The real estate industry has been slow to breakaway from an old paradigm – placing too much emphasis on quantity – says Larry Romito, president and CEO for Quality Service Certification Inc.
“It’s kind of like where the automobile business was in the 1970s. Quality was something that was talked about but they never did anything about,” according to Romito. The real estate industry has been “very focused on sales and production” while lacking adequate standards, metrics and processes for service, he added.
The industry may be quick to applaud its top-producing agents, for example, who amass the largest number of property sales or gobble up mass quantities of commission revenue, though Romito said he expects quality service to be an increasingly important factor in the marketplace. Other industry observers have said that the long-running national housing boom may cover up imperfections in service, while service and marketing can play a bigger role as the market slows.
QSC focuses on training agents in customer service while measuring the quality of service that they provide to clients.
Based in Southern California, Quality Service Certification sends out about 300,000 surveys each year to home buyers and sellers to assess their satisfaction with service they received from agents who participate in the company’s training program or whose brokers participate in the program. A sister company, Leading Research Corp., is responsible for conducting the surveys.
QSC launched in 2000, and two years ago the company launched training and ratings for mortgage professionals, including loan officers and mortgage brokers, and there are about 40 mortgage companies that use QSC’s services.
“The problems are exactly the same – loan officers and loan processors are obsessed with sales and production. Even though many companies talk about service, when you ask them, ‘What is the process, what’s the performance feedback and what do you do about it?’ it becomes a very short conversation,” Romito said.
Client surveys are sent following the successful close of real estate transactions. About 22,000 real estate agents have received the company’s quality service certification, and an additional 15,000 agents are affiliated with brokerages that participate in the program, Romito said. About 600 real estate broker-owners have enrolled in the QSC training program, and about 90 percent of them make the program voluntary for their agents while about 10 percent require agents to participate in the training.
In the surveys, home buyers and sellers are asked to rate agents in a number of service categories. The one-to-five rating scale, with five as the highest rating, ranges from “very satisfied” to “very dissatisfied.” A rating of three is “neutral.”
Consumers can view agents’ and mortgage professionals’ average rating and select agents and mortgage professionals at a QualityService.org Web site. A company CEO can view all ratings information online, while agents and mortgage professionals in that office are allowed to view their own ratings information.
Home sellers, for example, are asked to rate sales associates based on the marketing plan they conducted for the sale of the property, the price and terms of the sale, the assistance provided in negotiating the price and terms of the sale, the quality and frequency of communication provided by the association, attention to details and assistance from contract to closing, and overall satisfaction with the results and service provided by sales associates, among other categories.
The surveys also ask consumers whether a sales associate offered them the company’s “Quality Service Guarantee,” and whether the associate contacted them after closing.
Costs for company services vary based on the size of the company. A company with 50 salespeople or loan officers would pay an initial cost of about $150 per person to enroll in the QSC program, Romito said, and the per-survey cost is about $3.50, which includes mailing and electronic reporting.
While some companies choose to conduct their own surveys, there is always the risk of the “halo effect,” he said, in which clients will provide more glowing feedback because they feel that the survey presenter may be too close to the subject of the survey. An independent survey firm can help to eliminate this survey bias, Romito said.
Agents participating in the QSC program are directed to provide a written service guarantee to buyers and sellers that specify all of the services they plan to provide to them.
QSC participants representing sellers pledge to deliver a comparative market analysis; commit to regular communication including prospect and market feedback; promote property through advertising, direct marketing, industry networking and the Internet; provide counsel and negotiating assistance on all offers to purchase; forward financial information provided by prospective buyers and make efforts to pre-qualify or pre-approve buyers with a lender; offer home-purchase assistance, referral service and access to community and property information; and contact sellers following closing, among other services.
And those certified agents representing home buyers are supposed to, among other services: conduct a counseling and information session to identify the goals and needs of buyers; offer to arrange a meeting with a lender to pre-qualify or pre-approve the buyers; commit to priority availability for meeting buyers’ needs and schedule for property research and showings; identify all properties consistent with buyers’ needs and price range; prepare a written offer to purchase buyer-selected properties that meet buyers’ price and terms; provide counsel and negotiating assistance on all offers to purchase; recommend professional building and pest inspections and review findings and remedies; and accompany buyers on a walk-through property inspection before closing, if provided for in the contract.
Romito said a goal of QSC is to get companies to integrate service into their culture. “We’re shining a spotlight on that relationship between the real estate professional and the consumer. By shining that spotlight, it tends to lift it to a higher level.”
So far, the formula seems to be working, he added. Agents who have completed the QSC training program have an average satisfaction rating of 4.7, compared to a 4.4 average rating for those agents who are rated by the program but do not participate in the training.
Also, he said, the agents who have completed the training process have 45 percent more “very satisfied” clients and 70 percent fewer “dissatisfied” and “very dissatisfied” clients than non-trained agents, based on the average ratings they receive from clients.
There can be insurance benefits, too, for raising the bar in customer service, Romito said, as happy clients tend not to sue as frequently as unhappy clients. “For companies that have been with us a year or more, they are seeing a 10 percent to 30 percent reduction in their (errors and omissions insurance) rate.” Some QSC customers, he said, “are seeing a reduction in threats and claims and now are starting to see a reduction in lawsuits as well.”
And there are benefits to home sellers and buyers, too, he said. “The ultimate beneficiary is the consumer, and so it’s a win-win scenario,” as a program for setting and measuring service standards can serve to separate “pretenders from the contenders” and provide consumers more confidence in a smooth real estate transaction.
Romito borrowed an analogy from the kitchen: “I can’t imagine a world-class chef operating without recipes. There’s no way in the world you could have a consistent, reliable, predictable outcome through random events. That is part of the challenge you have in the service industry – too often improvisation and randomness drives what happens during the service experience.”
And while a lot of real estate companies invest too much effort on clichés and “dazzle” when luring clients, there is the risk that some very basic aspects of service will be overlooked.
An “ugly secret” in the real estate brokerage industry, he said, is that “broker-owners don’t know what their sales associates are doing relative to service delivery. A lot of broker-owners feel as though they have lost control of the business and they want to get it back.”
As the real estate market turns, it may become more critical to look at agent performance and service to consumers, he said. “There is a great danger in assuming spectacular, market-driven results are an indicator that things are going well – it’s an indicator that things are going fast.
“I think what has happened is there is a growing body of successful business owners who are looking beyond today. The real estate market is cyclical … when it changes, (they say) ‘how are we going to compete and maintain market share in a shrinking pool of business?’ Those people are beginning to look at service. When the market slows down, it may be a blessing for us. We are perfectly positioned for the next downturn.”
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