Measuring Realtor Competence – The Conundrum

First there was this big online debate going on about whether real estate is in fact a relationships business or simply “all business” that got me thinking about the agent selection dilemma. The argument, I believe, is largely semantics. It’s not important that our clients “like” us on Facebook, nor is it necessary that we become best beer drinking buds. The fact remains, however, that beneath every successful real estate transaction is some foundation of a relationship.

The same applies to any business, in fact. I don’t have to have a connection with my doctor – a relationship in the traditional and personal sense – but I do need to feel a connection on some level when I am discussing personal details. I have changed physicians more than once because they forgot their bedside manner somewhere back in 1960. And when one doctor suggested we run a routine test on a little internal thingy he, himself, had surgically removed twelve months earlier, I was not a satisfied customer, yet it had nothing to do with his competence. The actual surgery had gone swimmingly; the fact that I wasn’t important enough to him that he might have remembered — or even have taken a moment to review my chart and fake it — was the issue. Competence alone is not enough.

Real estate agents aren’t doctors, fair enough. We may really hit it off. But how do you know I’m any good at this real estate schtick? How do you measure competence?

Rob Hahn wrote on the topic:

I do not believe that consumers hire real estate agents because of the agent’s skill. The reason is largely that the consumer has no real way of evaluating agent skill.

They don’t, yet they do.

In Rob’s defense, sometimes the nexus between customer satisfaction and agent skill is missing. I have been involved in too many transactions with knucklehead “cooperating brokers” where their clients were by all accounts giddy with the experience, and yet I spent the entire transaction putting out fires and cleaning up their messes to save the sale for my own clients. There is perception, and there is reality.

Also in Rob’s defense, there is so much misinformation being spewed out there in the name of marketing that it’s often hard to separate the wheat from the chaff. One local broker likes to advertise that he has the best “client loyalty” record in all of the Delta Quadrant. Try proving (or disproving) that. My saying that I am a Top Producer, or that I provide superior service – that I am smarter, a better negotiator, or more ethical – does not make it so.  We all say that.

So how does a consumer evaluate the skill of an unknown? Today, thankfully, this is far easier than it was two years or two decades ago. People ask their friends, and by “people,” I mean a new generation of homebuyers and sellers who seek social validation for all of their choices.

Jim Klinge offered his tips for evaluating agents.

He had me head bobbing  — until the end.

“The BEST way to evaluate a realtor is by how many homes they have sold this year.”

Sorry Jim, but that’s only sort of right. I agree that an agent cannot be involved in just one or two transactions a year and possibly stay on top of their game. Too much of the experience we espouse can come only by having been involved in the play situations. But shear numbers alone do not guarantee excellence.

The right answer, I believe, is this:

The BEST way to evaluate a realtor is to consider both the number of transactions and the nature of those transactions.

You see, I can sell fifty homes a year, but if they are all one-hit wonders, all first-time customers I snagged because they bought into my awesome self-promotion and hollow claims, and who hired me untested and on faith, I have proven nothing – except, perhaps, that I am really good at marketing myself. What matters is the “repeat offenders” – those clients who used my services again or referred me to their friends.

In that spirit, and because we are big fans of transparency, here is where Steve and I stand today. (This, by the way, is in between running a brokerage, and it represents the efforts of two little brokers with no REO gig to their credit and nary a transaction coordinator or assistant in sight. And it does not include the transactions closed by our other San Diego Castles Realty agents. It does, however, include our own closings year-to-date plus the escrows we have in the hopper.)

Sales/Sales Pending: 35

Number of sales representing past clients or past client referrals: 17

There are agents who will sell far more homes this year – and far fewer. What’s important is that nearly half of our business came from people for whom we were a known quantity, and they were willing to engage again or suggest that their friends do so. Therein lies the true relationship aspect of the business.

And what about the newer agents? That’s where the real holes in Jim’s theory, and even mine, come in. Newer agents don’t have the years under their belt to have established a lengthy list of past clients. And, I am not prepared to concede that newer agents with fewer sales are by definition inferior. This is where the brokerage and the leadership become important. We have agents who have been working as agents for just a handful of years, not a decade or more, yet I would trust each of them with each one of my clients. This is because we have standards, we have expectations, we have mentoring and we have oversight. Those things are hard to implement with a cast of thousands in a corporate environment.

But what if you don’t have “friends” to ask? Well, the newest generations of homebuyers and sellers have redefined “friend” much like I may be redefining “relationship.” Their search box and social networks are full of them – thousands and thousands of them. You can even find some of them here.

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