Housing Market Slump: Lockbox Dilemma

Let’s take a break from the fallacy of a slow housing market for today and focus on something more basic. Could it be that listings aren’t selling because we’re leaving the wrong person in charge of the sale?

When a seller lists their home, they select a “listing agent,” someone whose job it is to learn everything they can about the property – its features, financial components (like taxes, cost to operate), unique items, etc. The listing agent is supposed to turn that information into a “benefits” statement – the cornerstone of their marketing which tells potential buyers “why” they want to live in that particular home. The listing agent’s knowledge of the property is combined with their knowledge of the sales process to create a “unique sales proposition” that attracts buyers to the “lifestyle” opportunity which the home represents. Thus, the most qualified person to sell the home is the listing agent. Certainly not the seller.

And certainly not the co-broke – or, if we’re being real, “showing” agents – from other companies that show up with buyers. Imagine, if you will, the absurdity of this process: An agent, who knows virtually nothing about the property shows up with a buyer, who likewise knows very little. Certainly, they both have some “information” from the MLS or internet, such as room “dimensions” and basic “components” of the property such as heating units or number of garage spaces. Nothing much more than what any uninformed person could perceive using basic senses like sight, touch or smell. This agent – not one hired by the seller, who has likely never seen the property before (they never attended the broker-walk-through or caravan that agents still host for their new listings) enters the property by unlocking the electronic lockbox. And together, an uninformed agent and inexperienced buyer take a product tour of a commodity with very little to guide them other than a basic “window sticker” called the listing sheet. At best, they can say they “like” the kitchen or they “hate” the rug. But other than that, there is no “sales” going on because the only person with the knowledge to create a sales “event” is absent: the listing agent. 

Not absurd? Think of it like this. You want to buy a new car. So you call Uncle Lou who has been a “car buff” his whole life. He reads up about the car you are thinking about on the internet and prints out a basic spec sheet. Then you and Uncle Lou go to the local dealer. You walk into the showroom, select a key from a hook on the wall, and then jump in the car – without the car dealer’s sales agent. You and Uncle Lou can determine if you like some elements of the car – how it feels, how it smells, how it takes a corner – but are you really learning anything about the commodity? What about its special features? Can you decipher the controls during your 5 minute test drive? Can you intuit the maintenance features or service requirements? Without the sales person, you’re left to ’selling yourself’ based upon your limited knowledge of the commodity. And you’re no expert. You’re just the consumer.

This is why lockboxes are terrible for the real estate sales industry. If – and it’s a big “if” – you’re being hired to conduct the sale of a property for a seller, then a lockbox is a direct abrogation of your duty to make the sale. It’s a sales cop-out. It actually absolves the listing agent from having to be present – to conduct the sales presentation – with buyers who have determined preliminary interest in the property. In fact, lockboxes transfer the duty to sell the property from the hired agent to the third-party showing agent. And the co-broke agent doesn’t know anything about the property; or the seller; or the sales opportunities that would potentially induce the buyer to make an offer. All they can rely on is whether the buyer “likes it” enough to make an offer.

On a side note, lockboxes are downright evil because they are also outmoded, ridiculous technology that is the second-leading cause of technical support issues for agents (after “forms software” which mostly stinks as well). Just read any web-discussion or blog or discussion thread from agents and there’s always dozens of posting about lockbox problems. Mostly, these stem from the kinds of PDAs the lockbox companies require agents to use – from old, Tutankhamen models that you can’t find even in the Smithsonian, to underpowered, consumer-shunned models like the Treo or worse. Sure, lockboxes now work with “new” Smartphones like the Blackberry; but do you know how hard it was to get those agents to get a Treo in the first place? Hell will freeze over before they trade them in for something more updated! But back to the real story….

Sellers should be furious. Lockboxes are undisclosed “escape clauses” in their sales agreement. I wonder how many listing agents sit in a presentation to a potential seller client and fully disclose, “Mr. and Mrs. Seller. After I put your home in MLS, I’m going to let completely uninformed agents show your home to potential buyers aided with nothing more than my incompletely filled out MLS listing sheet. Doesn’t that sound like a great way to sell your home?” And of course the MLS sheets are incomplete: Ever see a MLS listing sheet with accurate tax data? Usually, the field is required, but agents don’t do the research, so they just put $999999 in the field. So taxes, which are a critical component to the ownership proposition for a home, are left unanswered. Even if a buyer was “enamored” with the bathroom or the new appliances, they may not see an “opportunity” to make an offer because of “affordable” taxes. Oh, and we just love those descriptions on MLS sheets too! Creative comments like “Don’t show this until April 1!” and other agent-to-agent communications which end up right on REALTOR.COM because the data is automatically transferred from the MLS. Cool….. 

We can’t blame it all on lockboxes (ok, so maybe we can…) because listing agents also abrogate their duty to the seller by sending surrogate agents to do their open houses for them, too. That’s a story for another posting. Yet it’s fairly clear that the widespread acceptance of lockboxes – which were designed to make the agent’s life easier by eliminating the need for them to be present at the property they are representing when a potential buyer wishes to inspect it. Lockboxes have created a standard of practice that is anti-seller because they are anti-sales. The person most qualified to make the sale has been absolved of their duty to be present during the sales event. Makes you wonder why we continue to employ listing agents. The property information is online full time, so no need to contact them for basic information (and it’s not like they even return your emails anyway). They don’t show up at the sales events like showings or open houses. In fact, too many listing agents tell me “they don’t work with buyers” which should scare the hell out of their sellers.

As usual, the inescapable conclusion is that too many things done in the real estate industry are designed to not sell homes. Listings online without photos – or scary ones – aren’t hard to find. Agents who won’t buy a Blackberry because “it’s expensive” so they don’t return buyer inquiries until they get around to checking their email again sometime this week. Agents who tell profess “they will never send a text message on their cell phones!” demonstrate a diva-mentality of “they need me; I’ll just wait around until they call me.” And, of course, countless technologies – like the insidious lockbox – that coddle and perpetuate these outmoded standards of practice that makes one wonder: Who really caused the housing crisis?