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Defining “success” in the real estate – or how not to choose a real estate agent

By
Real Estate Agent with Keller Williams NY Realty - 120 Bloomingdale Road #101, White Plains NY 10605

TeamworkSuccessIn surfing the net, I discovered an on-line version of an article by Ben Brody and Laura Gurfein that appeared in last months Westchester Magazine about the county’s “top” Realtors. The subtitle declared “In good times or bad, whether buying or selling, these are the agents you want on your side.”

Now, I have nothing against the Realtors who were chosen  as the finest agents in Westchester NY real estate. None at all.    it was fascinating to see how the authors chose to define “success.”  They used a simple unbiased metric  – the bottom line.  They defined success in terms of .sales volume in dollars.  The theory being – the bigger the sales volume the better the “track record.”  This kind of boggles my tiny mind.  In a twisted way it reflects the public antipathy to Realtors in general because it emphasizes that “success” is defined in dollar signs.

This got me thinking – how exactly should one define success in real estate?  How should these bottom line numbers like sales production and number of listings held factor into a home owners decision about who to sign a listing contract with?

Well, realistically, an agent has to achieve two goals.  Certainly, over time, the agent must be able to turn a profit or they will go out of business.  This is much harder to do than most people outside our industry think.  I have to make a living this way and turning a profit is absolutely essential or my bills don’t get paid.  But for all the delusions of real estate agents being “rich” without any effort, the failure rate is enormously high – north of 80% in most of the country (over 90% locally.)  So posting sales volume  is a major component of success.

But, what does this do for the client? The home seller or home buyer?  The article indicated that whether selling or buying – these agents were the best.  But by looking at sales volume only, the article missed the mark altogether.

1. Is this agent primarily a listing agent or a buyer’s agent?  If they have an even number of sales in both categories – fine.  But I looked at the sales history of a couple of these superstars. They were primarily listing agents and did relatively few sales as a buyer’s agent.

2. On the listing side, what is their success rate?  After all, an agent can make a bundle listing in volume. The percent of listings that actually sell is another matter.To that end I took a look a closer look at a “top agents” sales record for 2009.   I picked an agent on the list at random and found the following.

 

  • This agent’s 2009 figures were way off from 2008. It’s a tougher market in which to sell homes and their sales volume was down nearly 4-fold.  That’s quite a drop.  Granted Westchester home sales are well down from 2008.  Although this agent was working a niche which has been badly hit  in the market, it is still a stunning fall in volume over one year.
  • During 2009 the number of expireids/cancelleds was nearly equal to the number of actual sales.  So when a seller listed, they had about a 50% chance of getting their home sold.  A few of these properties were rented.  If you include those as successful then the seller had a 68% chance that his home would be either sold or rented by that agent.

 

Compare these stats with those of another agent that I selected.  This agent will probably  never appear in the “top 20″ in terms of volume. But their record speaks for itself.

  • In 2009, this agent actually increased production – showing that they could negotiated just as well under far more difficult circumstances.
  • Every single listing either was sold or rented.  The one expired was relisted immediately.  With this agent 88% of the listings sold, the other 12% were rented.

Which type agent would you rather have listing your home? The more successful earner, or the one that truly gets the job done for the vast majority of their clients?

Now there are more criteria for sure.  I did not measure days on market or final sales price vs. list price.  The point is that are many factors beyond market share and raw profits that define greatness in the real estate industry.  From the consumer’s perspective – sales volume should be the least of these.

To Search for Homes and for further information go to my website/blog with free home search at The Westchester View

I am always happy to answer your questions and you can speak to me directly on my moble phone: 914-374-5529.

 

© 2009 Ruthmarie G. Hicks http://thewestchesterview.com. All rights reserved. Original post link

Defining “success” in the real estate – or how not to choose a real estate agent

Ruthmarie Hicks
Keller Williams NY Realty - 120 Bloomingdale Road #101, White Plains NY 10605 - White Plains, NY

Hi Patricia, I agree...

Hi Tim, Many top producers do have both - high sales numbers and excellent service which results in repeat business.  My objection was using this is the prime criteria!  Crazy and very misleading.  I am not casting a cloud over any of these agents, but the article was sloppy and LAZY and showed ZERO insight into what our business is all about. 

 

Nov 22, 2009 03:40 PM
Gail Robinson
William Raveis Real Estate - Southport, CT
CRS, GRI, e-PRO Fairfield County, CT

Ruthmarie, When I was a new agent, I remember the one thing that I had on my side was the fact that I wasn't a big shot with dozens of listings and could focus my time and attention on their listing. Having the most sales doesn't make one the best agent for a buyer or seller, they may be way too busy to give their attention their clients the attention they need.  The better statistic is the one you cited, what percent of the properties that you list actually sell or rent.  For some top producers it is a numbers game, they expect a certain number of their listing to fall by the wayside.  Excellent post!

Nov 22, 2009 03:49 PM
Ruthmarie Hicks
Keller Williams NY Realty - 120 Bloomingdale Road #101, White Plains NY 10605 - White Plains, NY

Hi Jeani - thanks for the input and best of luck in your new venture with your own brokerage.

Honest John - I have several cash buyers floating around my listings like a bunch of vultures.   Most of the time they are looking for a "steal." They arrogantly proclaim that they can close in a week or two if only my seller will accept a ridiculous discount.  When I list I must represent my seller.  A cash buyer who thinks they can get 30% off a home because they have cash in hand is not a buyer - at least not in my market.  There is no reason to give away the home because there are enough normal buyers out there who although they need loans - qualify for same and are willing to pay market price.  Although its a buyers market, it is not by any means a fire-sale and most cash people I deal with need to be far more realistic.  I have an obligation to present ALL OFFERS to my sellers - which I do, but if its a crappy offer, chances are its going to be rejected. 90% of cash buyers who come up with your line "I can close in a week" are looking for a deep discount.

As far as the multiple offers are concerned...when I have a seller with a desirable property that is priced right I DO get multiple offers. I had one earlier this year that had no less than six offers on it at one time.  It was interesting that a cash buyer (being represented by an agent) insisted that the seller sign a document stating that she had "seen his cash offer and was rejecting it." She signed it and thought it was rather funny since the offer was for $280k and the property passed title for about $340k about 10 weeks later.  Yes, the buyer needed a loan, but they had excellent credit and a great down payment. The cash buyer was competing for that offer which was on the table at the time.  The carrying charges for that period were no more than about $7k. So the cash deal would have lost my seller a great deal of money.

As for the multiple offer gambit - I won't play - as one seller of mine recently found out. They wanted me to say we were going for "highest and best" and that X date was our drop dead date on the listing. They were furious that I didn't phrase it that way because that would have been LYING.  They had an offer, but not multiples. In this case, such a gambit wasn't going to produce results anyway. Given the recent solds, they weren't going to get a bidding war at the price they wanted.

Nov 22, 2009 04:13 PM
Ruthmarie Hicks
Keller Williams NY Realty - 120 Bloomingdale Road #101, White Plains NY 10605 - White Plains, NY

Hi John,

Having your sign out everywhere is another game that is often played.  It doesn't matter how much you list its how much you sell and at what price.

Hi Esko, I agree. Sometimes the mid-range producer is an excellent choice because they have the time to put more into the listing.

Nov 22, 2009 04:16 PM
Ruthmarie Hicks
Keller Williams NY Realty - 120 Bloomingdale Road #101, White Plains NY 10605 - White Plains, NY

Hi Trisha,

Sometimes you do get quantity and quality - but it gets tougher and tougher to maintain the bigger you get.  Granted some teams are marvelous - others not so much.

Hi Karen,

I don't know - I've seen a lot of ranting and screaming by cash buyers around here.  I deal with them the same way I deal with other buyers. The trouble is they think they are 100% in the drivers seat - but they aren't.  There is enough competition out there so most sellers don't hae to take steep discounts. Our market isn't Florida or Las Vegas.  Homes aren't available for pennies on the dollar and that's what most cash buyers are offering.   I've had this type of buyer haunting several condos that I listed.  They kept saying "but I have cash."  Yes, but that doesn't mean they are giving it away.  In some areas where there are a lot of foreclosures, the prices are set to start bidding wars.

Hi Gail,

This is very true - quality trumps quantity.  The other issue here was that most of these agents were listing properties that were $1 million + - For some the average is about $3 million.  You don't need as many transactions to make that work into big bucks. It doesn't speak though to the quality of the transaction.

Nov 22, 2009 04:26 PM
Joey Arce
NUllennium Realty/NUllennium Lending - Huntington Beach, CA

Intereting write up. Success is measured in volume by your boss. Success is measure by your clients by how well you took care of them. The amount of referrals will answer the question in most instances. Ultimately every client has a different need and will choose accordingly. Good food for thought!

Nov 22, 2009 04:58 PM
Lana Robbins Realtor ® Licensed Real Estate Broker
Aloha Kai Real Estate - Clearwater, FL
Licensed in Florida, Washington, and Hawai'i

"I thought that estate agents were supposed to be NEUTRAL between the parties, and NOT TAKE SIDES."

 

Hi Honest John.

If you are in New York then the agent can be a seller's agent or a buyer's agent or in the case of being a dual agent both buyer and seller must consent to dual agency:

http://www.dos.state.ny.us/lcns/realestate/pdfs/1736.pdf

So in some instances they will take sides depending on the agreement.

In Florida dual agency is not allowed. Instead we are transaction brokers by default but with consent we can be a single agent:

http://www.leg.state.fl.us/statutes/index.cfm?App_mode=Display_Statute&Search_String=&URL=Ch0475/Sec278.htm

 

So it depends. On location and on the respective state law(s.)


"Many Realtors are all VETERANS---and strong supporters of the NAR.  Where are these ETHICS?  I never found this issue discussed in any REALTOR training book.  WHY?"

 

Actually if you have read some posts at least here at Active Rain some agents write about how they do NOT strongly support the NAR. For example 

Linda Davis' "The NAR Predicts Sunshine and Lollipops" @

http://activerain.com/blogsview/1345751/the-nar-predicts-sunshine-and-lollipops

and

Broker Bryant Tutas' "A Plea to the National Association of REALTORS(R)..... SHUT UP!!!" @

http://activerain.com/blogsview/1349237/a-plea-to-the-national-association-of-realtors-r-shut-up-

 

As for multiple offers... they may occur especially with REOs where the bank/s usually fish for the highest and "best" offer. Sometimes cash buyers lose to a higher offer that the bank/s have accepted.

For short sales in the Pinellas Realtor ® Organization MLS member agents are required to change the status to "Active with Contract." They are very stringent about this requirement and if violated may result in loss of MLS privileges which they have done.

 

~ Lana

 

 

Nov 22, 2009 05:41 PM
Ruthmarie Hicks
Keller Williams NY Realty - 120 Bloomingdale Road #101, White Plains NY 10605 - White Plains, NY

Honest John - this is straying away from the topic at hand.  Please refrain from posting. If it continues to be a source of inflammation, I will remove your posts.  Please understand that I would like to keep this topic on point.

Nov 22, 2009 06:39 PM
Ruthmarie Hicks
Keller Williams NY Realty - 120 Bloomingdale Road #101, White Plains NY 10605 - White Plains, NY

Actually, I've reported "honest John's posts as spam and they will probably be removed.  Paul is correct...unless a buyer is offering pennies on the dollar, cash offers are welcome.  As I said, many cash buyers are suffering from vulture complex thinking they can throw crazy lowballs all over the place and steal a house. Not happening - at least not in my market - and certainly not with MY listings.  Get realistic on pricing and you can buy a home.  There are enough buyers so that crazy cash offers are generally ignored - as they should be.

Nov 22, 2009 06:45 PM
Ruthmarie Hicks
Keller Williams NY Realty - 120 Bloomingdale Road #101, White Plains NY 10605 - White Plains, NY

Actually, I've reported "honest John's posts as spam and they will probably be removed.  Paul is correct...unless a buyer is offering pennies on the dollar, cash offers are welcome.  As I said, many cash buyers are suffering from vulture complex thinking they can throw crazy lowballs all over the place and steal a house. Not happening - at least not in my market - and certainly not with MY listings.  Get realistic on pricing and you can buy a home.  There are enough buyers so that crazy cash offers are generally ignored - as they should be.

Nov 22, 2009 06:50 PM
Miriam Bernstei
Rochester, NY

Ruthmarie, I saw the article in Westchester Magazine as well and I agree that not only was it's premise false, it was badly written and insulting to the rest of the agents in the county who work hard and are part of the reading public of that magazine.  These agents are part of teams and the numbers do not reflect any of their individual work.  I agree that it does not tell the whole story and I thought about a post but decided not to give the article any credence.  Bad reporting.  I was once interviewed by Westchester Magazine and same as Philip above an intern called me and then totally missed the point of what I said I could not recognize what I said after they edited it.  Shameful.  The publishers must not realize that they have alienated 7000 brokers, their families and relatives with this article.

Nov 22, 2009 08:27 PM
Tom McClaren
United Country Dowd & Forbes Realty, Edenton, NC - Edenton, NC
Realtor/Broker putting your needs first

Ruthmarie,

Thanks for the great post!  You are right on.  Our business is more than the amount of dollars brought in.  There are many intangibles that make great agents, not just sales volume.  

Nov 23, 2009 01:24 AM
Ruthmarie Hicks
Keller Williams NY Realty - 120 Bloomingdale Road #101, White Plains NY 10605 - White Plains, NY

Armando - I have reported you for spam.  You are not supposed to advertise on people's blogs.

Honest John - I have reported you to the community and am trying to get you blocked. 

EVERYONE:  Please be aware of the Active Rain  community guidelines!  If you are here to post tirades or spam my blog with advertising you will be removed. I don't do this lightly - however this disrupts honest and solid discussion.  General trashing of our entire industry with tirades is also a problem.

As for advertising web sites - get your own google juice - don't post links that are nothing more than shameless  self-promotion.

Nov 23, 2009 06:07 AM
Ruthmarie Hicks
Keller Williams NY Realty - 120 Bloomingdale Road #101, White Plains NY 10605 - White Plains, NY

Hi Miriam,

You too had the same experience.  Interesting.  I think the reason I decided to take it up was that I had an epiphany.  I was looking on iClipart for images of real estate agents and several images of people counting money, swimming in money, money falling on the agent from a tree caught my eye.  Having just read the article, I felt that their terrible reporting method perpetuated that myth.  I guess it was my way of pushing back against that reputation which creates so much distrust.

Happy Thanksgiving!!!

Nov 23, 2009 06:16 AM
Ruthmarie Hicks
Keller Williams NY Realty - 120 Bloomingdale Road #101, White Plains NY 10605 - White Plains, NY

For those who are confused by the thread of comments towards the end, I had to remove God only knows how many posts from a spammer.  I'm hoping the AR Gods can block further entries.  In any case, I didnt expunge all the related posts, so there may be some confusion.

Meanwhile  I would like to refer everyone to the community guidelines.  For some reason this blog was very vulnerable to spam.

I am posting the bulk of the guidlines here at this time to discourage further issues.

Respect the Real Estate Industry 

ActiveRain is a place where real estate professionals can network with their peers and discuss industry insider topics. It is also a public forum where consumers can pull back the curtain and see what the real estate industry is really about. 

Because of this level of transparency and openness, ActiveRain members must remain zealous in their quest to represent our industry in as true and professional of a light as possible, for both their fellow professionals, and the consumers who access this platform.

 

Respect the ActiveRain Community

Being a part of any community requires a certain level of trust. Don't abuse the site or your fellow members. By joining the ActiveRain community you are given a platform to present your ideas and opinions to a large number of people. We trust you to be responsible with that platform; thousands of other ActiveRain members are also counting on your trustworthiness.

Nov 23, 2009 04:35 PM
Ruthmarie Hicks
Keller Williams NY Realty - 120 Bloomingdale Road #101, White Plains NY 10605 - White Plains, NY

Hi Paul,

Yup - I'l give the AR people a while to deal  with the new name then delete. Unfortunately, since they have found this entire site,  other bloggers might have to deal with him too.  Love the line about a Realtor killing JFK and NAR being the leading cause of cancer.   You mind if I quote you some time on that?  I'm not a wild fan of NAR and their happy, happy scenarios.

I don't like blocking comments from non-members but I may have to do so for a while. 

Sorry that you got tangled in the dialogue.  Both of us as well as karen Rice were trying to address his "issues" in a sensible way.

Nov 24, 2009 03:14 AM
Brian Brumpton
Keller Williams Boise - Boise, ID
Boise Idaho Real Estate

Great post.  I agree it's important to go beyond the numbers.  You want to find the agent who serves the market you're going to be competing in.  I wouldn't expect an agent who sells primarily luxury homes to help sell a starter home or vice versa.  If you simply looked at the sales numbers you'd think the luxury home agent would be a shoe in.  In reality they'd probably be a fish out of water in any other category. 

Nov 24, 2009 02:01 PM
Richard Dolbeare
Inactive - Wailuku, HI
Living the Hawaii Lifestyle

Also, how happy is the agent?  One can have a ton of sales with happiness still elusive.  On a personal level, success and happiness are close cousins.

Nov 24, 2009 02:56 PM
Ruthmarie Hicks
Keller Williams NY Realty - 120 Bloomingdale Road #101, White Plains NY 10605 - White Plains, NY

Hi Brian, 

That is true and although I do know people who handle both and do it well - you want to know in advance that they handle these properties.  When I "expand" and list something in an area and a price range that I have zero prior experience in, I find someone to co-list with who does have that knowledge.

Hi Richard,

For some the dollar is king.  Although I see no need to rake in $35 million in gross sales - you do have to work very hard around here and really prodcue in order to survive. It is a very expensive place to call home. Most need to be doing a minimum of between $5 -6 million in business a year (depending on your split) if that is your primary means of support.  The trouble is that we have about the highest cost of lving in the nation.   We were on the Forbes "America's Most Mxpensive Cities" as the 3rd most expensive place to live in the US in 2008.  We ranked a more comforting 31st in the world.  The two cities that beat us, NYC (no surprise - we get people from NYC looking to contain costs) and Los Angeles CA.  Now our homes are expensive - which helps commissions.  But what most regard as "standard" commissions have been beaten to a pulp by discounters.  We earn probably less percentage-wise than almost everywhere else.  That trend has unfortunately extended to inexpensive properties such as cooperatives which can be a newer agent's meat and potatos. So a closing on a $150k coop can an average agent with roughly $1300 gross commission.  It all adds up, but if you need about $70k -100k to survive and you have out-of-pocket costs, one can see that working around here is pretty daunting. So there is a need to really push hard.  Also, the client base is very, very demanding.  As Miriam indicated - these agents have many assistants. That's the only way they stay afloat. 

 

Nov 25, 2009 06:03 AM
Dawn & Charlie Tetro
PalmerHouse Properties & Associates - Johns Creek, GA
Real Service Real Results

This has been a stimulating post!  Thanks to everyone for sharing!!

Dec 04, 2009 02:37 AM