Are So-Called ‘Commodity Products’ Really All Created Equal?

By | September 6, 2016

comparing commodity products

For those of us whose business involves providing products or services that some may consider to be the same regardless of who it’s purchased from, is this actually the case?

For example are all transactional real estate attorney’s the same because, after all, at the end of the day a deal will typically close?

How about nuts and bolts manufacturers, banks, life insurance providers or even airlines?

Do consumers have a hard time differentiating between all of the firms offering these products, generally considering one the same as another and simply making a choice by price?

If that is the case and using price alone as our guide, when a real estate attorney is asked to cut their fee because a potential client has found someone online who’s cheaper, should they accommodate the request?

Or, when one is considering making what could be the largest financial transactions of their life, instead of price should a decision be made based on the quality and reputation of the provider?

Should a professional really be ‘shopped’ for as if the consumer was buying a television? Of course not!

Or as another example, in the realm of title insurance where the premium does not vary from firm to firm (although other fees most definitely do), should potential buyers and refinancers rely solely on others to make the decision concerning the firm used to provide the policy?

In-other-words with clear title so critical, is the decision of the firm that’s used to do the work behind the title insurance policy irrelevant? Again, of course not! (Title Insurance: Always Compare Apples To Apples! (Chart))

But why this topic, this morning?

Because of an excellent email I received from Warren Goldberg of Mortgage Wealth Advisor’s that concerned how shopping for a mortgage should not be considered to be the same as buying an electronic device on Amazon.com.

As Simple as a Rocket? I Think Not.

There are people who would like you to believe that all products and services should be as easy to choose as a pack of chewing gum. In fact, Senator Elizabeth Warren notoriously once said that obtaining a mortgage should be as simple as buying a box of cereal.

But is that truly realistic? Can everything be made so simple that trusted professionals become obsolete?

Consider the following:

  • Why hire an estate planning attorney when you can obtain the forms for a Last Will and Testament online? Simply fill in the blanks and save a bundle! Right?
    Many thought this to be true…until their heirs spent tens of thousands of dollars on legal fees settling their estates because of the problems created by their short-sighted relatives.
  • Why hire a real estate attorney to buy or sell your home when technically you can represent yourself! Answer some “simple” questions while filling out a form Contract and you’ve eliminated a complication from your life. Right? Ask some home buyers who purchased properties with illegal structures or improvements, with leaking underground oil tanks; or speak with homeowners who purchased without knowing they needed a title search. An ounce of prevention is worth a pound of cure. These buyers found that the “cure” cost them tens of thousands of dollars.
  • Can you buy life insurance online by answering a bunch of “simple” questions? Certainly!
    Did you read and do you understand how the policy works, when you’re covered, and when you’re not? Is the policy appropriate for you now and will it still be in the future?
    Want to know how many of these people regret not working with a professional? Lots.

Online tools take the professional out of the equation by trying to minimize the transaction into simply shopping for a commodity. However, history has proven that treating financial products and services like a commodity is downright dangerous. And a mortgage is absolutely a financial instrument.

Warren Goldberg is the President of Mortgage Wealth Advisors, Inc., a Certified Mortgage Planning Specialist®, and a published author. His interviews and presentations include Blog-Talk Radio, Newsday, the Daily News, the Long Island Herald, and even the Nassau County Bar Association. His mortgage Industry newsletter is published bi-weekly and is read by thousands of subscribers.

Michael Haltman is President of Hallmark Abstract Service in New York and a Director of Heroes To Heroes Foundation.

He can be reached at mhaltman@hallmarkabstractllc.com or at 516.741.4723.

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