In its September 2008 issue, alongside its reviews of tub cleaners and organic produce, Consumer Reports turns its critical eye on the real estate industry.
The publication polled a sample of 3753 readers who sold or tried to sell a home, 4029 readers who bought a home and 7368 readers who did both. The results are illuminating to anyone in the industry; especially some of its findings which will surely be controversial.
Let’s look a bit deeper at the numbers.
First, the good news. Only 1% of sellers tried to use an online web site (craigslist, forsalebyowner.com etc.) to sell their home. 80% chose to go with an agent. It suggests that any fears that online players may someday distermediate the Realtors seem overblown. Sellers want to work with a real estate professional.
The bad news is that CR concludes is that overall “higher commission didn’t always translate into more service or better results.”
Moreover, respondants who “paid commissions of 3 percent or less were just as happy with their brokers performance as those who paid 6 percent or more.” In fact, those who paid more were “more likely to say they had regrets about the selling process”.
More troubling, is that CR recommends that consumers continue to aggressive negotiate the 6% commission downwards.
Seems to me that the real challenge here is that, moving forward, the industry needs do a better job of communicating its value (beyond puff advertising pieces) and, more importantly, delivering that value to consumers.
There are many ways to turn this tide, but I believe one way to slow the downwards trend on commissions is if brokers and agents can demonstrate to consumers they have an aggressive multi-modal marketing package in place for each and every listing.
Unfortunately, despite overwhelming evidence that consumers are looking for homes on the Internet (about 80%), it seems some Realtors are still choosing to ignore the medium.
According to CR, 85% of Keller Williams agents advertised homes on the Web – compared to only 76% of RE/MAX agents and 75% of Century 21 agents. The numbers, while high, are still unacceptable.
Agents should be syndicating their listings across the Net, taking dozens of high quality photos of the home, creating single property sites, doing video tours, blogging about their listings’ key selling features. Any or all of these approaches can add value (either real or perceived) to the bottom line of the transaction.
Brokers aren’t off the hook either. They need to be educating their agents on what the 21st Century internet-savvy buyer is looking for and then provide platforms that can deliver those services to their agents.
The Internet is not the be all and end all to getting a home sold. But far from being a threat to the 6 percent commission, it may just end up being its salvation.