Reports are coming out a bit late for Teton Valley, Jackson & Star Valley, see below:
The art of the Referral
It’s funny that I reference art in the same sentence as something that I’m not very good at. That is, the referral.
Oftentimes agents refer to the customers they are working for with different names. The one that gets me is “the client”. Agents will refer to the person they are working with as their client, regardless of whether or not the person may or may not actually be his or her client… “Oh yes, that’s Bob, he’s my client.” Sometimes I wonder if it’s a protective measure for real estate agents marking their territory when speaking to other agents about a person that might be working with either, or both…
I’ve gone way off track here. When it comes to making money in the real estate industry, we usually do so by providing a service within a State of which we are licensed. There is one exception, the referral. If I have “a client” working with me in Idaho or Wyoming, and they decide they would rather purchase in Arizona, they can do their homework and choose
an agent to work with in that State. OR, an agent the client knows or is comfortable with can vet out agents in Arizona and refer them to the agent in Arizona. When doing so, they would ask the Arizona agent for compensation in return for the referral, but usually only if the client completes the purchase in Arizona. In most cases, the agent in Arizona, or the receiving agent will compensate the broker who provided the referral a portion of the compensation they receive. It doesn’t cost the client anything.
While a referral is more accurately described as an act of referring someone for a specific service, you can now see in the real estate industry a referral often time represents a person such as a client or a customer.
So why aren’t I good at referrals? I don’t suppose it’s something that one can really be bad at, I just feel that sometimes it’s not appropriate. With regards to the
circumstance above, sure. There are however a number of agents who ask for referrals when in my opinion, it isn’t appropriate. For example, advertising real estate in an area you are not familiar with then simply referring the client to a local professional is not appropriate in most circumstances, at least in my opinion. There are unfortunately a number of brokerages whose services are dedicated to this sort of tactic. Usually a website will funnel potential buyers and sellers into a location where they receive a recommendation for an agent, even though they know nothing about the agent they are referring. In some cases the receiving agent might just be paying for the service. In this scenario, there’s no research going into the recommendation. Another example would be real estate agents themselves. Real estate agents are notorious for shopping for real estate in areas where they are not licensed, locating an agent, and asking for a referral fee when the transaction closes. I’m probably going to get some flak for this, but in many circumstances I don’t think it’s appropriate.
I believe agents need to be transparent when working with other professionals. If they expect a fee, they need to make that clear before enlisting the services of another professional.
A final note about referrals, they are ONLY paid by brokers to those with a real estate license. Agents can NOT compensate anyone directly, and Brokers can NOT compensate someone who does not hold a real estate license.
So, maybe I just need to get better about asking for a referral. Remember it’s not all about asking another agent for a fee, but it’s broaching the issue with the potential client. The referral can be a useful tool, and a helpful service to the public, as long as they are aware of the situation. I think it would be relatively difficult to refer someone to another agent without them being aware of the situation. So, how would you feel if your agent asked if they could locate another agent for you in hopes of receiving a fee from the receiving agent?
The Competitive Life of a Local Real Estate Agent
First, a special thanks to those in the community that voted for me as a “Best of Teton Valley” candidate for the real estate category. With that said, I thought this might be a good opportunity to write a special edition “Teton Realty Blog” article. As always, you can read on at tetonrealtyblog.com.
As some of you may know, I am not only a member of the Teton Board of Realtors, but also of the Snake River Regional Multiple Listing Service operated in part by the greater Idaho Falls Association of Realtors. I’m also a member of the National Association of Realtors and attend as many gatherings and educational opportunities as I can.
Having experience in marketplaces other than our local market (obviously the local market is the majority of our business) has given me the opportunity to study the dynamic of not only marketing practices, but the level of competition amongst brokers, brokerages, and real estate agents. I have also been exposed to real estate outside Teton Valley. Believe it or not, there are vast differences in not only the level of competition, but the culture. Culture of real estate you might ask? You bet there is. Those of you who have worked with a local realtor to purchase a home here after owning a home elsewhere probably know exactly what I’m talking about. If you haven’t, and you have had an experience with a local real estate agent, you probably didn’t find the experience all that unusual.
Here in Teton County, it is my opinion that we are held to a higher standard in terms of the level of service a real estate agent provides. This isn’t because we live in an area with a wealthy community over the hill, it’s because we’ve been practicing business in such a way for so long that it is now an expectation. For example, most parts of the country view listings with their respective buyer’s agent without the listing or seller’s agent present. Some areas even provide contact information for the occupant, be it a renter or the owner. The buyer’s agent might call to arrange a showing if they listings states that the property is occupied, otherwise they have a uniform lock box system, usually with an infrared access key that tracks which agent accesses the property with a date stamp. In my opinion, it’s incredibly efficient, but certainly not what we are used to here in Teton Valley. In contrast, listing or seller’s agents almost always attend showings in our marketplace. It affords the seller’s representative the opportunity to review property highlights, answer questions, and provide assurance to the occupant that lights are turned off, doors are locked and the property is secured.
“Culture” aside, I have also found the level of competitiveness to be different than most markets as well. By that, I mean more competitive. I think there are few reasons for this:
-First, not only are we a small community, but we are a recreational community. When I travel, I tend to focus on real estate advertisement. I have found the level of advertising and quality to be higher in recreational communities (which really just translate to more $$). And our little market is no exception. We have a diverse group of competing companies, and they really all do a great job. I don’t know how each of these companies pull it off, but I can tell you (whereas I handle a large portion of Teton Valley Realty’s marketing campaign) that it’s a lot of work.
-Second, we have a unique blend of box store type brokerages, big regional brokerages, and small local brokerages. In most small markets, there’s one “big guy” and perhaps a few mom and pop shops. Here, it’s very interesting to see how well each local company performs.
-Third, I think it’s just a small-town dynamic. I truly believe that some of the Region’s best (of anything) come out of Teton Valley. Honestly, it’s absolutely unbelievable how many great restaurants we have locally. Every time I travel I’m reading reviews, or checking online for a great place to eat. At the end of the day though, it’s hard to beat some of the local services that we have available in our little community. This isn’t just for restaurants either. There are great lodging opportunities, outstanding healthcare professionals, truly unique shops, a great variety of grocers, telecommunications options that would make Google proud, and the list goes on.
So why all the competition? Because we have a lot of great services to compete with!
CC&R’s Do they expire?
Note: the following information is a culmination of opinions from local professionals (including my own), none of which whom are attorneys. The below information should be verified with legal counsel in the event the information is to be used in real-world application.
First, a quick overview as to what CC&R’s are. CCR stands for covenants, conditions, and restrictions. Basically, they are the rules of a subdivision or neighborhood. The goal is to help preserve property appearances and values. They are filed in the record associated with specific subdivisions against every lot or home owner, who is required to abide by them.
Several times over the course of my career in real estate I have run into a situation where I am told that CC&R’s are no longer binding, have expired, or cannot be upheld. In most circumstances, I believe this is wishful thinking. It is not uncommon, however, for a developer to outline a term of existence for these documents. The general idea would be to protect values while the developer is selling lots, but to allow those within the homeowners association to make amendments as they see fit once the community has evolved or built-out. Oftentimes, the magic number is somewhere around 20 years. The wording could be tricky and state something along the lines that the documents dissolve once the development has built out. It doesn’t necessarily have to outline a timeframe, date, or number of years. It can be something that triggers the termination, though I personally wouldn’t find this to be as definitive.
The above being said, a couple of other questions along these lines I often times get asked:
-Why terminate CC&R’s?
The simplest answer in my opinion to this question is trends in real estate and lifestyle. A couple of examples would be brick construction or large square footage. In the 50s, brick construction was extraordinarily popular. Today, masonry is very expensive by comparison, and fairly uncommon. The same goes for square footage. Currently, the trend for new construction is not only modern, but simplistic. Often times, simplistic means small. This has been one of the biggest challenges with our evolving local market, smaller homes are popular today, but weren’t 10-15 years ago when most of these developments were created.
-Can CC&R’s be terminated without expiring or dissolving naturally?
I believe the answer to this is yes. Every set of CC&R’s has a section that dictates how the CC&R’s can be amended, or presumably terminated. Most of the documents I have reviewed for local developments require 60 or 70% of the home owners vote, or two thirds. In some cases I have seen 90 and even 100% requirement to amend these documents.
Circling back to the amount of knowledge I have on the topic – it’s limited. When some people ask the question, I think that they already know most of the answers I have described above. I think what some are looking for is an obscure law or case law that would allow for termination of documents if they are not upheld, or a certain amount of time has passed without an active homeowners association. To that end, I cannot say. In my opinion, and attorney would best be consulted to (try to) answer these questions. Better yet, Idaho case law, might help answer these questions if such case law exists. My only advice in this scenario would be not to make assumptions when it comes to documents recorded against a piece of property.
