According to various polls, from local associations to the widely distributed Harris variety, public/consumer perception of the greater real estate industry and the agents that serve it is in the toilet. This is nothing new.
In the spirit of taking action to reverse the negative stigma around the industry, there has been a spike in conversation recently around the cause of ‘Raising The Bar’ (#RTB) by real estate professionals, including an REBarcamp session before Inman Connect NYC, Twitter-speak, blog posts, podcasts and blog talk radio shows.
With lots of conversation comes lots of ideas, including:
- Raise the barrier to entry (Keep out the stupid, poor agents)
- Kill the barrier to entry (Increase competition)
- Increase continuing education requirements and ethics standards (Create smarter, more ethical agents)
- Only hire honest, empathetic, generally good people who have a strong work ethic (Make the consumer LIKE me into doing business)
- Acquire pretty technologies and engage in Social Media best practices (Apply the Laws of Attraction)
All of these ideas focus on the top of the industry funnel – marketing, messaging, advertising, massaging, allure, the ‘easy to manipulate’ aspect of reputation management…they are too far removed from solving the real issues at hand.
The common thread I’ve heard is that the industry must increase its ‘Professionalism.”
My Notorious partner posed ‘The Single Question to Rule Them All‘, all Lord of The Rings style:
“Is professionalism a competitive advantage in real estate or not?”
In short, Rob says if this is the case, the riff-raff will eventually be driven out. If it isn’t the whole RTB exercise is anti-competitive in nature and generally deceptive.
Robs logic is sound, but there is very little context to the question, so it’s just that…logically correct with alot of ambiguous conjecture and talking heads spewing esoteric, self-serving opinion around the definition of professionalism and how to raise That.
Rewind— REBarCamp San Francisco 2009. Sitting in a group of well respected real estate ‘thinkers’, Rob Hahn asks: ’What is the next big thing in real estate?’ With my head focused on the cornucopia of tech related products and services, I didn’t have an answer and admitted to such.
Today–- My answer is pulling the veil back around performance related metrics relative to market baselines for practicing real estate agents. Establish a Bar, establish accountability, demand greater transparency and Raise The Bar along the way.
So, I propose ‘The Single Question To Rule Them All’ then becomes:
‘Is Performance a competitive advantage in real estate or not?’
Rob’s logic applies to this question and fits like a rubber glove.
If Performance is a competitive advantage, the riff-raff will eventually be driven out. If its not, then the whole RTB exercise is anti-competitive in nature and generally deceptive.
Performance is a competitive advantage. I trust I don’t have to write 400 words to explain why.
I’m not sure that the greater industry is ready to RTB…it can be done in pretty straight forward fashion but there are substantial ramifications.
Lets begin…
Social Media Can Help Raise The Bar.
Generally speaking, Social Media provides a two-way conversation medium that ideally compels some level of engagement between two parties. There is an emotional connection that Social Media taps into for people and it works (very well) when implemented thoughtfully and engaged consistently…a good strategy herewill drive potential clients.
Social Media should not be postured as a chronic popularity contest where thou with the most ‘friends’ wins. The term friend has a diminished meaning in the world of 5000 Twitter and FaceBook ‘followers’. Being named to ‘influential’ lists and the such amounts to little more than superficial ‘pat on the back’ contests amongst inter-industry professionals and is of little value to a consumer…I digress.
Where Social Media really stands to help RTB is rooted in the caveat of the medium: If you don’t follow up your dynamic online persona with performance driven results, consumers are likely to wield Social Media against you…As stated, its a two way street and bad news travels fast.
Set The Bar With Transparent Access to Relative Performance Metrics.
Open the MLS data vaults to establish a baseline (or bar) around local market performance metrics such as:
- What is the average Days on Market for a $Xk to $Xk house in my market?
- What is the average List to Sales Price difference for similar homes in my market?
- How many sides did an average agent close in the last 6 mos, 12 mos, 24 mos?
- What is the average # times a listing re-priced or re-listed in a given market?
- What is the average final Sales to List price ratio?
- What is the average commission charged on a property within my search criteria?
- How do REO’s and Foreclosures affect a property in a given area?
Once I have a flavor for how my market is performing on average and a Bar has been set, the second and more important question is:
Which Agents/Offices/Brokerages/Franchises Outperform These Averages and by How Much?
You can’t argue with real, empirical data. You can’t fake the grades on your bell curved report card.
Allowing consumers to evaluate which real estate professionals outperform local averages (Baselines or Bars) that are important to the specific consumer would go a long way toward increasing the likelihood of a positive experience, as well as aid in improving consumer perceptions and expectations.
In addition, consumer access to performance based information (currently locked under MLS data use Rules and Regulations) would:
- Drive out the under-performers or force them to do what it takes to raise themselves above the Bar
- Spur innovation in the sector of commission reform <–A big deal to consumers
- Increase good competition
I can hear the arguments:
‘Just because Sally transacted more sides, doesn’t mean she’s a better agent.’ Very true. Johnny could have sold 4 properties to Sally’s 20 over the past 12 months, but Johnny sold each one in far less time than the market average.
‘Billy took, on average, 30 more days to sell a property.’ Yes, but he did so at a List to Sales price that was well above market averages.
‘My consumer wouldn’t listen to me and insisted I list the price way above market value, thats why I had to reduce the price 3x and it sat on the market for 462 days.’ Well, you should have passed on taking that consumer as a client.
There are many such what if scenarios. Performance based data isn’t of much value when analyzed in a vacuum. It becomes very valuable when compared and contrasted against market averages and considered in conjunction with a unique consumers wants and needs. Throw in consumer ratings, other forms of feedback on some level and now you’re serving steak instead of sizzle.
Evolve The Traditional Real Estate Commission Model
I know, its not supposed to exist, ‘there is no set commission model’- humor me.
The fundamental issue in the ongoing consumer vs. real estate professional beef is the gross misalignment of performance for consideration. Consumers generally have a negative opinion of real estate professionals because they believe they overpaid for services compared to the value received. This is likely because the agent they ended up retaining had poor performance metrics or their positive metrics didn’t align with the consumers wants/needs.
Access to such transparent performance metrics relative to a baseline would blow a hole in the bow of the traditional real estate commission model. Underperforming, inexperienced agents could no longer ride the coat tails of top performing seasoned agents. Top performing agents could set new pricing models, justify a retainer for services, charge for services using a ‘cost plus’ model…they could make MORE money instead of subsidizing Ron the part time Realtor who botched his last three listings, yet scored a listing that would have otherwise been yours because his college friend Bill said something about needing a real estate professional on FaceBook.
I can’t think of another industry that pays entry level employees on the same scale as long standing executives. Consumer confidence and perception could rise substantially if they knew who they were paying for up front rather than after the transaction closed, didn’t or worse.
If you’ve followed along to this point I’m sure many are screaming that something like this will never happen, because…:
MLS’s are funded by and thus beholden to the agents they serve.
If an MLS decided to adopt some crazy cavalier attitude and turn this performance based data consumer facing, many agents would likely get upset…read: violent rebellion amongst natives, loss of revenue, mass firings at Cowboy MLS.
Since MLS’s are generally for profit enterprises and the people that run them probably like the fact they have a job, this type of a mass public outing is a non-starter.
So, what about a version that displays all the pertinent individual performance metrics and how they rank against the given baseline/bar, but leaves the agents personal information anonymous? The only time an agents personal information becomes available is when a consumer pays for the privilege. Unlimited access to all agent profiles wouldn’t be prudent for obvious reasons…rather a set amount, say 5 profiles per subscription. Those below The Bar remain anonymous and left to think about how to raise their Bar.
In the alternative, Stan finds a real estate professional on Facebook, Blogsite, Zilow, Trulia, IDX, ActiveRain…pick your Social Media outlet. They like the personality and now want to check how deep the beauty runs. Dial up the agents performance related data and get a holistic view of who you might retain to handle the largest transaction of your life. Think Carfax for real estate professionals.
Shame on the agent or broker that would threaten to pull out of an MLS for offering this anonymous data for public consumption, that would be like saying you want the industry to remain in the gallows of consumer perception, deceptive beasts of no prestige. And if shame isn’t enough, I’m sure there are other incentives to keep everyone submitting their data…
In the ugly and very likely circumstance that agents and/or brokers still balk at the idea, make it opt-in only. No personal information available unless you as an agent give the MLS the express right to do so. Pay agents to opt-in, every time their personal profile is requested. Share the wealth a little.
The big question is always: Where is the money? I’d be willing to bet that (ALOT of) consumers would pay for access to such information presented in an intuitive UI-sortable and searchable by what metrics are important to their situation (much like Diverse Solutions did).
This isn’t some pipe dream that would take millions of dollars in development or years to implement. It could be done quickly and at relatively little expense. In fact, the primary reason this data isn’t already available is due to simple economics and complex politics…there is alot of money in keeping the data under lock and key…economics rules politics, so where there’s a bigger dollar there is a way.
There are Agent ranking systems out there. Most allow the agent control over what information is displayed and/or claimed…rendering the system and information skewed at best. This type of agent rating system must have a very complete set of market data and be maintained by 3rd party providers that simply maintain its purity and integrity.
Diverse Solutions has created the closest product I’ve seen to a tangible, working model using MLS direct data. Agent Scouting Report was the result of a 48-hour developer competition at the Inman Connect conference in San Francisco last summer. In its current edition Agent Scouting Report doesn’t work because it shows every agents stats…effectively ostracizing those that happen to fall below the Bar. I don’t think they’re far off, their product was well thought out given the limited time they had to develop it..a few turns of the dial and some thoughtful considerations in how the data is displayed (see above), and..?
As an agent or broker would you be adverse to this? Why? :)
The Broker/Franchise Perspective.
I own a brokerage or franchise and want to fill my office with agents who exceed certain performance metrics for certain property types in certain areas of town. My brokerage is conducive for these types of agents to excel. As a broker/owner, I would pay to know who these agents are. This would be an immensely valuable tool in analyzing my own brokerage as well as my competition on key performance indicators. I could derive all sorts of actionable data to use as a recruitment and retention tool.
So is everyone ready to Raise The Bar?
It depends on if those who talk the talk about Raising The Bar are indeed serious about doing so and walk the talk. It will take open minded professionals from MLS directors, their boards as well as the brokers and agents they serve. I’ve laid out some top level ideas on how economics could cut through the politics, there are more.
The upside for the industry is huge from customer service, commission model and perception standpoints. It risks shaking the long standing economic model right down to its core, which is a good thing. In the right hands this very well could and should be the next big thing in real estate.
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