ZipRealty Inc. is making public the customer satisfaction ratings that it’s been collecting on its agents for nearly a decade, providing prospective buyers and sellers with a means of vetting agents on the company’s own Web site.
Many third-party Web sites already give consumers the opportunity to rate the services provided by real estate agents and professionals in other fields. Others have sprung up offering to assist those being rated with "online reputation management."
But ZipRealty claims it’s the first national brokerage to provide access to ratings of its own agents.
A spokesman for ZipRealty said that company will report verbatim the average of scores consumers have given agents on a five-star scale. But the company will only publish positive feedback in a separate section for testimonials in each agent’s profile.
ZipRealty has employed a third-party vendor, Key Survey, to administer surveys to clients. Now, agents who have completed at least three transactions can expect the results of those surveys will be available to the public.
Last week, when the process of adding ratings to agent profiles on the company site was still underway, feedback was available for about half of ZipRealty’s 2,800 agents.
Clicking on the profile of San Francisco-based ZipRealty agent Miranda Pan, for example, revealed she’d earned 4.7 out of 5 stars in 18 client reviews. Pan, who specializes in condominiums, tenancies in common, two- to four-unit properties, lofts and investment properties, also had testimonials from eight clients totalling 800 words posted with her profile.
While some of the testimonials were short and quite general, all were positive. A few went into some detail.
"Miranda is the sort of person who doesn’t take ‘no’ for an answer," one of Pan’s past clients wrote. "When the listing agent didn’t return her repeated phone calls, she drove to his office across town and sat in his reception area until he agreed to speak to her. It is this total dedication which makes Miranda a fantastic Realtor."
Last week, ZipRealty said it added 551 agents during the third quarter — a 21 percent increase from a year ago — and boosted transactions by 31 percent, to 5,019. That helped the company trim losses for the quarter to $1.7 million (see story).
In a more detailed quarterly report to investors, the company said it views customer acquisition as one of its "core competencies." According to online metrics tracker Hitwise, the company’s Web site is the fifth most visited in the real estate category.
But ZipRealty executives think continuing deterioration of housing markets will make it increasingly difficult to acquire online leads, the report said. The company hopes to offset that by doing more repeat and referral business, and "increasing our visibility and credibility to potential clients over time."
ZipRealty has also been able to shore up revenue by reducing the commission rebates it offers buyers several times, the company said. It’s done so, the company told investors, by "demonstrating superior service."
Where permissible by law, ZipRealty provides cash rebates to buyers, and represents sellers for less than most traditional brokers. ZipRealty reports that typically, seller clients pay a total brokerage fee of 4.5 percent to 5 percent of a home’s sale price, of which 2.5 percent to 3 percent is paid to agents representing buyers.
Although most of ZipRealty’s business has come from representing buyers, one of the company’s growth strategies is to increase the proportion of sellers it represents.
"If we fail to recruit, hire and retain qualified agents, we would be less able to service our clients and our growth would most likely be impaired," the company warned investors.
Competition for qualified agents is intense, the company said, and retention is "an industrywide issue." ZipRealty may be at an added disadvantage because of the lower commissions its agents earn, the company said.
ZipRealty has experienced "a high degree of agent turnover" in the past, the company said — mostly in the first few months a new agent is employed.
High turnover means ZipRealty must "expend a substantial amount of time and money to replace agents who have left," and could slow expansion into new markets. The company warned it may have to resort to employing "a significantly higher number of new agents with less experience … which could cause us to be less effective at expanding our market share in our existing markets and entering new markets."
Founded in 1999, ZipRealty first turned a profit in 2003, and then made money in nine of 16 quarters from 2003 to 2006 before ending up back in the red during all of 2007 and the first nine months of 2008.
After expanding into 10 new markets in 2007, the company scaled back the pace of growth this year, opening offices in Long Island, N.Y., in March and Hartford, Conn., in July.
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