The Role of the Internet

Mollie Wasserman's internet warningGiven 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!

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