Real estate business makes paradigm shift

The very nature of the business, and the skills required to manage it, have changed dramatically, according to real estate Broker Rollie Langston, of ReMax House of Brokers.

A Springfield native and 34-year real estate industry veteran, Langston served as president of the Great Springfield Board of Realtors in 1980.

In those days, mortgage rates were running around 15 percent, and even at that price money was generally unavailable.

Now, with mortgage rates at sustained historic lows – currently in the 5 percent range – Realtors are enjoying unprecedented success.

And unprecedented numbers of people are being drawn to the industry. As of April 2005, the Greater Springfield Board of Realtors had a record 2,200 members, up from a norm of about 1,500 in the last few years.

Big changes

For most Realtors, the biggest shift in the business in the last 25 years is technology.

“I started before we had fax machines,” said Sabina Frank, broker/manager of the Nixa office of Carol Jones, Realtors, who entered the business in 1985. Now fax, e-mail and cell-phone technology are necessities.

And the Internet has created more knowledgeable buyers.

“Buyers walk in from other parts of the country and they’re already sold on the area because they’ve gotten on the computer and have checked out our school system,” Frank said.

While the Internet makes buyers more knowledgeable, they are also more independent.

“It used to be when people would call you for a listing and it didn’t work for them, you’d ask, ‘Can I help you?’ and you’d get those people – always,” said Elaine Dozier, a Realtor at Murney Associates.

Now buyers get information online and are reluctant to commit to a particular agent, said Dozier, who celebrated 21 years in the industry in July.

Not just sales

Twenty-five years ago, a person with property to sell hired a Realtor to find a buyer. The equation isn’t that simple anymore. With the advent of buyer agency in the mid-1990s, that all changed.

Finding a buyer isn’t the challenge.

“We don’t have any problem finding people who want to live in shiny new houses” Langston said. “The problem is being able to manage all the variables.”

The Realtor, no longer simply a commissioned salesperson, must help their client, the buyer, navigate everything from financing and forms to zoning and inspections.

Also, as people relocate from one area to another, transactions can pile up in a kind of domino effect.

“Sometimes people will go under contract to buy a house here, and it’s dependent on the house in Kansas City selling, which is dependent on one in Salt Lake selling,” Langston said. All those variables have to be managed.

The job is more complex, and so are real estate contracts.

“The positive side of that, however, is that we have literally thousands of transactions that occur with relatively few disputes and almost no litigation,” Langston said.

Demand, market shift

“There was a time 25 years ago when Springfield was the center of the universe for most of us. And many people moving here wanted to be in Springfield,” Langston said.

That’s no longer the case.

No longer dependent on Springfield for retail, restaurants or medical services, communities such as Nixa and Ozark have experienced explosive growth. And their new, up-to-date schools are a tremendous draw.

Few Realtors work exclusively in a single community anymore. Now they go all over the Springfield metropolitan statistical area, which includes Christian, Dallas, Greene, Polk and Webster counties. That’s also a function of buyer agency.

“We go where the buyer wants to go,” Frank said.

Dozier said she’s seeing a lot of people, particularly retirees, moving here from other parts of the country, and especially California.

The attraction is “cost of living and the price of a house here,” she said.

For example, a homeowner in California can sell a house for $300,000 or $400,000, move here and buy the same quality house in the $100,000 range and retire on the difference.

Langston said another attraction is safety.

“It’s safe environmentally; it’s safe from a crime and personal safety standpoint; and it’s safe economically. We still have relatively low taxes, relatively low cost of living and have the availability of relatively low cost housing -– though that is rapidly changing,” he said.

Future factors

A mix of factors will determine the fate of Springfield area home sales, chief among them affordability.

There are four components in affordability: land, labor, materials and regulatory costs.

Regulatory includes all the “soft costs” associated with permitting and building, including impact fees. As the cost of developed lots increases, so do home prices.

Demand also is reducing affordability. If demand continues to drive costs upward, “we will soon outstrip the ability of local people relying on local employment to afford the average house,” Langston said.

Dozier agreed. “It is going to be a problem. It’s going to keep a lot of people from being able to buy a home because we don’t have a whole lot of $50,000 homes.”

Quality of life is another issue. As pristine hillsides give way to residential development, pressure will increase to preserve and protect the natural features and resources that drew people here in the first place. “Not-in-my-backyard” backlash is a potential issue.

And while interest rates will continue to be a positive factor, possibly for several years, national circumstances could change that.

Of particular concern are accounting scandals related to Fannie Mae and Freddie Mac, the U.S. government sponsored enterprises that are the nation’s largest buyers of mortgages.

“I think that is a potential liability,” Langston said.