I recently re-read this blog post: http://www.matthewferrara.com/next-generation/measureperformance, by Matthew Ferrara entitled, "How to Measure REALTOR Performance".

I am a big fan of what Matt has to say; I generally agree with his commentary and regularly recommend him to others.

I have attempted the following précis of this post to focus on one of Matt's main points.

According to management guru, Peter Drucker, "defining what the task is and what it should be" is the difficulty in determining what exactly to measure.

Applied to real estate, the task simplified is to fulfill the customers goals.  So what precisely is the customer expecting to achieve in a real estate transaction?

The goal is not to list, but to sell. 

So why do so many listed homes expire and not sell?  For the Seller this question is at the root of what measurement is most meaningful to them.

How effective is a REALTOR who has 100 listings in a year, 10 of which expire?  A 90% efficiency rate is hardly effective in my opinion, but I'll let you be the judge.

Is a REALTOR who has only 18 listings in a year and sells all but one, less effective? If the goal is to sell then this REALTOR with only a 5.6% failure rate is considerably more effective than our top listing REALTOR example.

In Matt's words, "It is wholly irrelevant to measure the number of ‘available listings' by a particular agent (or firm), unless we measure success by the number of listings taken". 

Unfortunately for the public, ‘listing volume' is a common way for defining successful REALTORS.  If the professional obligation of a REALTOR is in fact to work in the best interest of a client then perhaps we need to do some serious navel-gazing on how we define success.

The failure rate (of expired listings) is not a measurement commonly used in the real estate industry.  Now we must change this so we know how successful we are as individual REALTORS and as an industry in fulfilling customer expectations, and our professional obligations.

The task defined is to sell 100% of listings and all REALTORS should be measured against this standard if we are going to improve our professional perception.