THE ESCROW ADVISOR
March 2015 • Issue Sixty-One
ARE REAL ESTATE AGENTS NECESSARY?
Are Real Estate Agents necessary? We’re drowning in
data…all kinds of data…about every conceivable topic.
Whatever the question, Google, Bing or some other
place on the web will have an answer. But with an
abundance of data come challenges; how to determine
credibility, how to understand it, how to organize it
and how to apply it. It is entirely possible to have too
much data; so much so that a home Seller or home
Buyer can suffer paralysis by analysis. An engaged, professional Real Estate Agent can filter through the
mounds of data and ensure that a client acts with full
faith and confidence.
The post crash real estate market is nothing like the
pre-crash real estate market; and I don’t mean with re-
the discovery process was very laborious, limited and
inefficient; consumers would scout properties by looking at magazines, driving around neighborhoods, talking to friends and family, and looking in the
newspaper. Now demographic information for any zip
code can be had in seconds.
Agents used to control listings, Buyers had to contact
them to either review the books (way back) or get
emails from the MLS. That’s long over, numerous
sites allow free MLS searches; Buyers see everything
an Agent does. Today, 98 percent of all home Buyers
go online to see homes for sale (NAR 2013). They typically browse listings on at least 6 to 12 different sites
in their research, considering price, location, photos
and visual attractiveness. And 93 percent are self-di-
Transparency has disrupted the real estate industry, try as they could NAR and the rest
could not stop progress. This is good for the consumers and good for the professional
Agents. However, the challenge now is for consumers to use this data appropriately.
gard to values. Technology, the Internet, mobile
phones and transparency have transformed real estate.
Despite continued efforts by the real estate industry
and the National Association of Realtors to the contrary, the “iron curtain” of secrecy around real estate
is being pulled down. Today’s Buyers and Sellers can
access almost as much data as Agents...but without
the ability to process and apply this valuable information you’re hunting with sling shots instead of sniper
rifles.
Buyers have benefited the most from the data explosion. From their couch they can casts wide nets in
order to learn as much as possible about what type of
property they want, what’s available and what they can
afford. Often, they’re not “finding” a place to live as
much as they’re “ruling out” places they don’t want
to live. This important initial phase has been transformed by the Internet more than any other part of
the buying process. Before the technology explosion,
rected at this point, conducting their research without
the help of an Agent. Many prefer to remain self-directed so they can educate themselves before committing to a relationship with an Agent.
Sellers tend to see the data they want to see, which
can lead to problems. Selling a home is more complicated than buying; there are several layers and several
outside variables. The abundance of data has empowered Sellers, some elect to go it alone or use discount
brokerage firms. The challenge for them remains not
collecting data, but properly interpreting and applying
it. While this clearly isn’t rocket science, there is much
more to selling a home that putting in on the MLS
and waiting. Sellers need to look at their home as a
Buyer will; on line, at the photos, read the narratives,
pull the demographics and comps. Sellers also have
the remember the challenge of dealing with the Buyer
Agent, appraiser, inspector and other people in the
Continued on Page Two
E ATON E SCROW C OMPANY
M ISSION VALLEY B RANCH • P: 619.342.7800 • F: 619.692.3262
La Mesa Branch • P: 619.664.4540 • F: 619.466.6290
Rancho San Diego Branch • P: 619.873.3777 • F: 619.873.3773
ESCROW CANNOT
UNILATERALLY
RELEASE FUNDS
Question: I am a Real Estate
Agent and need some advice.
A couple of years ago, I represented a Buyer who went
to settlement. However, certain repairs which the Seller
had agreed to do were not
completed by the settlement
date, so $7,500 was held in
escrow. I sent several faxes
and e-mails to Seller’s Broker
(the Listing Agent) requesting that the repairs either be
promptly completed or that
the escrow funds be released
to the Buyer. I finally received a message that “according to information
received by the listing office,
the Seller had passed away.” I
relayed this information by
letter to the escrow company.
I received no answer. Recently, the purchaser located
the Seller’s address and telephone number and discovered that the Seller is alive
and doing well. In this case
the listing office appeared to
have misrepresented the
truth. Where should we go
from here?
Answer: This is, indeed, a
bizarre situation. Without
casting any blame on anyone
at this point in time, I suggest that you advise the escrow company that you have
located the Seller, and demand that the Escrow Officer follow up on this. While
technically, it may be considered unethical for you to contact the Seller directly, since
Continued on Page Two
The Escrow Advisor
March 2015 • Issue Sixty-One
ESCROW CANNOT UNILATERALLY RELEASE FUNDS (cont.)
you were the Selling Agent, there is nothing to stop the Officer from making the call.
In fact, I suspect that the Officer did not focus on the escrow issue when settlement took place. Traditionally, Escrow Officers will have the Buyer
and the Seller enter into an escrow agreement, and include a time limit as to when the escrowed funds should be released. If the work is not completed
within an agreed upon period of time, the escrow will be released directly to the Buyer — without demand from the Buyer or objection from the Seller.
If there is no such time limit, the Escrow Officer is prohibited by law to release the funds just because one party has so requested. An Escrow Officer
has a fiduciary duty to the parties to the transaction. There are only two ways in which the funds can be disbursed: by written release signed by both
parties, authorizing how the funds are to be distributed, or by a order issued by a Judge. The latter obviously requires that a lawsuit be filed, and this
is time consuming and potentially expensive for everyone. Many escrow agreements will include a provision that the prevailing party in such litigation
will be awarded such legal fees and court costs as determined by the Judge. Such a provision is designed to expedite an out of court settlement.
You should also contact the Listing Agent and his/her manager, in writing, to advise them that the Seller has been located. You should request that
they immediately contact the Seller in order to resolve this matter.
You have suggested that the Listing Agent may have misrepresented the facts, but I would not rush so fast to judgment. What did they gain by withholding vital information from you as to the whereabouts of the Seller? Unless there was some unwritten agreement between the Seller and the
Agent that these funds would ultimately be released to the Broker — which in my opinion would be illegal — the moneys would be returned to the
Seller if the work was completed, or released to the Buyer.
I am also surprised that despite the long period of time since the escrow was created, the Escrow Officer took no action to resolve the matter. There
is a process in law called an Interpleader Action. The escrow company would file a lawsuit against both the Buyer and the Seller, put the funds into
the Court registry, and basically ask the Court to release the attorney from the escrow obligation and resolve the dispute.
It clearly is a mystery, but now that you have located the Seller, I believe the matter will be quickly resolved.
By Benny L. Kass, www.realtytimes.com
ARE REAL ESTATE AGENTS NECESSARY? (cont.)
mix. Data is a big part, but just as large are all of the steps down the road.
Disruption is a good thing, especially in real estate. However real estate is a more than booking a flight on line or pricing
a car - real estate involves many more variables and no two more unpredictable than Buyer and Seller. Flat fee and virtual
service companies have emerged, discount brokerages, even “full service” firms that offer rebates back to clients. Of course
some folks will go that route and in some cases, they will do better than dealing with a sub par opportunity Agent and
find success. However, cries that the Real Estate Agent is soon to be obsolete do not resonate.
There will always be consumers who can “do it themselves,” and why not let them? If they have the motivation, skills and
knowledge, why not? It’s never going to be the norm because the average person doesn’t have the time, can’t keep up with
trends or laws or just has no interest in taking on one more thing in their busy lives. Laws change, marketing changes,
contracts change, photo quality changes, technology changes, and consumer behavior changes. But for most people
dealing with a home purchase a mere 4-5 times in an entire life, keeping up with these changes is not feasible.
I want the smart client, the client that wants to see the data, that wants to discuss a pricing strategy and that has a definition of success. I enjoy the give and take on line with those independent types; I’ve even helped them knowing they
were not going to use my services. So what? Does it kill me to toss a line every one in a while? There will be a future for
Real Estate Agents and the professional Agent will continue to be in the mix. Perhaps in different roles, but still there.
By Hank Miller, www.realtytimes.com
EATON
ESCROW
MISSION VALLEY
2727 CAMINO DEL
RIO SOUTH, SUITE 2
SAN DIEGO, CA
92108
P: 619.342.7800
F: 619.692.3262
LA MESA
9340 FUERTE DR.,
SUITE 210
LA MESA, CA 91941
P: 619.664.4540
F: 619.466.6290
RANCHO SAN DIEGO
2451 JAMACHA RD.,
SUITE 108
EL CAJON, CA 92019
P: 619.873.3777
F: 619.873.3773