Agent Ratings Must Be Done by Other Agents
Mar 15, 2011 17 Filed Under: In the News, Our Thinking
Zillow.com's Agent Ratings Product
Agent Ratings is in the news again. MLSListings, based on Sunnyvale, California, has announced that it will launch a pilot REALTOR ratings program with the California Association of REALTORS. But it appears that the MLSListings program isn’t what HAR attempted to do a while back, where consumers directly rate agents:
Designed by independent consumer review agency Quality Service Certification (QSC), the program collects and evaluates feedback from both buyer and seller clients in the months following the home sale, and provides information to brokers and agents to help them better evaluate and market their services to consumers.
Given QSC’s involvement, I imagine the ratings system will be something we haven’t seen yet, which is interesting.
At the same time, NAR has just published an interesting factoid from its 2010 Home Buyers and Sellers Profile (free if you’re a REALTOR). It is a table of qualities and skills that home buyers have rated as being “Very Important”:
This chart is likely flawed from the way the question was asked (although I don’t know, because I haven’t seen the original survey question and options for answering). Nonetheless, it provides support for the proposition that consumers are totally unqualified to render any meaningful evaluation of a real estate agent. As a result, any agent rating product that wants to assist the consumer must incorporate ratings by other real estate professionals.
Analyzing the NAR Survey
There are some odd things about this survey and its results. Eight of the nine skills/qualities listed are rated as “Very Important” by over 79% of respondents. Practically speaking, that means every skill/quality is rated as being extremely important. Yet given that 79% of REALTORS cannot be said to have all eight skills at a high level, one wonders how some of these consumers managed to find a REALTOR to work with at all.
Furthermore, only 85% of respondents rated Communication skills as Very Important. Really? So 15% of consumers think it’s perfectly fine if their REALTOR can’t make phone calls, writes nonsensical emails, and generally drops off the face of the planet? I find that impossible to believe.
These results suggest that 25% of single male buyers, or one out of four, doesn’t much care if their REALTOR has no people skills. Really now. “This is my REALTOR, Axe; please ignore his body odor and gang tats – he just got released from prison for assault.” I don’t think so.
What the survey ultimately says to me is that consumers are completely unreliable as it comes to knowing what it is they really want. At a minimum, if the respondents were asked to order the nine qualities in order of importance to them, we might get some useful tidbits out of that. But this survey simply says consumers want everything from their real estate agent (except tech skills… which appears to be what a whole lot of agents seem to be focusing on these days… but that’s another story).
But there is a more fundamental problem, and one that actually impacts the consumer experience.
Consumer Ignorance
Assume for the moment that consumers really think “knowledge of purchase process” is absolutely critical to a REALTOR. How exactly could they evaluate this?
How many purchases should we assume said buyer has made in his lifetime? Since the average consumer is in the real estate market once every seven years, if our consumer is a first-time homebuyers at age 30, we can assume he has done three whole transactions by the age of 51. And to assume that laws, regulations, and processes around purchasing a home would not change over a 21 year period is silly.
So, even if the consumer isn’t a first-time homebuyer, there is no way that he knows enough about the home purchase process to evaluate a REALTOR who does this for a living. In fact, there’s no way the consumer knows enough to evaluate a part-time REALTOR who hasn’t done a deal in two years. Exactly where in the process will the consumer be able to step in and say, “Hey, wait a minute – you’re not doing that right”?
What about “Knowledge of the real estate market”? If the consumer knows more about the real estate market than the real estate agent who does this day in and day out, why would he (a) hire the agent, and (b) not work as a real estate agent himself? Presumably, whether your doctor has a thorough knowledge of medicine is “Very Important” to you, but when was the last time you sat down and grilled your physician to make sure that he knows how the endocrine system functions? If you had to test your doctor for medical knowledge, would you even know enough to know if he got it wrong?
Fact is, all that a consumer can talk about is personal perception and customer service elements. Did the REALTOR not return a call for three days? He can talk about that, because he knows other professionals do and do not return phone calls. Was the REALTOR friendly or nasty? He can talk about that. But did the REALTOR negotiate like Scott Boras or like Neville Chamberlain? How would he know?
The Solution: Agent Reviews of Other Agents
For all of these reasons, consumer reviews of real estate agents is not particularly meaningful. The QSC reviews are more in the nature of customer satisfaction reviews, but since consumers lack the basic knowledge to assess whether the REALTOR in question did a good job or a bad job, it will be of limited utility to other consumers who are looking for real, trustworthy information on who is good and who isn’t.
The solution is simple. It isn’t easy, but it is simple: agents should rate other agents.
At the end of each and every transaction, each REALTOR should fill out a form rating the other agent on important categories, such as Honesty, Negotiation Skills, Market Knowledge, and so forth. All of the surveys can be anonymous, but all of the responses and scores at least be from someone who does real estate day in and day out.
That most industry insiders throw their hands up and say, “You’re dreaming” does not by itself make the suggestion wrong. It just makes it difficult to implement. But that excuse has already fled on the last helicopter out, since if REALTORS don’t do accurate, useful ratings/evaluations, consumers certainly will do inaccurate, not-so-useful ratings on places like Yelp and Zillow.
Combine the evaluations of other real estate professionals on knowledge, professionalism, and expertise with consumer ratings of customer service elements, such as communication, friendliness, and responsiveness, and we’ll have something that buyers and seller would both find incredibly useful. That it might make life difficult for unprofessional agents who have terrible customer service skills to me sounds like a feature, rather than a bug.
Be the Wildebeest!
Agent Ratings represents a clear case of conflict between short-term individual interests and long-term collective interests. Stefan Swanepoel’s new book, Surviving Your Serengeti, points out that the lowly wildebeest has thrived and become the most numerous species on the savannah, despite being the preferred choice for dinner for virtually every single meat-eater in the joint. He says it’s because of the wildebeest’s ability to endure. I agree. But I say it’s also because the wildebeest knows to sacrifice the weak and the lame to the lions and hyenas in order to preserve the herd.
Be the wildebeest. Cull the weak from the herd. Implement agent ratings by other agents, and give consumers guidance that they have long been seeking.
Your thoughts and comments are welcome, as always.
-rsh