Given the revolution in technology that we’ve experienced over the last few years we must look at what technology can and cannot do. This differentiation is especially crucial when dealing with real estate, an environment where online companies clutter the bandwidth and your inbox with schemes to save incredible amounts of money and time by using their services.
Now let’s be clear: technology, and specifically the internet, is a wonderful thing! Technology is a fabulous way to gather data and can do functionary tasks better, faster and cheaper than any human being ever could. But the danger does not lie in understanding that technol- ogy. The danger is that by itself, the internet can never provide the fiduciary counsel required in services such as mortgage lending, law and real estate.
Functionary, fiduciary—why do we keep using these “f” words? Simply, it’s very important to understand the difference between the data that you can get online and the advice, counsel and interpretation of that data that only your Realtor® can provide if you’re to get the best deal when you sell a home.
Information Versus Knowledge
As web-savvy Realtors® who generate a significant portion of our business online, we are big believers in the free flow of information. You will find that both online and off, this new breed of Realtor® usually provides the most complete sources of information that you’ll find anywhere.
Yet, we have had many of our colleagues question why we give out so much information, often saying: “If you give out too much information, people will have no reason to call you.” We disagree. Although we give out information freely, we have never had a shortage of requests to retain our services for Silicon Valley real estate sales. That’s because there’s a big difference between information and knowledge.
John Tuccillo states in his book The Eight New Rules of Real Estate, “Information is a collection of facts or observations about reality. Knowledge is actionable.” In today’s information age, consumers can increasingly get all the information that they want or need, but it’s use- less unless someone with expertise in the field can provide the knowledge to allow them to correctly act on it. Information, without the context of a pro who can share the day-to-day knowledge of the industry, is just data. If a consumer were to act on it without context, they could very well reach incorrect conclusions and achieve undesirable results.
Information is like sand on a beach—it’s plentiful and anyone can find it. But if you want to build a sandcastle, you may want to consult the Sandmaster who lives on the beach, who can tell you how much water to use, what weather conditions are best for building, and most importantly, when the tide comes in and how far up. Without this knowledge, you could spend an entire afternoon building a great sandcastle, only to have it washed away!
Myths Involving Real Estate and the Internet
People love to surf the web when it comes to real estate. It’s estimated that last year, between 70 and 80 percent of homebuyers started their search online. But there are definitely myths about what the internet can and cannot do. The following myth is one of our favorites:
“The Internet is great! I can . . .
- buy a book
- buy an airline ticket
- buy or sell a house
- get legal advice
- receive a medical opinion
. . . all online!”
At what point did the above statement step over the line from fact to myth? If you say after number two, the airline ticket, give yourself a gold star! What’s the difference between the first two products and the last three services? Simple. The first two are commodities bought mostly by price, the last three are services that require coun- sel, advice, knowledge and understanding of your individual needs. The first two are functionary products, the last three are fiduciary services. You can purchase the first two products entirely online and probably save money in the process. In regards to the last three services, the internet is a great place to start your search for service providers. But if you try to “go it alone” with just the data you find online, you will very likely risk losing your shirt if you don’t consult a local provider who under- stands your individual needs and is accountable for their services.
Let’s look at a couple of obvious examples before turning to real estate. Let’s say there’s an online site called WeKnowLaw.com. For $39.95, payable in advance by credit card, you can receive a “legal opinion.” Does this opinion come from an attorney, a paralegal or a truck driver? The site says it’s from an attorney, but how do you know for sure? And what if you take this legal advice and your case turns out badly? How do you get out of the deeper legal dilemma you’re now in? Local attorneys who are dependent on referrals for future business have a great incentive to stand behind their advice and counsel. Does whoever at WeKnowLaw out there in Dot-Com Land care if you’re unhappy with their opinion? In other words, what happens if something goes wrong?
Then there are the online mortgage companies that advertise everywhere. If you’ve read the business section of the paper lately, you know that many of these companies are not doing so well. Why is this? Well, there are a couple of reasons. First, much of the mortgage process still has to be done locally, so there’s little economy to doing the process online, and more importantly, many consumers are finally catching on that interest rates and financing programs are very vulnerable to the old bait and switch that we mentioned earlier. Do you really think for a moment that the online mortgage company in Anywhere Land is particularly concerned if you’re unhappy with their services? Local mortgage lenders derive business from local Realtors® and the community. Therefore, they have to make the situation right because they must be accountable! The national dot-com isn’t. Now, as we said earlier, the internet is a wonderful place to shop rates and programs and to educate yourself on the mortgage process. But afterwards, do yourself a favor and bring the best package to your Realtor’s® recom- mended lender and ask if they can match it. Either they will, or they’ll tell you why they can’t.
Have you ever been to a medical website? There are many wonderful sites out there. If you were to go to one to become a more educated patient, and then take your questions and concerns to your doctor, that would be a very smart use of the internet. If, however, you were to go to a site and attempt to diagnose yourself, that would be a very unintelligent use of information, with potentially disastrous results.
Real estate is an interesting field in that it combines functionary tasks with fiduciary counsel. Functionary tasks such as property searches or accessing home sales data can always be done cheaper, faster and better by technology. If that was the whole of real estate, we’d be the first to applaud the national dot-coms popping up online promising to provide you these services without your having to leave the computer. But the problem is, these companies don’t tell you what you don’t get. For example, there are a few companies that heavily adver- tise that you can get a free home valuation on line. All you have to do is give them a street address and it’s yours. So what do you get? (Drum roll please.) It is possible that you might only receive a list of homes sold within a one- mile radius of that address. Some companies farm your information out to several agents, others to only one agent, and some might have automated responses that do not take into account any of the particulars of your neighborhood. But in all cases, unless your home has been on the market, none of them has seen the inside of your home, noted its pluses and minuses and exact location, and therefore, will not be terribly precise. Does this “home valuation,” coming from a national site, take into account the power plant going in two blocks away from this home which will affect its value? Has it seen the inside of the home to find out how it compares with others? Does it take into account the railroad tracks on the next street? What about the local economy and the fact that young professionals are moving into the area, accelerating the increase in prices? What about sewer abatements or the newest regulations? A national dot-com can’t advise you of any of those things, which could greatly affect the value of the property; but a Realtor® who’s working in your interest can. Some of these sites will connect you with people who know your exact loca- tion and will be aware of the pluses and minuses of your particular street, but others won’t! And even an expert who knows your street can only give you a range of 5-10 percent of the value of your home “sight unseen”.
Please remember that while the internet can provide information, it cannot interpret it! A Realtor®‘s real value is not just in using technology to market your home, but bringing those buyers to you and helping you make the most money when selling your home!