As I mentioned in my post “Can Zillow Annihilate Realtors?”, Zillow is planning to launch agent ranking system. This is really what I wanted to talk about, but somehow I drifted to prospects of our annihilation by Zillow.
Do clients need to find out how agent ranks by accessing Zillow (or any other site for that matter) today? Aren’t market results (numbers of sold homes) transparent enough when we drive through neighborhood on Sunday afternoon and read agents signs? Before I answer this question, let me remind you how clients were finding agents in pre-Internet age and how agents were ranked at that time.
We competed at the market place, advertised in newspapers, knocked to clients doors, sent postcards, etc. More money we made selling homes, more we could spend on advertising. By doing it we were improving our name recognition and this lead to more business. At the end, those who close most sales, made most money and were considered better agents. We knew that best of us according to this criterion, not necessarily were providing the best service in terms of answering all questions, and fully satisfying all client requirements. However, they were achieving the key objective of every client – selling or buying a house.
Then came Internet. It is changing many things, but really has not yet affected fundamental rules of real estate. Let’s me use an example of the San Mateo County, CA on San Francisco Peninsula (it is tucked between San Francisco and Silicon Valley). One would think that this would make it susceptible to change. The reality is that it is one of the most conservative counties in the country, largely unaffected yet by Internet. The business belongs to long term agents. They know the clients as they went to school together. Did Internet affect them? Yes it did. It helped them to modify the 20/80 rule (the 20% of agents owns 80% of the market) to the 10/90 rule (10% of agents owns 90% of the market). We know that clients love to do their Internet research. They see the listings and the see a few names. Then, they drive around and see agent signs and recognize the names they found on Internet. So, Internet helped best sellers to get even more recognition.
So, where is the place for Zillow to tell us who the best agents are? It is not here, at least today. The fundamentals of real estate have not yet changed.
Let me ask you a question. Who AR agents are? Who are you? Are you an experienced and successful agent who is preparing for the change caused by Internet or are you a new agent (or not yet a top seller) in the business and trying to wrestle the business from well established agents? I know who San Mateo County AR agents are. According to my estimate, the majority of San Mateo AR agents belong to the second category.
Will number of AR points help us to compete at the market place? Obviously we hope so. However, it will take time and the amount of time will be different in different parts of the country. The market place is changing. Client behavior is changing. Yesterday, clients were happy with agents who helped them to close a transaction and it was easy to know who the best agents according to this criterion where. We just counted Open House signs and knew who the Best is!
However, tomorrow the market place will be much more complex. Clients will know more and will request from agents not just the basic knowledge (of course the need for good negotiation and closing skills will always be there!), but they will demand more knowledge or different knowledge that they found on Internet. We will have many categories of good agents. Some will still be best in closing transactions; other will provide consulting and fulfill more diversified knowledge-wise needs of clients. Clients will need to understand differences between different categories of agents and who is best in which category. And here is room not just for Zillow but for other entrepreneurs as well. In categories where the sign counting is not sufficient to know who are the best, clients will be looking for guidance. And these future opportunities are another justification for our time investment in AR.
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