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