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?
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:
- Number of homes sold
- Average sale price
- Average percentage of sale price to list price
- 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.