Real Estate Agent ≠ Financial Advisor

Words I Had to Look Up While Writing This Post: 4

How Often I Get Rantish Like This: Not Very, I Promise

So… I’ve got a little bit of a bone to pick. I’m going to try not to rant here, because really, who thinks that’s funny, interesting or entertaining? No one, except the crazies. Maybe the guy who Googled ‘elizabeth 7 days face farts’ a couple of days ago to get to my site would enjoy a good rant, but that’s probably it.

Anyway, over the last couple of weeks, I’ve had several encounters with various forms of media discussing or requesting more info from the general public on the topic of real estate agents encouraging or persuading buyers to purchase homes that were ‘more than you could afford’. In each of these instances, there was opportunity for open comments about this concept and the airways were absolutely flooded with responses from people who had an agent who tried to talk them into buying higher than they wanted to, or whose neighbor totally bought an $850,000 house, even though he knew he could only afford a $200,000 house because his agent said he could do it and totally deserved it, but then the house was foreclosed on. All of these instances were discussing the housing boom back in the 2005-2006 era of maxed out credit in comparison to the exodus of debt that’s currently taking place.

I get that it helps soothe the conscience of the public to have a scapegoat. People can’t live their lives constantly self-flagellating about their own poor financial decisions. Thus, a villain is in order. Real estate agents made a killing during the boom. Property changed hands with lightening speed and each transaction greased the palm of an agent, if not two or three. We were printing our own money. We were growing it on money trees in the back yard. So clearly, if we were the ones with the most to gain, it must ultimately be our fault that it all collapsed, right? Find those witches and burn them at the stake!!

I’ve got to take umbrage with all of this. Like a lot of umbrage. Extreme umbrage; I’m just saying. (Sometimes when I’m writing, a word appears in my head within a sentence, but I’m not sure that it means how I want to use it at all. I doubt myself and my language skilz. So I dictionary.com it. 9 times out of 10 I’ve got it right and then I’m so proud of myself I need to use it a few times. Just to prove how awesome I am.)

To begin with, home sellers were just as greedy as their agents. Yes, we were thrilled with our jacked up commissions, but did you turn down the $100K you made on your house from when you bought it in 2002 till when you sold it in 2005? Because that’s more than I made in 2005 and 2006 together in commissions; I’m just saying. And now that you put it down on your house you bought in 2005, which is worth 60% of what you bought it for, you’re angry and disappointed that you ‘lost’ that inflated equity. That’s clearly also my fault.

And secondly, (and most angrily and with lots of upsetness in my feelings [when I get really upset I lose the ability to communicate succinctly]) I really a lot need everyone to understand this one thing: YOUR REAL ESTATE AGENT HAS NO IDEA WHAT YOU CAN AND CANNOT ‘AFFORD’. I’m sorry. That was screamy and poorly written. I couldn’t help it.

I seriously cannot deal with the concept out in the public that a real estate agent has any clue whatsoever what his client can afford.

As your real estate agent, here’s what I know:

▪ What you tell me your price range is

▪ What the lender says you qualify for

Here’s what I don’t know:

▪ How much you make

▪ What your debts are

▪ How high your tolerance for debt-risk is

▪ Whether you’ve been squirreling away cash for 7 years or living month-to-month

▪ Who you owe child-support to

▪ That your job is less secure ever since you accidentally sent that email meant for your girlfriend about your boss’s propensity for nose-picking to the entire company

▪ What rich grandma died and left you $2.6 mil

▪ About your secret, jewel-encrusted silly bandz habit

▪ Everything else about your financial status I would need to make a qualified judgment about what you can and cannot ‘afford’

My point is that, yes, I had clients who bought in 2005, 2006 and 2007 who couldn’t keep their homes. This fact makes me sad. It doesn’t make me sad, however, because I feel responsible for this occurrence. Many of these people were my friends, and in some cases, even my family. Don’t you think that if I had some magic 8 ball knowledge about the collapse of the national housing market I would have warned the people I love about the upcoming disaster, instead of watching them walk into it totally unprotected while gathering my comparatively paltry commission checks? Plus most of these people encountered some additional life/work issue that further depressed their situation. I feel bad for those clients, but I feel bad because they, like the rest of our country, are affected by a recession. And it sucks. Not because I could have stopped it from happening.

So next time you hear someone blaming the real estate professionals for the bubble pop out here, remember this: four out of five of my closest friends who are real estate agents have lost their homes to foreclosure in the last two years (which seems like a much more interesting angle for a story on the housing crisis, doesn’t it, NPR?). Does that sound like we had a clue it was going to happen?

(That was kind of ranty. Sorry. Yesterday my three year old ran around the house without a stitch of clothing giggling like a madman while I tried to negotiate the $18,000 deficit between the purchase price and appraisal of one of my buyer’s houses. If only I had my own reality show; it would somehow manage to be equal parts pornographic and tediously boring at the same time. Is that better?)