"Know Your Customer" Rule -- Real Estate Version

Googling (Facebooking? Zillow-ing?)

Your Buyer/Seller

Financial institutions are subject to something called the "Know Your Customer" rule, to prevent identity theft fraud, money laundering and terrorist financing.

I'm starting to think that real estate has something equivalent, called the "Know Your Buyer (or Seller)" rule.

By that, I mean that I'm increasingly seeing clients "Google" -- not to mention "Facebook" (is that a verb yet?) -- their transaction counterparts to glean important, personal tidbits.

Like, what kind of job do they have?

Where are they from?

Where do they currently live -- and what's it worth?

I haven't encountered the following yet, but I'm sure it's just a matter of time: "They're only offering $X for my house!?! But he/she just made partner!!"

Misgivings -- and Misinformation

The trend is clearly accelerating, so it hardly matters that I have misgivings about it.

But I do -- two, in particular.

One. It feels voyeuristic and intrusive.

OK, it is voyeuristic and intrusive.

But I suppose that's precisely what's driving the exponential growth in social networking sites generally.

If you don't want your personal information out there, don't participate -- or, take steps to safeguard it.

Two. Publicly available information yields only a partial -- if not misleading -- picture of someone's finances.

As I've blogged before ("Taking Trulia for a Spin", "Automated Valuations on CyberHomes, Zillow, etc.), third party Web sites are notoriously unreliable when it comes to appraising homes.

They rely on stale tax data; don't know the interior of a home (floor plan, aesthetics, etc.); and are clueless about things like updates (or not), additions (or not), and local price trends.

Even if they were spot on, they still don't tell you what someone owes on their home -- or what they have in their bank account.

Plenty of people who look flush are actually maxed out, living on their credit cards; conversely, others without big jobs, homes, and cars have perfect credit scores and can borrow whatever they want. Or can pay cash.

Which is why, ultimately, all the personal info in the world matters much less than what a lender, vetting an actual Buyer, has to say.

For now, at least to a Realtor, the rest is just (occasionally titillating) noise.