Businesses run on metrics. We use them to reassure ourselves, and to show others why certain things are true. The real estate industry is no different, but we are undergoing a change in how a real estate transaction occurs. Most of this change is being driven by the internet, but it also involves people seeing the business model being outdated in general. While the growing influence of the internet is being recognized by Realtor Associations, there also seems to be a desire to push facts, which suggest that the old model is just fine.
The Houston Association of Realtors conducted a survey of buyers and sellers to determine trends amongst these groups. It was discovered that many are turning towards the internet for information, and this is causing consumers to be more knowledgeable about the industry, which will lead to them being more discriminate about how they use the services from a brokerage. It is envisioned that buyers and sellers may choose what services they want the brokerage to provide, in order to reduce their costs. This is part of the change in the profession, and it is not an issue for the industry. Firms like Redfin pose a greater threat it seems. Some of the data from this survey hints that maybe the consumer is just happy with the way things are though.
Parts of this report are sent out to people in the industry each week to highlight a positive answer about Realtors. One sign that could be seen as boding well for Realtors is that 45% of the people surveyed state that they only contacted and worked with one Realtor. Only one percent contacted four or more. The idea being that consumers so trusted their Realtor (or the profession) that they only needed to contact one person. However, there are some other facts to consider. Thirty-six percent of the people surveyed refused to answer this question, and we do not know why. Also, a follow-up question for those who only chose to call and work with one Realtor may have been useful: why did you only call one Realtor? Or why did you not shop around?
I am curious about that thirty-six percent, but that may be difficult to find an answer as to the reasons for their refusal. The other group that I wish to study may be easier for me to fathom. I always suggest that people call different inspectors or contractors when dealing with such a major purchase or investment. I have also recommended speaking with different Realtors. I spoke to four Realtors before settling on one to help me when buying a home. I consider this process of choosing natural. After this question and response was sent to me, I decided to ask some people about their process of finding a Realtor. I asked a buyer and a seller if they wished for me to provide them with a list of Realtors to call. They responded that they already had a Realtor, and in both cases they only contacted one. The seller chose to use a Realtor who had helped a family member buy a home. The buyer was going to use a Realtor, who had answered the phone at a brokerage firm which was listing a home they were interested in. Both decided that one Relator was pretty much the same as another, so they did not really require looking into if this was the best candidate to help them.
This may be why people are not searching for the best Realtor. If it is, maybe the report’s finding is not the best news for Realtors. Here is the scenario playing out in my head: the consumer is becoming better educated about products and services as the internet becomes a more important tool for the average person. Realtors may not be doing enough to distinguish themselves from one another, so in the consumer’s mind they do not have to search for the best person for the job. I noticed that brokerages are starting to advertise to distinguish themselves from their competitors, but this can be difficult for the individual agent to do. As firms like Redfin increase their presence, traditional Realtors may find themselves loosing ground, as consumers see that this model can be better for them financially.
Many years ago, when I was overseeing a staff of over two hundred employees, another manager came to me and stated that we should only have the absolute best employees on staff. He had a plan for weeding out the poor performers that he wanted my approval to enact. I told him great, but we are we going to get replacements who meet his criteria for the best. We just had to hire them. I pointed out that roughly a quarter of the people fit into the description of being fantastic employees, a quarter into being bad, and around half were average. His plan would cause us to loose seventy five percent of our work force. I think that this rough breakdown describes most industries. The vast majority of Realtors, home inspectors, appraisers, and loan officers that you will encounter are within the average. A few are bad, but then a few are fantastic. We cannot get rid of the average of the bad in one fell swoop, but you as a consumer can weed us out to find the best person to work with. However, I would like to know what you think. Is it alright to look at only one Realtor? And is this good or bad for the industry? It will be interesting to see what changes may occur in real estate over the next few years.