Real estate agents and their brokerage companies have their work cut out for them if they want to remain relevant, according to a key finding in the latest residential real estate satisfaction study from J.D. Power.
Although it has been well-documented that the majority of homebuyers take to the internet before lining up an agent (the National Association of Realtors’ Real Estate In A Digital Age 2017 Report says 57 percent of buyers went online to begin their home search or find out about the process), an increasing number of buyers and sellers, including first-timers in both categories, are foregoing the use of an agent altogether, according to J.D. Power.
The Costa Mesa, California-based marketing, consumer intelligence and analytics company only releases its entire survey results to subscribers, but Craig Martin, senior director of financial services for J.D. Power, confided in an interview that the very first few questions revealed a growing trend toward “going self-service.”
In what Martin called “a surge,” 19 percent of repeat buyers and 14 percent of more experienced sellers did not use an agent in their most recent transaction. Even rookies are eschewing the use of agent – 13 percent of buyers and 9 percent of sellers.
J.D. Power’s 2018 Home Buyer/Seller Satisfaction Study is based on 4,072 evaluations from 3,332 customers who bought and/or sold between March 2017 and April 2018. The survey was taken between March and May of this year.
All four percentages have “grown steadily during the past two years,” a Power company press release pointed out. And company spokesman Brian Jaklitsch said in an email that it appears likely the trend will continue unless agents and the companies they represent don’t change their ways.
According to the 2017 National Association of Realtors Profile of Home Buyers and Sellers, for-sale-by-owners (FSBOs) accounted for 8 percent of 2016 home sales, and they sold their homes, on average, for about $59,000 less than those who used Realtors.
“Seems easy to imagine a situation where [agents] become less and less a factor, profitability of the firms in question (continues to erode), and a lot of jobs are threatened,” Jaklitsch said. “A pessimist might even say they are likely to go the way of taxi cabs and medallions in NYC and elsewhere because of Uber unless they change.”
As Martin sees is, though, real estate agents are not going away; they just have to reconfigure their value proposition. “If all you are doing is executing trades, if all you are is an information broker, your value is gone,” he said in a telephone interview.
What have you done for me lately?
Consumers, he added, are asking two key questions: What are you doing for me? And what am I paying you for?
For agents, “so much of this is about expectation settings,” Martin said. “In theory, anyone can buy and sell a house on his own, but most people want and still need someone who’s an expert and can guide them along their way.”
Keeping clients satisfied is all about keeping people in the know, the survey also found. Overall satisfaction scores are higher when agents provide timely responses to questions, keep clients informed of key points in the transaction and share comparable properties.
Another important factor is social media. Nearly half of buyers (47 percent) and more than half of sellers (55 percent) took to social media to find agents, and the majority they were “delighted” with their choices.
The survey found that reputation is the top factor among first-timers (44 percent of sellers and 39 percent of buyers) in selecting a realty firm, even more so, surprisingly, than word-of-mouth recommendations. For repeat homebuyers and sellers, firm reputation is second (23 percent of buyers and 28 percent of sellers) behind the clients’ previous experience with a particular salesperson.
Most satisfying brokerages
Only five companies, each a national franchise, were evaluated in the J.D. Power survey. But together, they represent 67 percent of the market, according to Martin. The five are Berkshire Hathaway HomeServices, Century 21, Coldwell Banker, Keller Williams and Re/Max.
For the fifth consecutive year, Century 21 had the highest rating among first-time buyers and rookie sellers. But it dipped to fifth among repeat buyers.
After that, the ratings were mixed. Among first-time buyers, Re/Max was second and the only other brokerage on par with average. Among repeat buyers, Berkshire Hathaway, Coldwell Banker and Keller Williams were above average; Re/Max was on par with average.
And among first-time sellers, Keller Williams, Coldwell Banker and Re/Max were below average (Berkshire Hathaway was not rated in this category.)
Correction: This story’s subhead originally erroneously added together the percentages of buyers and sellers eschewing agents. We’ve since updated the story to properly reflect that there are four subsets of buyers and sellers, each with its own percentage. The story has also been updated to reflect that Re/Max is on par with average among buyers. We regret the errors.
Lew Sichelman’s weekly column, “The Housing Scene,” is syndicated to newspapers throughout the country.