What would it take for the real estate industry to rid itself of incompetent agents? Professor of psychology and behavioral economics Dan Ariely’s keynote at Inman Connect San Francisco shared the research showing why change is unlikely anytime soon.
Early in my real estate career, I learned that if you want your deals to close, you have to handle most of the work in the transaction. After two decades, I found about 20 percent of my transactions were with highly competent, professional agents.
The rest of the time, I was handling transaction issues that the other agent either ignored or was unable to solve.
Dan Ariely’s research provides a clear rationale as to why the incompetence issue has been so difficult to address.
Inaction trumps action
A health benefits company tried numerous tactics to persuade its clients to switch from name-brand medications to generic versions. To make the change, the client merely had to sign the form and mail it back.
The company’s first tactic was to show how much money its users could save with generics. When that didn’t work, it offered to drop its copay to zero. No matter what it tried, it didn’t work.
When the company hired Ariely, he had them send every client a letter stating that if they did not elect an option (generic or name-brand), they would stop receiving their medications. At that point, about 90 percent of the clients opted for the generic.
Ariely cited several other examples, as well. “If you had all of your stock holdings liquidated today, would you still buy the same stocks tomorrow?”
The same is true of magazine subscriptions. Once people subscribe, it’s much easier to continue their subscription than it is to change it.
The bottom line here is that it is easier for people to do nothing than it is to make a decision and to take action on it. The real estate industry is struggling with incompetent agents because the decision about how to correct the problem is so difficult, and the implementation is even harder.
Clients reward incompetence
Ariely described a locksmith who was very successful when he first started in the business. About 10 to 20 percent of the time, he would end up breaking the lock as he tried to open it.
When he fixed the broken lock, the clients were so pleased that they tipped him. As he became more competent, he almost never broke a lock. The result was his customer satisfaction dropped, and his tips became negligible.
According to Ariely, opening the door and not breaking the lock took little-perceived effort. Repairing the lock that he broke took more perceived effort and, hence, was worth more.
“It’s not enough to give someone a dollar of your time — they will value you more if they have to wait, and you show that you get sweaty palms helping them,” Ariely said.
Another reason the public tolerates incompetent agents is that competent agents seldom show their clients the work they do on their behalf.
Ariely asked, “When you work with clients, are you conveying the efforts of what you do for them? They only see how many houses you show them. They have no idea about the houses that you didn’t show them.
“They appreciate the curation when they know about it, but if you don’t advise them, do they appreciate the work you did in finding the best properties? The answer is ‘no.'”
Are we asking the right questions?
As the health company scenario above illustrates, the right question can trigger change. Ariely cited the insurance industry that has tapped into this approach.
For example, if the agent asks the client seven questions about what will make him or her sleep better at night, the client will buy a more expensive policy.
Evaluating trade-offs is difficult
The National Association of Realtors reports that the typical consumer knows 12 agents. Ariely’s research shows that consumers do a poor job in comparing options and evaluating trade-offs.
This fact explains why consumers normally hire the agent that they have seen most recently face to face. What questions do we need to ask to change this behavior?
Can customer reviews and education decrease incompetence?
Consumers investigate most purchases they make. As agent reviews include more data — such as the number of transactions closed, customer satisfaction rankings, price ranges and areas the agent serves — consumers will become increasingly more likely to hire competent (rather than incompetent) agents.
In terms of your own business, increase the probability your client leads will hire you by listing the services you provide in a grid. Next, place a checkmark beside each service you listed.
Make at least three more columns where your clients can compare your services with those of your competitors. Because incompetent agents will be unprepared to provide the items on your list, you will probably be the agent who converts the lead.
But you need to do more. As Ariely suggests, show them all the steps you take to close the transaction.
Create videos that illustrate issues your past clients have encountered and get their testimonials about how you helped them to solve their problem. This educates potential clients as to why they need to hire you to cope with any problems in their transaction.
Until the industry can figure out the right questions to ask, be able to educate consumers about what competent agents do to help them navigate the thorny transaction process, and continue to strengthen the review process.
Ariely’s research indicates that incompetent agents will be with us for a long time to come.
Bernice Ross, CEO of RealEstateCoach.com, is a national speaker, author and trainer with over 1,000 published articles and two best-selling real estate books. Learn about her training programs at RealEstateCoach.com/