It Ain't All Big Hair and Cadillacs

I had a light-bulb moment yesterday during a closing - yep a closing - that word has not been spoken alot lately - good news is, real estate is still selling - but I digress...

Here is some background information:

The process was second nature to me, needless to say, things come up during closings that are unforeseen - bottomline, I leave it to the legal professionals to work it out. However, my clients were uncomfortable with the nature in which documents were shuffled, stacked, signed, faxed etc with little or no explanation as to exactly what needed to be read, signed, explained etc. "Just Sign Here."


Unfortunately my buyers' attorney was not present during the closing and hence had to explain the significance of each document - what to sign and where to sign etc via the telephone ... My buyers had a less than ideal experience with the seller's attorney - she was extremely unprofessional and condescending to my clients with her terse explanation of why there was a delay from the seller's side in providing a clear and merchantible title. In addition to the mortgage, there was a lien on title which needed to be removed prior to transferring the title to my buyers.

During the laborious process of signing documents, the closer presented my client with a disclosure form, required by HUD to inform my client that that seller's attorney was an agent of the title company. As per Federal Law (RESPA) requirements, the disclosure informed them that the seller's attorney would be paid a referral fee for referring the closing to their title company.

Perhaps it would not have been an issue had there been a - hmmm - a more pleasant exchange - between my client and the seller's attorney prior to the presentation of the document. My clients questioned the validity of the referral - needless to say, they didn't feel she deserved it. My clients were not even aware of the fact that there was a financial benefit derived by the attorney simply by selecting a title company - and of course the signed document, while in full compliance, required a signature of acknowledgement that a referral was paid - somewhat after the fact.

To be clear, I don't fault attorneys in any way for deriving referral fees from title companies. I often pride myself on how I try to educate my clients thru out the process, trying to be as informative and provide as much information regarding disclosure as possible - however, it simply dawned on me that while this disclosure is relatively insignificant, it highlights the fact that consumers simply don't know what they don't know.

What even prompted this entry was the reading of article related to a study that questions the true effectiveness of RESPA, perhaps allowing the states to better regulate the settlement services.

Laws do not equate to better education or necessarily to better disclosure. Regardless of federal and state laws designed to protect consumers, I as an agent cannot minimize what is significant or insignificant as it relates to disclosing information. Consumer education regarding the purchase and sale of real estate is so critical, yet some many of us as real estate professionals fail to provide in-depth education of the process. Again, what was second nature should have been more thoroughly explained.

Perhaps the best way to leverage new technologies for real estate would be best leveraged in education regarding the PROCESS of buying and selling real estate and not on FINDING property - or maybe combine the two. Hmmm - now that sounds like an idea.