Satori Alliance | Financial Counseling | Real Estate Investment Products | Financial Guidance Seminars

I’m seeing a perfect storm threatening the real estate industry that I’ve been part of for thirty+ years. It’s not a pretty sight. Like an ominous weather pattern, you can see it swirling and still not be able to do anything about it.

The three elements of this storm: regulations, expectations, and retirement.

Regulations. Over the last few years, even for a qualified prospect, entering into a buying or refinancing deal is like having a second job that lasts anywhere from three to six months. Pulling together the documentation for buying or refinancing has always been a challenge, but it’s worse now. Lenders are demanding more documentation than ever before. At the same time, new regulations are coming faster than most people can keep up with. That usually means even more documentation.

At the same time, the government has imposed rules about appraisals that muck up the process. For instance, mortgage brokers can no longer communicate with appraisers. That increases the amount of back-and-forth communication. The more people that are involved, the more chance for slippage and miscommunication.

Expectations. To buyers, this looks like incompetence. Many of them have expectations that buying will be easy, especially as the economy improves. Having researched as much as they can on the Internet — not always a reliable source of information — they’re ready to shop around for real estate agents and mortgage brokers. So when they’re asked for even more documentation on an ongoing basis, they get frustrated by the pace of the process and frequently walk away.

As a result, the professionals are constantly afraid of losing clients over events they can’t control. That changes the dynamic of the relationship in a negative way, because the agents have to develop five times as many prospects in order to get a single sale. This stretches their workload even more, potentially causing more delays.

Retirement. The final piece of the storm is retirement. The real estate and mortgage professionals who got into the postwar real-estate boom have already retired, and others who came in when the industry was flush in the 1950s and 1960s are increasingly thinking about it. That means the industry faces an increasing loss of professionals with patience and perspective.

What can buyers and investors do? They can ratchet down their expectations. Be more patient and educated about the process. Go ahead and research information on the Internet, but develop an intelligent consensus about data (such as what a house is worth) from multiple sites. Take the time to find a professional whom you know and feel comfortable with. Competence and experience are the best umbrella in a storm as bad as this.