain forests when a stylish CD-ROM cabinet and an online backup arrangement would suffice.
While an overlooked initial on page 47 of the 10th disclosure addressing the danger of eating paint containing lead might land you in court (which I sincerely doubt), there is such a thing as obsessing.
And while we are all out obsessing over the prescribed procedural solutions, our paradigm is out partying in another dimension of innovation, creative thinking and real problem-solving.
I bet they can see Sherman’s island from there. It’s a place where competence and service to the client are as important as, and maybe even trump, the company procedural manual. And that’s the real twofer deal.
Help your agents to understand what they are doing and why, and you might not need quite so many cover-your-hiney checklists.
Kris Berg is broker-owner of San Diego Castles Realty. She also writes a consumer-focused real estate blog, The San Diego Home Blog.
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