Agent professionalism — or the lack thereof — is the biggest risk to agents, according to the DANGER Report. “Raise the bar” is the chant. #QualityOverQuantity is the answer. So says all-around good guy Sam DeBord in a piece he wrote about the industry’s misguided fixation on closed deals as the measure of an agent’s value and professionalism.
Debord wrote, “The answer is more complex than volume or business model. It’s about education, experience, dedication and professionalism. Those are difficult things to measure, but improving an industry isn’t supposed to be easy.”
At a high level, I generally agree with DeBord about the whole quality-versus-quantity thing. As former general counsel for a vast real estate firm, I can attest to the fact that “one-star” performance is not reserved only for the inexperienced. Some of the worst transgressions I saw were committed by top producers.
But I also don’t think you can generalize the other way that the volume of deals has no bearing on an agent’s value proposition to his or her client. Deals create experience, experience creates knowledge, and knowledge delivers value.
In other words, do you want to be the first patient of the newly minted surgeon? I’ll pass.
So which is it? Quality? Quantity? In the end, the answer to this debate is really not up to the industry. Millennials, the next massive wave of homebuyers, will define their own version of agent value and the ultimate homebuying experience they want.
Take a look at what is happening in healthcare. A recent study found that 70 percent of younger millennials chose a primary care physician based on recommendations from family and friends — compared to just 41 percent of patients over the age of 65.
And more than half of those same young ‘uns said they searched online for health information and relied on online physician ratings before seeing a doctor. And these same folks are not afraid of spreading the word about their experience — good or bad — to their social circle.
The National Association of Realtors data seems to support that this same trend is happening in real estate. According to the just released 2016 NAR Home Buyer and Seller Generational Trends, 46 percent of millennial buyers used word-of-mouth referrals to select their agent — compared to just 32 percent of those 61 and older.
And if logic follows, this younger group will also be inclined to rely on agent ratings and reviews as a way to vet the agent that they select.
So will ratings and reviews simply take the place of production numbers? Certainly not yet, as the current state of agent ratings and reviews is broken, at least compared to the (usually) objective data about how many deals an agent closed. And as I said before, production does matter to a degree.
First, no ratings site will ever have a complete dataset for consumers to get the full picture about an agent. Buyers and sellers are only going to do one review per deal, and there are multiple sites where this can be done. It’s data fragmentation at its best.
Second, and more importantly, millennials are savvy when it comes to rating sites. They know BS when they see it.
Zillow has the most reviews, so I did a simple search of agents in Seattle — my home turf. Page after page after page, I saw only five-star agents. My mouse got tired after 20 pages.
With all due respect for the scores of Premier Agents that popped up on my screen, do we really think that not one of their clients had less than five-star experience?
By no means is this a Zillow-only issue. This selective review bias is pervasive across ratings sites.
The current system might be broken, but millennials will be undeterred in their search for the wisdom of crowds. If they are willing to talk smack about their doc, they will do the same about their agent.
There is an opportunity for the industry, led by NAR, to influence this next generation’s desire for authentic evaluation of real estate professionals, both regarding quantity and quality.
NAR appears to be willing to spend money on wooing millennials on the value of a Realtor as evidenced by its just-announced #GetRealtor campaign.
But the reality is that it would be very difficult for NAR to get into this fray. Politically, it risks disenfranchising a significant number of its members, many of who legitimately might not fit the five-star label.
So who will?
A decade ago, the industry had a chance to step out of its collective comfort zone and deliver what consumers wanted regarding automated valuations. We all know what happened.
Millennials present the next big opportunity for the industry to redefine itself. A decade from now, we will look back and see how we did.
Formerly Senior Vice President of Industry Relations at realtor.com, Russ Cofano is a 25-year industry veteran with executive-level experience in technology, association, MLS and brokerage. You can find him on LinkedIn or Twitter @russcofano.