George Costanza was obsessed with “HAND”. If you had power, if you had the upper hand.
Throughout my career, I have sold stuff…all kinds of stuff. Retail, services, technology, technology services, opportunity, revenue, cool factor…you name it, I have probably sold it. In every instance, the goal in selling (and buying) is to create mutual alignment and fair value. If you like what I have and I like your price, we do a deal. If we can’t create the space where our mutual needs are met, then there is no deal. Everybody walks away, knowing that there is the opportunity to do business again when the need parameters change. You may be disappointed, but rarely is there much ill will.
But there is a glaring omission from the list of things that I have bought or sold where it can often be hard to walk away without ill will – REAL ESTATE. The world of real estate runs by its own arcane rules and logic, and a powerfully flipped sense of hand. In business, largely speaking, the buyer sets the terms on which they can or will do business. And the concept of “hand” is fluid throughout the sales process. At some points the seller, and at other points the buyer. But in real estate, there is no fluidity. The buyer, in my experience, never has “hand”. (Even as a seller, which I have been on multiple occasions, I never felt as if the buyer had any control.)
In any good transaction, there is a fair exchange of assets for assets (typically money for something). But in real estate, especially when the buyer has to use financing, they lose control the minute they make an offer. Once the offer is accepted, the system honors the seller. The seller has the opportunity to walk away if the buyer has issues beyond their control, including bank issues, changes in underwriting policies, assessment issues and so on. The seller can choose to demand that the buyer make a portion of their deposit non-refundable, that the buyer work around their closing dates. Of course, at any time the buyer can walk away, but that does not allow them to control or influence the transaction, only terminate.
This is a broken path. How do we make the transactions smoother, and more fluid? Simple…we break them – standardize the terms. Make it like a rental agreement. Pull the lawyers and the agents out of it. Make it like eBay. You have a house, list on a marketplace. You want to buy a house…go to the marketplace. The transaction and financing happens in an open and fluid marketplace. Your financing is either approved or not. The close date happens or not. Make it easy. Make it clean. Make it person to person, measured by the transparency of a marketplace.
Middlemen serve, largely to inject their value into your transactions. They don’t always add value. (In my experience, in real estate, they have frequently provided more friction than guidance, but my sample set is very small.) But complex services like programming or design happen within controlled marketplaces. Increasingly, auto buying is moving this way. Why can’t you list your house on Amazon?
Make this transaction more transparent and even and facilitate the exchange of money for assets, rather than dragging the system down and creating unequal transactions. Give everyone hand. Make this easy.