Real Estate Agents: Finding the Right Match in a Tough Market
Referral? Yard signs? Newspaper or magazine? Google?
Currently, you really can't.
As a result, unqualified, underqualified or improperly qualified agents often end up in a transaction with the wrong consumer.
A referral from a friend or family member seems like a logical path, yet more often than not, the consumer doing the referring has a completely different set of needs than the person receiving the referral. According to the National Association of Realtors' 2009 Profile of Home Buyers and Sellers, only 10 percent of buyers and 22 percent of sellers used the same real estate professional in subsequent transactions. So at least 78 percent of consumers don't use the same real estate professional they very possibly recommended. Actions speak louder than words.
Contacting an agent from a yard sign, print media or web search is rooted in advertising and marketing, not performance or skill. You could interview agents you found on Google or whose names you saw on yard signs, however you're still depending on either their unverified word or references that they handpick. For the business of real estate sales to evolve, consumers need access to an agent's performance-based metrics which are measured against local market averages.
As mentioned in the opening article, there are very few industries in which someone just out of school can demand as much for their services as someone who has a 20-year track record. This is an expensive, slippery problem for the greater real estate industry and consumers alike.
Let me explain: Let's say I'm a seller with a $400,000 house to market in a certain subdivision in Anywhere, USA. I'm referred to or personally locate five agents to potentially sell my home. During the interviews, each agent states that he or she is a "local expert" who can sell my home for top dollar and fast. How do I verify such claims? The contract put in front of me says that I'm going to authorize a 5 percent commission, $20,000 in my case, to sell my home.
For that kind of coin, I want to know the answers to four questions:
- How many homes the agent has sold like mine in regard to style, price range, days on market and relative to the immediate area my home is located. (Hyperlocal experience).
- How many photos and open houses the agent averages per home listed. (Basic marketing efforts)
- How many homes the broker has sold in the past 2 years. (Recent experience).
- What the agent's average sales price was vs. the initial listing price. (Local market economics expertise)
I want to know all of the above about my five prospective real estate professionals in relation to local market averages. I understand that real estate is local and there is a bell curve. (Provisions for REO/distressed property could easily be made, since these property types typically influence performance metrics. There are many other aspects that could be considered here as well, such as client and peer recommendations.)
With the right access I, Joe Homeseller, could objectively research and sort which agent(s) were most qualified to sell my home, according to my subjective needs. I could instantly rule out, say, three of my five prospects since they evidently can't market their way out of a wet paper bag, have sold one home in the past two years, or routinely overprice their listings by 10 percent. The last 2 look good on paper, so I visit their sites, read their blogs and personally interview them again to see which is a better personality fit. Agent No. 3 turns out to be the winner. I trust my selection because it was made using performance and experience metrics that were important to me.
Sounds reasonable, except that accurately verifying my four questions is a process that's fragmented, at best, and simply not possible, at worst. Yet it could be done. The performance-based statistics of a given agent (or agent team) are not public information, but they do exist (in excess) within the vaults of the local Multiple Listing Service and local agent association databases.
Unfortunately the architecture of local real estate associations and MLS groups prohibits this type of agent information from being made widely accessible.
Why? Money and politics.
However, if agent information was openly searchable by a variety of statistical performance measures, and if straight empirical data and the personal identity was revealed only after a consumer paid for the privilege -- now you have a tangible, valuable product. Think Carfax, or even eHarmony for real estate agents.
Now this is just me, but I would pay $20, $30, or even $50 to objectively evaluate (that is, run a background check) on a professional who stands to shepherd me through one of (if not the largest) financial transactions of my life. Further, I would pay a premium for an agent who scored well in the areas that mattered most to me.
Transparent agent analysis is a business innovation that the real estate sales industry needs to raise the bar in the eyes of the consumer, and it will foster real cost innovations. Reward the top-producing agents and motivate the underperformers to step up specific aspects of their game.
There have been incremental advances on this front, as evidenced by the Houston Association of Realtors' brave foray into addressing this historically taboo subject with their Realtor Match product. The evolution must continue.
Next: Establishing a graduating class system inside the National and Local Association of Realtors.
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