The early bird gets the worm, and in no industry is this truer than real estate.
RentHop, a site that simplifies the apartment search process, recently released a study on the response rate of brokerages in New York City — the uber-competitive city that never sleeps.
The basis of the study comes from the data RentHop gathers each time a renter submits a listing inquiry. After the inquiry is completed, the site sends a text and email with the renter’s contact information to the listing agent who listed the property.
From there, agents have up to nine hours (during the 8 a.m. to 11 p.m. EST time slot) to follow up with the renter and begin the process of sealing the deal.
According to the study, which provides a snapshot of response rates over the past year, traditional firms and smaller firms with 50 agents or fewer have higher response rates than 100-percent commission firms and larger firms with 51 agents or more.
So, what makes the difference?
On average, traditional firms have an average response rate of 71.07 percent. In comparison, 100 percent commission firms have an average response rate of 68.16 percent.
“Generally speaking, traditional firms operate with far more management in comparison to 100 percent commission firms,” wrote Faye Chou, RentHop‘s statistical data analyst. “Most traditional firms operate with full-time, dedicated agents who work in small teams that are overseen by multiple managers.”
On the other hand, 100-percent commission firms tend to have a higher percentage of part-time agents who operate independently, the study noted.
The lack of management means that agents at 100 percent commission firms aren’t under the sanctions put in place by managers at traditional firms for underperforming in areas such as their responsiveness to buyer inquiries.
In addition to firm commission type, RentHop examined how the size of a firm impacts its response rate. On average, smaller firms had a response rate of 78.42 percent, versus a response rate of 65.06 percent for larger firms.
“This correlation could be attributed to the fact that managers at smaller firms have more control and easier access to individual agents,” the study said. “Managers at a larger firm may have less time to communicate/educate its agents on behaviors that work to bring in leads.”
Lastly, RentHop discovered that firms of all types tend to have lower response rates during the summer and fall seasons, due to the overabundance of inquiries from students, interns and other renters looking for new apartments.
Chou says firms of all types can learn from this study and take certain measures to improve response rates for their potential clients, such as creating incentives for quick response times and educating agents on ways to work efficiently with leads.
“I think brokerage firms can help increase their response rates by simply increasing man power during the summer season to handle the increase in inquiries,” she said.
“Other methods may be installing a carrot and stick (reward/punishment) program that will reward agents who respond more inquiries than an agent who doesn’t.”