Real estate: the least trusted profession
The Davison Files
By Marc Davison, Wednesday, March 19, 2008.Bookmarking Sites
In 2006, Harris Interactive published a poll listing the most (and least) trusted professions. Doctors topped the list, and were "completely trusted" by only 50 percent of respondents. Real estate agents neared the bottom of list, again, barely beating out stockbrokers and lagging auto mechanics, lawyers and insurance agents.
Musings, press clippings and polls taken in the United Kingdom show estate agents are viewed in a similar light there.
World over, real estate agents are not trusted. What a bummer.
But I, for one, trust that the only things polls measure correctly are the respondents' satisfaction with their own ignorance.
People don't trust what they don't know
Only half of respondents in the Harris poll trust doctors. This is evidenced by the second and third opinions we seek out after each important diagnosis. As laypeople, we don't know enough about health, law, stocks, auto repair, real estate. By nature, we are suspect of those who know more than we do -- especially if that knowledge is used to sell us something.
Another recent Harris Interactive Poll shows only 30 percent of respondents say they trust the press. A greater percentage of respondents (41 percent) trust Internet news sites and publicly generated information. People feel they have control over the Web to a greater degree than they do mainstream media.
A common thread among every profession listed in the Harris poll is that they regard things we hold most vital to our existence -- our health, money and prized possessions. These things are just too important to hand complete trust over to another person.
And yet, despite this overwhelming amount of distrust, Americans are addicted to medical treatment, to collecting ever more prized possessions, and to a passion for real estate.
Where does the distrust come from? Is it real? Is it affecting how consumers engage with these professions?
When citizens can't tell real from fake
In 2007, Naomi Wolf wrote an article for The Guardian titled, "Fascist America, in 10 easy steps."With regard to the media, she writes, "… you can have a steady stream of lies polluting the news that is so relentless it becomes increasingly hard to sort out truth from untruth. It's not the lies that count but the muddying."
I will argue that this correlates to messaging and marketing as well, and how an abundance of unbelievable, erroneous, gratuitous statements can and will pollute the well of trust for any profession.
This is real estate's greatest folly. The industry's greatest foe is itself. Consider the continuous stream of mercury spilled by the National Association of Realtors' "this is the right time to buy" campaigns into real estate's Love Canal. Consider all the other contaminants released by individual companies and agents -- grandiose untruths that seep into the consumer groundwater. They see it, hear it, read it, and they honestly don't believe a single word of it.
The 7 percent trust factor speaks for itself. But while I believe it correctly measures the respondents' satisfaction with their own ignorance, in this case the ignorance has been deeply cultivated by the real estate industry itself. Consumers are sprayed with phrases like "Internet Gurus," "Gateways to Tomorrow" and "Expert negotiators" in advertisements and commercials when hundreds of thousands of agents can't even remember their e-mail address or know what a URL is.
The secret
Are agents untrustworthy? Some are, but many more are not. Yet many good agents and companies paint themselves with the brush of mistrust by adhering to modes of marketing and branding that fail to set them apart.
Untrustworthy agents hear what their clients say. Trustworthy agents listen.
Untrustworthy agents make deals happen. Trusted agents help people buy and sell homes.
Untrustworthy agents work hard and make a case for it. Trusted agents work smart. They perform magic and do it quietly, with grace.
Untrustworthy agents stress about deals. Trusted agents never lose their cool.
Untrustworthy agents are about me and I across all their brand touch points. Trusted agents place their entire emphasis on "we" on "you."
Untrustworthy agents claim they got into real estate to help people. Trusted agents got into real estate to make a living. They are transparent about that.
Untrustworthy agents say what the consumer wants to hear. Trusted agents tell it like it is.
Untrustworthy agents work with anyone. Trusted agents hand-pick clients.
Untrustworthy agents hide behind templates. Trusted agents speak in their own voice.
Untrustworthy agents use platitudes to market themselves. Trusted agents have stopped marketing themselves in the conventional sense altogether.
Building trust
Years of experience is great, as are designations. Continuing education -- better yet, self-education -- rocks. But none of these things cultivates trust. Doctors and lawyers have experience, designations and education, and at least half the Harris poll respondents don't trust them.
Trust comes from a deeper place. Sophistication cannot be faked. Honor leaves a long, visible trail and results are easy to quantify. These are the only things that matter and they are wrapped up in something called truth. The real estate industry will continue to grapple with distrust, and practitioners will continue to fight to prove their value as long as they continue to believe that pulling the wool over consumers' eyes is their best shot at redemption.
Marc Davison is a partner at 1000watt Consulting. He can be reached at marc@1000wattconsulting.com.
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Submitted by Christi Borden, CIPS, ABR, GRI on March 19, 2008 - 7:05am.
Great Article. Wow... I have copied this for my team to remind us that we have to continually earn the trust of our clients and work diligently to keep it throughout the transaction. One of the reasons that I became a Realtor was a trust issue (or lack there of) with my own Realtor. If we all perform to the best of our ability and at the highest level of integrity, then we can raise the public opinion of our group as a whole. But remember, we are always brought down to the lowest common denominator in the eyes of the public and the press. In my opinion, our industry must do a better job training the good realtors and weeding out the bad, before we are able to raise the bar in real estate.
Your Katy, TX Realtor,
Christi Borden, CIPS, GRI, ABR
Prudential Gary Greene, Realtors
Email: Christi@ChristiBorden.com
Web: www.ChristiBorden.com
Cell: 832-372-7470
Submitted by Lawrence Bunnell on March 19, 2008 - 7:17am.
Perhaps the reason agents are seen as untrustworthy is because the traditional, commissioned based model is set up in such a way as to make the incentives for agents and clients at odds with one another. I believe Inman reported on a study of Chicago real estate agents that showed that real estate agents hold out for better offers and get higher sales prices when selling their own homes than they do when they sell the homes of their clients. The reason is fairly obvious. Under the traditional commission based model, an agent's incentive is to sell homes quickly. A fast sale cuts down on advertising costs and work hours utilized by the agent and their staff. Holding out for a higher price for their clients only marginally increases the agents's bottom line and, when ad costs and time are factored in, can actually make for a wash or loss in terms of additional compensation.
From an objective viewpoint, you'd have to agree that there's a lot that doesn't make sense with the traditional model. I mean, where else can a professional earn the same amount of compensation for a job that takes 6 days to complete as they can for a job that takes 6 months? Apparently the amount of time involved in the job has no relation to value. Where else can a professional who has 1 month of experience charge the same rate as one with 10 years of experience? Apparently experience has no relation to value. And, where else can someone perform approximately the same amount of work on a $200,000 property as they do on a $1,000,000 property and yet receive a difference in compensation of $48,000?!!! Apparently the amount of work involved has no relation to value either.
If agents want to improve their image, they should devise methods or models for doing business that provide for them to be compensated in ways that are commensurate with the with the actual service provided, the amount of work involved and the time spent providing the service. Then we can begin to again build confidence and trust with consumers.
Submitted by REALonomics .net on March 19, 2008 - 8:08am.
The most significant observation in Marc's article is, "People don't trust what they don't know."
The consumer wants transparency and full access to all things "real estate." Transparency, complete access to property information and a sense of full partnership create trust...nothing less.
We are an industry whose model was birthed in an era of information control. For the most part this model still prevails despite the overwhelming evidence that it doesn't work and the consumer doesn't want it.
It's silly and sad that we continue to think we can spit shine our broken model. Do we really think we can duct tape or super-glue the pieces of an industry that is becoming increasingly shattered into thousands of shards.
Mr. Davison hit the nail on the head when he likened us to an industry with "an abundance of unbelievable, erroneous, gratuitous statements can and will pollute the well of trust for any profession."
To this day, our story remains about us, sadly.
Submitted by Walter Boomsma on March 20, 2008 - 4:11am.
People may not trust what they don't know... I'm not sure I totally accept that, but there's an element of truth.
I think it would be more to the point to suggest "People don't trust people who clearly do not know what they are doing."
I am constantly amazed at the amount of consumer education I must do with clients - many of whom have bought and sold and worked with another number of "real estate professionals." If these professionals know what they are doing they are unable to communicate it to their clients.
As a real estate instructor I find a number of people taking costly prelicensing courses with no intention of getting licensed. They want to know either because they are investing... or some freely say "so I won't get screwed by an agent."
The commission model has worked for a long time in other industries... but it works best when there are checks and balances that are sadly lacking in the real estate model where agents are independent contractors with little or no supervision or accountability. It is easy to forget that agencies (companies) are as much about commission as individual agents.
On the consumer side, there's even ignorance about the commission model! A lot of consumers seem to think the agent gets the entire amount.
I agree wholeheartedly the industry is it's greatest foe - or in the words of the cartoon character Pogo, "We have met the enemy and he is us."
Submitted by Richard Greenwood on March 20, 2008 - 7:41am.
As long as we continue to allow DUAL AGENCY, we open the door for conflicts of interest that will continue to diminish our stature as professionals.
Submitted by Lori Turoff on March 21, 2008 - 8:42am.
We are indeed our own worst enemy. As long as just about anyone with a pulse is able to hold themselves out as a "real estate professional" our image will remain tarnished despite the presence of agents who excel. I've read that 20% of agents do 80% of the business. What, though, is the incentive for a brokerage to turn away those other 80% of agents who do little business when, often, it costs the broker next to nothing to allow the agent to hang a license? Should a deal come to fruition due to one of these agents the broker still reaps 50% or so of the reward. In other businesses, non-producing employees are expensive for an employer to retain due to the obligation to pay payroll taxes and possibly benefit packages. As independent contractors, brokers have to do little to take on mediocre agents. Perhaps that has something to do with our problem?
Submitted by Sol Sek on March 21, 2008 - 8:55am.
Today's consumers could care less about the EFFORTS put in by their agents. What is most important to them is RESULT. They don't care how you go about at getting things done, as long as it's done as promised.
Commission and agency issues are hybrids of the real concern which is consumers want result-based representation.
People are tired of the bait-and-switch used by agents that promise one price and close at another. They are tired of agents performing needless activities to score points.
Regardless of the industry, great service is expected. I believe our industry as a whole is doing the public a disservice by assuming more service-more efforts means more value to the public.
We ought to be discussing ways to improve result vs. ways to make us look like we are working harder than ever.
Submitted by Debra Stone on March 21, 2008 - 9:49am.
I believe that the real issue in the real estate industry involving trust comes from a variety of issues. First,it is not seen as a true profession. The barrier to entry is very low. Most of us realize that almost anyone can get a license. Requirements are not high, so we should not be surprised at the results. We need to really change the requirements for licensing and demand higher standards from the real estate industry, if we want to gain respect in the eyes of the public. If your industry itself values entry requirements so little, how can we expect the public to respect our license. We must raise our standards ourselves to regain our position as trusted advisors for our clients.
Second, the regulators do not have sufficient staff to make sure that all are following the regulations. More auditing and other checking of standards needs to be done in order to monitor the industry. The public needs to understand how the industry works. For the most part, because of lack of staff, the regulators rely on brokers to do their part. But with so many agents and so much activity, we all know it is difficult to monitor the process. One idea would be to have brokers audit each other. This is done with other professions, like CPA's. Better oversight and more transperancy would be the result.
Finally, if we work together, we can change our industry for the good. The first step is recognizing that we need to change ourselves, then we can take action. For the most part most Realtors or agents are competitors, many of us do not get involved in the process of the business of our industry as a whole. Serious Realtors must get involved in their associations and industry groups to work for change.
Submitted by Susie Blackmon on March 22, 2008 - 5:49am.
This is one of the very best articles about 'good' realtors that I have read. No matter what we do, not policing our own is our biggest enemy. We also need to have higher fees and higher educational requirements in order to be licensed in real estate.
Susie Blackmon
http://www.BuckingtheRealEstateTrend.com