Invasive Species, Cooking, Culture and Real Estate

March 2, 2023

John Mijac, Managing Broker
Long Realty Foothills Office

 

Baca Float #3 and Agency

I’m sure you agree we should offer tenant representation, right?  Before you stop laughing, let me add to your amusement: I know nothing about property management, but I want to tell you how to change it!  To double down, I think Property Management today is largely broken, difficult to do while remaining sane, and sometimes rife with fraud!  Not that anyone reading this is a fraudster, in fact, I admire any property manager who is able to make a living doing this job and still keep their ethics intact! 

If you’ve taken offense, I’m not surprised, but let me tell you a little story.

Back in 1853 the US bought a bunch of land from Mexico…you know, the Gadsden Purchase.  A series of conflicting land claims and grants from Spain, Mexico and the US resulted, some of which went all the way to the Supreme Court.  One involved an odd slice of land called the Baca Float # 3, named after a descent of the Conquistador, Cabeza de Vaca.  That parcel went through so many claims, frauds, and legal battles you would swear it was cursed. The Baca Float passed through many hands until it was eventually sold to the Gulf American Corporation (GAC), that company famous for selling underwater lots in Florida.  The entire story is fascinating, stranger than fiction, and worth reading about.  I can’t write that book, just these thousand words, so I’ve included various source materials below for your pleasure.  

What does GAC and the Baca Float #3 have to do with Property management?  Nothing, or perhaps everything…if we can learn a lesson about the ultimate results of single representation and human greed. You might not know that Real Estate sales did not have any real buyer representation in the 70s.  Arizona was known a Caveat Emptor state…Buyers Beware!  Unfortunately, few buyers realized that was true.  In 1983, a Federal Trade Commission study revealed that more than 72 percent of home buyers thought the Seller’s agent represented them.  

At the same time, in the early 70’s, the Gulf American Corporation promoted that land they had bought (the Baba Float #3, now called Rio Rico and the Empire Ranch Community) with very aggressive marketing efforts, including the distribution of millions of “vacation tickets” to the Tucson-Nogales area.  GAC flew people in through its subsidiary Modern Air, and sold the customers, as they had in Florida, on lots by switching out the lots they had seen with others which were land-locked and without access or utilities. Here is an image of the so-called planned retirement community that never came to be.

The sales tactics were so egregious, eventually HUD stepped in and required GAC to repay many buyers for their deposits and down payments. I believe we, in the Real Estate industry, realized we had made an error because of these sales and other land fraud sales in Northern Arizona, and so began to look at our single representation model.  I find it no coincidence that the very first Exclusive Buyer Agency firm in America was opened in Arizona in 1985 (Ridgely Evers’ America First Home Store).   More and more, REALTORS understand that a meeting of the minds is easier to achieve with a cooperative attitude.  

Finally, here is the point.  Many Property Management brokerages advertise attractive listings which are not available.  Also, most all Property Managers have their own in-house pocket listings, and do not have access to any other brokers’ inventory.   This has been a standard of practice in the industry for years.  Agents know if they get the prospective tenant in the door, the fact that the property the customer came for is not available is not an issue.  Agents also know the few bits of inventory the broker carries will only create a sense of urgency for the customer to sign an agreement and take what they do not really want.  This is very similar to the GAC model, and I argue it does not serve the prospective tenant, the Landlord, or the agent in the long run.  Sooner or later the government will step in.  Don’t follow our path! Get ahead of the lawsuits and government intervention. Having said this, I do understand the roadblocks: who will pay for Tenant representation (as the customary $50 won’t do), and…what will a Tenant Representative’s duties be?  How can brokerages share their listings and have someone else rent them?

Split the duties, split the money, share the listings, share the business.  If you cooperate and compensate, business will increase, and you will do more of it.  Yes, some brokers will fall out, but that is true in every business.  Property managers could have tenant agents and landlord agents. Tenant agents should present ready, willing, and able tenants, with credit ready for the unit they want to rent, and with their finances checked out.  They should be the ones to call when the tenant makes a mess, doesn’t pay or bolts.  I know this sounds like a loss of money (and control) as it did to us back in the 70s. Accomplish this and the result would be that property management companies would begin to share their listings rather than hoard them, they would have a broader base to serve their tenants, and more tenants to rent their landlord’s properties. Business would flow much more rapidly and easily.  Tenants would be happier.  Landlords would be happier.  Property managers would be less stressed…and would make more money, not less, if they are one who can adapt. So, take a lesson from the Baca Float #3 and the GAC corporation…don’t screw things up so badly the government has to fix it. 

John Mijac, Managing Broker, Long Realty Foothills
Article citations can be viewed at asreb.com/journal/articles

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