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Agent Ratings Must Be Done by Other Agents

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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”:

REALTOR skills buyers rate as 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

18 COMMENTS

  1. Not taking a side, but raising a question. What is the motivation for one lone agent to give another agent a bad review? The idea that this could be anonymous is hard to grasp since most agents, (especially ones that you say the herd should sacrifice) only do a couple transactions a year. There’s a really good chance they are going to know who wrote the bad review. So, what would motivate one agent to honestly and pretty much publicly rate another agent?

    • Plus, suppose the rating agent doesn’t have enough knowledge/experience to rate a peer accurately? Or worse, they have poor ratings themselves. We’d need a Rating System for the Raters.

      • Since each agent would have his/her own rating, I think we can figure it out pretty easily. It’s not perfect, Ken, but it’s a damn sight better than what we have right now, which is nothing, or having uneducated consumers do it.

    • Well, I for one would prefer it be non-anonymous for a variety of reasons, but I’d take anonymous over nothing.

      The motivation should be, IMHO, the thing that REALTORS pay a ton of lip service to: professionalism.

      A profession implies far more than just a trade, just a job. It implies working at least in part for the public good: doctors, lawyers, clergy. It implies a measure of pride in the profession to want to keep it free of the unethical and the incompetent, since the consequences of bad actions on the part of a professional are so enormous for the client who trusts the professional with his health, his freedom, and his life savings.

      Or, we all can admit that real estate is not a profession, throw the whole “Code of Ethics” thing out the window, and petition state governments to re-classify real estate licensees as “fiduciaries” of the client.

      • I know that I have a hard time writing a bad review for a restaurant on Yelp. That doesn’t even effect me professionally. Unless the agents were *required* to rate the other agent, I think participation would be mostly limited to great reviews and the occasional horrible one for someone who really mucked it up.

  2. The conflict I have is with wanting to love this idea and knowing that getting the execution right would be like curing the plague. The assumptions for accuracy are that we’d see this industry stand up, as a whole, and decide to be unbiased? We can’t get the handful of cable networks to do this with our daily news, or NFL professionals to do so between two sides — but we’ll see individual business owners in fragmented industry do this for the good of other agents who are thousands of miles away?

    Still, my stubborn self loves the ideal of this effort. *sigh*

    Do we start with a better evaluation method? Some type of definition to then be judged and judge? Can we build on algorithms like Yelp that *try* very hard to eliminate fraud?

    • I agree the execution is daunting. Then again, I suppose if no one set out to try to cure polio, we wouldn’t have a polio vaccine either. 🙂

      One note: I don’t think it’s agents thousands of miles away. I think it’s agents in the same local market, evaluating each other after a transaction. And individual business owners shouldn’t do this for the good of other agents, but for the good of their CLIENTS, y’know, the people they supposedly owe fiduciary duty to.

  3. Hey Rob — First, congrats on being a finalist for post of the year at REtechSouth.

    In my opinion, based on experience, observing the business in real time, agents rating other agents for public consumption is, understated, a bad idea. Very little good will result. The 80% who can’t make a go of it will not, for the most part be reliable critics. The 20% will be all over the map. However, part of that map includes personal agendas, self aggrandizing, etc. The best that can come of it is something approaching neutral, which is a complete waste of time.

    Here’s an example.

    Dad’s brokerage was the most prolific in San Diego in the 1960’s. Consumers loved him, or should I say his results. His agents were far more successful, that is, most were far above the local median income. The only time the DRE ever knew he existed other than license renewal was when his competition sent in false allegations to them. They lived in his office for three days. When their investigation was completed, the head investigator gave Dad his card. He said, “The next time anyone gives you a problem at the state level, have them call me. You’re the cleanest operation I’ve ever audited.”

    It didn’t end there. He was constantly vilified for not joining the local/state/national Boards of Realtors or the local MLS. He finally had to threaten a DOJ lawsuit to shut them up. A lawsuit, by the way, they eventually faced and lost just a few years later, brought by yet another of their victims.

    Brokers/Agents will sink or swim in the free market based upon their long term performance and results. Beginning an official soap opera site will not do anything but give the industry another black eye. All of this is, of course, just my opinion.

    • Congratulations to you as well Jeff! 🙂

      I don’t doubt the difficulty — the gaming, the personal agendas, the vendettas, all of it. At the same time, I don’t think you’re arguing that consumer reviews of real estate agents are useful indicators of quality. The issue then comes down to, how do we allow consumers to get useful guidance on who is and is not a good representative when they’re looking at the biggest purchase of their lives that will put them into debt for decades?

      Taking a consumer’s advice about a real estate agent is like taking a blind man’s advice about what movie to go see. Logically, I can’t see a reasonable source of ratings/evaluations other than other real estate professionals. That’s the premise from which I start. Is there another premise?

      • Thanks Rob.

        I don’t endorse reviews by consumers or agents. The market reviews them daily. Consumers who pay attention, network themselves into relationships with solid, professional agents. You and I do the same thing with any service we need, from car servicing to medical attention.

        This is, in my opinion, nothing more than the doomed to failure search for Utopia. We don’t live there, it never existed, and it wouldn’t work for long if it did.

  4. agents ratings by other agent, sound both good and bad, what’s good about this is that, agents are rated by people who knows exactly what agents do to the extent of observing every little detail, but what’s bad, the agents won’t give a good rating if they find the other agent too competitive

  5. I have many happy clients, … but they are clients and NOT my best friends.    At the behest  of my zillow account manager, I sent 40 letters to past clients asking them to write a review on zillow for me.  (I just bought some  zillow  adds, after 7 years on TRULIA.  

    Well the response is ZERO.   so that is NOT a reflection of my value or service to others, or whether they were pleased or would refer me to others (they have and do).    its that they are busy too, with their own businesses and making their lives in their new homes.
    I am a good realtor, … but maybe what I am not good at is coercing “recommendations” on public sites from my past clients.

    Also, these public sites favor LISTING agents, not buyers agents, in their model, but fail to promote the idea that a buyer is entitled to their OWN representation, and the listing agent represents the SELLER’s interest.

    face it..  real estate is a craaazy business model, and the public sites are really a revenue machine, made of regurgitated data that we as agents produce and sell it back to us in advertising space.

    I wish our MLS system and our National Realtor Association did more for us as Realtors than distributing our data to public sites to sell advertising space back to us. 

    grrrrrrrh.

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