In my last post, I wrote about how the sales profession might look in the future. But how did it look in the past? This is an excerpt from a paper I wrote on the role of technology in CRE on the industry’s roots (apologies for the academic tone…).
“In no other part of the civilized world is land made such an article of commerce, and of such incessant circulation.”
James Kent on American land use in “Commentaries on American Law 438” published in 1830
Land wasn’t always an article of commerce as described by Kent. For centuries across Europe, land was an entity whose conveyance and use was governed by common laws concerned with the order of inheritance, alienation and protection from creditors. As a British possession, the American Colonies followed suit.
But the British Debt Recovery Act of 1732 altered this substantially, if not inadvertently, by allowing for the treatment of real property to be the same as chattel/personal property. Essentially, this gave debtors the right to seize not only personal property but land to recover costs. The British saw this solely as an additional means of debt repayment. But in the Colonies, where land was abundant, it was seen an opportunity to use land as a substitute for money, i.e., an article of commerce.
While there was plenty of handshakes agreements, lawyers were eventually the choice of sellers and buyers to record or transfer property title. The agent role evolved in order to find willing buyers for willing sellers. (To this day, real estate agents cannot perform the functions of a lawyer in real property transactions.)
Early real estate agents tended to be the people in town who knew everything and everyone. A fountain of local information they were paid in favors or fees to bring parties together. Unorganized and often acting independently, they could also be unscrupulous in their dealings.
Around the turn of the 20th century the real estate industry of today emerged when the National Association of Real Estate Exchanges (1908 – now known as NAR) and real estate brokerage firms such as Cushman & Wakefield (1917) were born. Affiliation with these organizations inferred a higher level of ethics and service by their agents or members. Vouching for the honesty of their agents, brokerages and professional groups like these were meant to separate the wheat from the chaff.
By the 1930’s most state laws were written or appended to require that anyone who assisted in the transfer of real estate was licensed or registered with the state. The title insurance industry quickly followed in order to protect buyers and ensure more accurate legal recordings including the encumbrances, liens, restrictions, etc… that could be attached to land.
One of those liens – loans specific to purchase of real property (mortgages) – became more commonplace. Turning the British Debt Relief Act on its head, land was not only an instrument for debt repayment but a way to incur debt itself.
Extensive relationships and local knowledge have for years been the core services that real estate agents provide. Those services have been expanded to include consultation, marketing and information services all in the pursuit of connecting buyers and sellers. Additionally, numerous areas of specialization have evolved due to diversity of product, increased competition and client demand. It is these individuals who contribute to a world-wide industry handling assets in the trillions and accounting for over 50 percent of developed economies’ net worth.
Public Domain image via Wikimedia Commons