The digital age has profoundly impacted the way real estate attorneys and real estate brokers do business. For example, in the case of my real estate law practice, I recently represented the seller in connection with the sale of a shopping center. The property, the title company and the seller’s attorney (i.e., me) were located in Texas, the seller was in Arizona, the buyer was in New York City and the buyer’s attorney was in Atlanta, Georgia. We used email or ftp sites to transmit and review title commitments and surveys and to send drafts of conveyance documents and closing statements back and forth until closing. The closing was done by the title company via Federal Express. Current federal legislation, the Digital Signatures in Global and National Commerce Act (E-Sign), will allow even the closing to take place electronically, and Texas title companies are beginning to move in this direction. However, despite the ease and swiftness of the Internet, nothing, in my opinion, can replace that personal connection between an attorney and their client, and the trust, professionalism and camaraderie that flows from that relationship.
Real estate brokers have also realized great efficiencies in using the Internet as part of their service to their clients. First, of course, they use the Multiple Listing Service to list and identify properties for clients, and they use email to keep in touch with often far-flung clients. However, as in the case of real estate lawyers, there are limits. A recent news story illustrates these limits.
A Newsday story by James Bernstein chronicled the demise of Foxtons, a New Jersey based residential broker. Based on Mr. Bernstein’s story and other news reports, it appears that Foxtons entered the brokerage market in the New York City/New Jersey area in a big way in 1999, introducing themselves with an expensive advertising campaign. They used Internet listings and a paid staff to sell property, instead of commission-based brokers or agents. They paid commissions to buyers’ brokers (according to Bethany Marten with the Home Buyer’s Resource Center, quoted in Newsday) of only 1 to 2%, compared with the somewhat standard commission of 6%. Once a house was listed with Foxtons, while it was entered into the Foxtons database on the Internet, Foxtons clients complained that there was little or no personal contact with the staff, and that the house they were trying to sell was not even shown to prospective buyers. There were reports that buyers’ brokers did not like to show houses listed with Foxtons to their clients, because the commission was such a pittance.
I have worked with many real estate brokers over the years, and there are many good ones out there. A good real estate broker is invaluable in buying or selling either commercial or residential real estate. A good broker assists their client with proper pricing, with the best timing for the sale, with packaging the property so it will bring the best return, and with addressing buyers’ concerns. On the buyer’s side, a good broker helps a client not only find the property, but can assist with appraisers, inspectors, engineers and financing. I have bought and sold many properties of my own over the years, and even though Texas law allows me to act as a broker for myself or for a client, I do not. In fact, I have used a broker each time, not only because they are an invaluable partner in any transaction, but also because I can count on them to be objective.
At least one New Jersey broker, James Boyer, on his blog at Real Estate Webmasters, opines that the demise of Foxtons won’t have much impact on the local market. He notes that he has watched a majority of Foxtons listings expire without a sale. The Foxtons experience may be a lesson that clients of real estate brokers, like clients of real estate attorneys, expect and need that personal relationship with their professional. That relationship pays off, and is worth paying for!