In the run-up to the housing bust, many buffered doom and gloom predictions with the observation that a downturn would likely run real estate's boom babies — the horde of inexperienced, under qualified agents that entered the business in recent years — straight out of town.
The real pros would be left. Fewer Realtors would do more transactions. Median Realtor income would rise and the industry would no longer suffer the embarrassment of knuckleheads.
As it turns out, this has not happened. As of October 1, NAR membership has declined just 8.42% year over year. Like dinner guests that won't leave, many under qualified agents remain at real estate's table, picking at crumbs.
The reasons why aren't hard to figure. The cost to maintain one's license and association memberships are relatively small. The absence of meaningful standards for entry into the industry is matched by a lack of consequences for under performance once inside. Weak agents may be struggling, but they'll hang around to pick up the occasional fluke or friends and family deal.
Moreover, because competitors also cooperate on transactions on real estate, there's little peer pressure on bad agents. That bad agent may just deliver Uncle Marty as a much needed buyer. And brokers often have little incentive to jettison these folks given their relatively attractive splits.
This is all understandable. Times are tough. But those healthy enough to escape the closing-to-closing view can make a leap forward.
Let me explain:
Among the many interesting insights to be found in the California Association of REALTORS 2008 Survey of Home Buyers are two findings that seem at odds at first glance, but may offer a glimmer of hope.
First, only 20% of "Internet buyers" (an increasingly meaningless distinction marking buyers who use the Internet in the real estate process) picked their agent because he or she was most qualified. 44% chose their agent because he or she was perceived to be the most responsive.
Second, buyer satisfaction with their agent dropped significantly, falling from from 4.4 to 3.3 on a 5-point scale from 2007 to 2008. The number one reason cited for dissatisfaction was a perceived lack of aggressive negotiation by the agent. 80% of dissatisfied respondents cited this complaint.
There are many conclusions that can be drawn from this, but here's mine: To win a consumer, you need to answer your email; to make them happy in this market, you actually have to know what you're doing.
For several years, in many markets, moving a listing was a two-week stroll to a big payday. Offer strategy was reduced to "Offer as much as you possibly can." We all know those days are over. For all you agents and brokers out there capable of hitting a higher standard, now's the time to move.
That means marketing. If you're a broker and willing to cut loose the weak agents in your organization you may lose a few deals in the short term, but will have the freedom to leverage the experience and skill of your best agents in a effective campaign. Many companies claim "The best agents," but what if you could prove it? Make bankable statements of about your hiring standards? Compare the average years of experience and productivity of your agents versus that of your competitors'? Leverage social media to show this expertise?
Quality can win in this market. If it's for real.
I may be asking too much here. That's fine. Forget about me. Listen to the customer. They're asking too.
– Brian Boero
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I'm a REALTOR in SoCAL and I'm seeing agents "drop like flies". More than half of the agents that I know have full or part time jobs outside of real estate. Most do one or no transactions each year (these folks never did much business even in a boom market).
Just because they keep their license and pay their dues doesn't mean they're doing business. The professional and tough will survive and thrive…they one hit wonders will hang on with a thread. Check the NAR/CAR stats in six more months and see who is left. How long will agents pay dues when there is no ROI?
I love this blog and always look forward to reading it! Have any stats or insights on how and why sellers choose their listing agent these days?
The decision to hire a real estate agent should most definitely be about quality. The problem is– most folks do not know how to evaluate quality. I suggest this game of 20 questions:
http://tinyurl.com/6aygee
I actually scared someone (hey, and it's around Halloween too!) because I have a online chat feature gadget on my homepage. Someone chimed in and was ready to type their question, and I simply typed,"How can I help you." All of a sudden across my screen came; "GUEST HAS LEFT." This of course is an extreme example. Those Realtors who survive our economy and weather the storms, will profit by remaining professional, educating the "big kids" and responding quickly to questions and also criticisms. Also, I don't know about some markets, but a lot of Realtors here in the Cedar Rapids area are what we would consider "part time." They have a spouse or significant other who brings in the baseline income, so they can sell the occasional house or two each year!
It will be interesting to see what the survey results reveal after January. I practice in The Woodlands, Texas and belong to HAR. The email for 09' Dues just hit agent email boxes. While the cost of dues is relatively low $300 range, I suspect many part-timers, posers and dreamers will freeze and excuse themselves from the business. I see and hear it beginning to happen in our market.
The brokerages that have a business model based on renting desks and charing fee-fees have zero intrest in culling the heard…doesn't matter if an agent sells 1 home or year or a 100, the broker makes the same fees. Culling the part-timers would be like clamping off their own fee/income faucet.
I'm a sales manager for a commission split company (Prudential Gary Greene, Realtors) Our company and myself get paid when the agents get paid, the more they sell and no sells = no income, the better job they do the better we all do, in the present and the future. We are having discussions and business planning/strategic sessions with our team members. Our focus centers on action, commitment and service orientation. Today's market is extra-ordinary, if you're not responding with extra-ordinary efforts and actions…you're screwed.
I agree with what you are saying but at the same time there are many excellent agents, many my competitors, that will not be able to ride this storm. The truth is the country club real estate brokers; you know those that “love looking at houses” will survive because they do not have to earn a living selling real estate. I will miss doing business with these fine agents!
Here are the hours required in the state of Texas to perform certain occupations. The manicurist must have about 3 times the hours as a real estate agent. I wonder why we have issues about our image as realtors?
Doctor 11 years
Lawyer 7 years
Barber 1500 hours
Manicurist 600 hours
Real Estate 210 hours
David Winans
David Winans GMAC Real Estate
Dallas/Fort Worth Texas
http://www.MetroTex.org
Marc and Brian have such a great perspective on so many facets of this industry. This is another one that I agree with completely. But I would guess the audience here is not one of decision makers who will actually make changes where they need to be made. The people on the frontlines can most clearly see the wisdom of this, but we are not the ones who affect change. And those who do are probably not looking too far outside their own companies to seek out a point of view that challenges "the way it's always been done." Nevertheless, yours is a great voice for the change the real estate industry needs.
Marc and Brian,
Thanks for writing this I think your points are highly valid. We need to cull the week or all shall suffer the lag.
I was in a Remax office the other day training on realPING. The topic turned to answering Email lead inquiries- One agent was bitching about the cold leads the broker was emailing her.. She was not able to convert OR talk with 7 out of 7 leads.. One lead said I am interested in moving next month to… The agent actually said she always gets back to leads within 24 hours… AND she has a blackberry– but no data plan… After hearing this the Broker now has me building a new tool for hos agents.. stay tuned… Hey Marc- I did not see you at the NAR Convention?
I'm teaching a blog class today. I don't do this very often, but every time I do it seems the #1 question from the agent audience is "What if I am wrong?"
People wonder why so many attend a class on blogging, but few leave and actually do it. I suggest they take a simple topic like Earnest Money. Five people say "but what if what I write is wrong?"
It amazes me every time, that people are afraid to be wrong in a blog post, and yet not afraid to be wrong in their everyday practice of real estate. I usually say, if you're wrong about Earnest Money, I fear for your clients. If the reason you can't blog is because you don't know enough about what you do day in and day out…not being able to blog is the least of your problems.
Brokers who are afraid of agents blogging, are putting their head in the sand. Better to read the blog posts of your agents, so you can target which classes to have for them. If they are wrong on anything, better that you the Broker can see that in a blog post…no?
Is it worse for them to get it wrong in a blog post? Or worse to have them applying the knowledge incorrectly for even one client?
@Ardell
That is a twisted but telling reason for not blogging. My god. Love your idea about brokers scanning agent blogs to surface the under qualified.
Brian,
Why do you think so many agent bloggers are posting about the neighborhood restaurant or park? Don't hire an agent because they gave you gr8 restaurant reviews