Being a consumer and making purchase decisions is not always easy when the actual purchase is a first time or extremely infrequent one. And that's the case when it comes to real estate.

How do you know which agent is good or not?

Some really good blog posts lately have touched upon this topic.

Danilo and Tony at real/diaBlog blogged Monday and said "It's time to clean up real estate".

And they don't think brokerages will do that job.

"(Brokerages).... have their business models set up so that low producing, part-time and ineffective agents cost nothing to support/sponsor. Therefore, if an agent only sells one house they will in essence become a profitable commodity. The commission and fee structures are set up in such a way that the mediocre agents are the bread and butter of a brokerage firm. They will not be receptive to any restrictions that could limit agent counts."

Many end consumers have problems separating a franchise brokerage brand from individual agents.

Maureen Francis of miOaklandcounty.com posted this last week in regards to "Separating the brokerage from the agent":

"Our real estate licenses are kept with one broker who is responsible for supervising us. But we act very independently, and there is little that can be done to ensure that all of the agents working for one broker live up to one high set of standards. Unfortunately, that is just a reality of the way this business is structured. If you go to a McDonald's Restaurant anywhere in the world, you can expect that the burger will taste pretty much the same. But if you go to a Re/Max, Century 21, or, for that matter, even a Sotheby's International Realty, you cannot be assured that all of the agents are the same within that brand."

So what's a real estate consumer to do?

Maybe check out online review sites to find an agent with stellar reviews?

Leading online real estate industry analyst Pat Kitano has a great overview of the main real estate agent review sites at "Online Reputation Management for Realtors"

Sites include Homethinking.com, IncredibleAgent, Yelp, Judysbook, Angies List and upcoming site Agent Scoreboard.

All these sites have one thing in common: Lack of a true national footprint which will take time to establish. It's not an overnight process for sure. Most reviews originate from agents soliciting testimonials from past clients. Absolutely nothing wrong with that what so ever.

But the real question is: How does a consumer determine which agent is both outstanding in terms of making the deal happen as well as acting with a true ethical fiduciary responsibility to his or her client?

It's not easy at all.

We're all used to find vendors based on referrals from sources we trust. There is only one problem: Many times the referral source does not know if the agent is truly good or not. Why is that? Mainly because they have nothing else to compare with and they may have only bought or sold a house 1 or 2 times in their lifetime.

When users have full information and lots of experience with a buying situation their reviews and referrals become very valuable. When it comes to real estate they are still important but not as valuable due to the lack of knowledge of the average consumer.

So what to do?

In addition to looking at user reviews hard metrics are necessary to look at such as number of transactions including listing and sales price histories. It will weed out the part-time hobby agent for sure.

I think that requesting references from the three to five most recent clients (not the clients that the agent would choose) is another very good qualifier. Used extensively in the builder and contractor industry it usually immediately weeds out the really bad apples.

An overlooked but critical component of an agents level of competence is his or her negotiation skills. This would be one of the areas I would focus on if I was in the market for an agent and was interviewing past clients. A good agent can save their client lots of money in the negotiation process leading up to a sale.

There are tons of "Questions to ask" lists out there, mainly used for promotional purposes. Like "Does your real estate agent do this and that for you?". Or "Does your real estate agent have an active home selling system like this"?

But most of them do not focus on the hard-to-measure qualitative skills that are so important when hiring an agent.

I know there are much smarter and more experienced people than me reading this blog (And you're probably one them! Thanks for reading this far!).

So let me just ask you... If you were a consumer looking for a real estate agent....

What 3-5 questions would you personally ask a past client of a real estate agent that would reveal useful information to help making your decisioning process easier?

Thanks in advance!

-Ola

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Posted by Housia at 10:51 AM | Permalink | Comments (2) | TrackBacks (0)

Home owners who sold their homes themselves had better results than sellers that listed with an agent in Madison, WI during the period of 1998-2004 according to a study from two Northwestern University economists, New York Times reports.

When the agent's commission was factored in, the FSBO's came out ahead financially. It should be noted that Madison has a high traffic FSBO listing site that is well known in the local community. The authors of the study caution that they are not sure that their findings apply on a national basis. Most communities don't have high traffic FSBO sites.

Anything in the report coming out in favor of the agent? Houses that were listed on the local MLS sold quicker.

The study was adjusted for several factors including timing, house and lot size as well as neighborhoods.

The big question is: Will the data hold up in a slowing home market? The authors are currently crunching data for 2005 and 2006.

I am sure this will be a study that will be debated quite a bit. If you knew what you were doing and had patience to wait a bit for your house to be sold... then going FSBO was a good idea during 1998-2004. At least in Madison, WI....

Best,

Ola

Posted by Housia at 09:36 AM | Permalink | Comments (0) | TrackBacks (0)