If It Is So Important, How Come I Know So Little About You?

Real estate agents will tell you, and rightly so, that for most people, selling their home is the biggest dollar transaction in which they will ever engage. And it would follow that choosing a partner in that transaction (i.e., the real estate agent) is the most important decision they can make in preparation for that transaction. If all that is true, why is it we know so little about real estate agents?

Jigsaw

Real estate agents will be quick to point out that there are all kinds of information available about them on their web sites, and that is true. But all that information is subjective and controlled. If there is something the agent does not want you to know about them, you can be sure they will do their best to hide it from you. For example, suppose the agent does a particularly poor job with one of their clients. Do you think that client’s testimonial will be prominently posted on their web site? Doubtful.

It is true that the real estate intermediaries like Zillow and Redfin post all customer feedback they receive for agents (as far as we know), resulting in a more comprehensive tally in their “star” ratings. But these too are highly subjective ratings. Real estate agents who are likable and give good service are more apt to get the five star ratings. There is certainly nothing wrong with giving good service and being likeable. (If I were a real estate agent, they would be the two core tenets of my business.) But if you had a choice between a likable agent that got you one price for your home, and an old curmudgeon of an agent that got you an additional $10,000 for your home, who would choose? I know which one I would choose. After all, I am not marrying them, I am just paying them to sell my home.

The problem is we know almost nothing objective about real estate agents, especially about their performance. Which makes it particularly difficult to assess their capabilities in a quantifiable and objective way. Without such information, agents who list the most homes become the “Top” agents, not the ones who sell fewer homes but get top dollar—we have no way of knowing that.

Here is the information I would like to see made available to consumers to help them in choosing an agent. This information should come directly off the local MLS, by DRE license number, to ensure its accuracy. The information should be for the preceding twelve months:

  1. Number of homes sold
  2. Average sale price
  3. Average percentage of sale price to list price
  4. Average number of days on the market

These four data sets may be helpful if you had it for just one agent, but what would make it really powerful is if you had it for every agent. Imagine having this information for every agent in just a single office. You might find that the “Top” agent averages 94% of sale price to list price, but some other agent in the office, who sells fewer homes, gets their clients 98% of the listing price. Now who should be the Top agent? The ironic thing is, this type of information would actually benefit the agents that help their clients the most. But more importantly, it would also serve as a check and balance against the inherent conflict of interest in the industry. How hard would a real estate agent work to get you top dollar when they know their quantifiable results are going to be available for everyone to see, which will directly impact their future business?

As things stand now, with the all-or-nothing commission structure in place, agents are more concerned with getting the home sold than with getting top dollar. But if the above mentioned “report card” were available for every agent, the conflict of interest would be reduced, and agents would be forced to strike a balance between getting the home sold and getting top dollar. And as sellers, that is all we can ask for: get the interest of the agent more in line with the interest of the seller.

 

To learn how to keep more or your hard-earned equity when you sell your home, check out The Intelligent Home Seller eBook and The Intelligent Home Seller eCourse.

Three Ways to Protect Yourself from a Lousy Real Estate Agent

Hang around the real estate industry long enough and you are bound to hear horror stories about lousy real estate agents…from other real estate agents. You will hear about bad advice, laziness and violations of their code of conduct. And for sure, they are out there. Why are there so many lousy real estate agents? The problem can be traced back to a single issue: low barriers to entry. It just does not take very much to be able to call yourself a real estate agent.

Blue Barrier

These low barriers to entry have two major consequences. First, there is no minimum level of experience or internship required for real estate agents, like there are for other home service professionals such as plumbers and electricians. Consequently, there are plenty of real estate agents running around trying to “fake it till the make it.” The other consequence of low barriers to entry is that there are just too many damn real estate agents.

According to the State Federation of Medical Boards there are 878,000 doctors in the US. And according to the National Association of Realtors™, there are 997,000 Realtors in the US.  That means that there are more Realtors than doctors, even though there are a lot more sick people than there are home owners.  This over abundance of agents almost guarantees the existence of some pretty marginal performers.

So, when it comes time to selling your home, how do you guard against a lousy real estate agent? There are three things you can do to protect yourself.

Due Diligence. The first thing you must do, even before you meet a potential agent face to face, is to conduct due diligence on them. At the very least you should head over to the Department of Real Estate (DRE) website for your state and conduct a search based on the agent’s license number. This will tell you if there are any complaints registered against them. Another thing you can do is to view their current listings. How do they look? Would you want to buy any of those homes? If the photos of the home are unappealing, then the agent probably is too.

Interview. The second thing you must before you settle on an agent is to interview them. You should have a list of specific questions to ask them to see how they respond to challenging real estate situations. What is even better is to ask the same questions to multiple agents and compare their answers. If their answers to your questions do not put your mind at ease, it is probably wise to avoid using that agent.

Education. The final line of defense against a lousy agent is for you to learn everything you can about the home sales process. You should know about staging, pricing and marketing. The more you know about these subjects, the less chance there is that you will get railroaded into a bad decision by a lousy agent. Realistically, how can you expect to identify a lousy agent if you are in the dark about real estate?

There you have it: the causes, effects and solutions to lousy real estate agents. Do not leave your choice of agent to chance.

To learn how ReaListing helps home sellers avoid lousy real estate agents, click here.

To learn how to keep more or your hard-earned equity when you sell your home, check out The Intelligent Home Seller eBook and The Intelligent Home Seller eCourse.