AgentsCompared.com Blog

My previous post on what a “top producer” means for the real estate consumer.

Here are some quotes on the subject from folks on Real Estate’s A-list. Thoughts?

“I know of a dozen ‘Top Producers’ who, through time spent or number of transactions closed, are driving under the influence of their own “success” but have no business being behind the wheel.”
–Kris Berg

“Suffice it too say, real estate is and always will be a personalized business built off of relationships. There will still be many, many consumers that will be happy, in fact, more than happy to hire the nice young 22-year old kid they met at an open house who isn’t carrying 15 other listings and willing to kill for their one and only customer.”
–Marc Davison (comment #13)

“I do think that its interesting that the number of units an agent sells is still equated with their proficiency or the level of advocacy and skill they bring to a new client or potential transaction – the truth is there really isn’t a correlation – you could sell a quantity of homes without being the best possible representative for a potential seller – maybe you sell so many because your sellers are intimidated into accepting the first offer they get or accepting terms that might not be optimal for them. Even the number of homes they sell in a specific market only shows where they are most active, not that they are the best agent for the job.While it does indicate a familiarity with that marketplace, it doesn’t mean that the agent is the hardest working, most creative, or the best negotiator – it only indicates (factually) that they had the highest volume. Perhaps I’m alone in the experience but I knew an agent who was extremely high volume and hard working, but really difficult to work with because they didn’t take care of details and were much more interested in facilitating the transaction than being the best advocate for their client – not that they didn’t do an acceptable job, but they didn’t do the ‘best’ job – and the cooperating agent always needed to be the ‘laboring oar’ in any transaction.”
–Bill Lublin (comment #13)

Over the weekend the Chicago Tribune ran a “special advertising section” on short sales, foreclosures, etc. One piece encouraged folks who are considering a short sale – from the buyer or seller side – to “hire experience.” Here are some highlights from the article:

When choosing a real estate agent on either the sell or buy side, one of the most fundamental issues to ask about is experience, says Mike Golden, co-founder of Chicago’s @Properties real estate brokerage. The agent you choose should be experienced in short sales, and able to take you step by step through the process, explaining how long it will take and your role at each stage, he says.
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Sellers should also ask how the agent plans to market the home. The answer should be that the marketing effort will be as or more rigorous than that for a traditional sale, according to Alex Charfen, CEO of Austin, Texas-based Distressed Property Institute.
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Buyers should ask real estate agents how many short sales they’ve completed, and in how many they represented the buyer, says Pat Kelly, broker-agent with Realty World All-Pro.

On a related subject, watch for future posts here that feature local Realtors® telling us what they look for when choosing an agent for themselves (i.e., when making a referral).

Buying or selling a home inevitably subjects you to a litany of potentially confusing abbreviations, acronyms, terms, titles, etc. I thought it might be helpful to start tackling some of them here.

Ever wonder what the difference is between a Realtor®, Real Estate Agent and Real Estate Broker? Here’s the lowdown. Generally speaking, whoever you hire to list your home or show you properties must be licensed by the state. Here in Illinois there are currently two types of licenses, a broker license and a salesperson licensee. [This will be changing soon. Amendments to the Illinois Real Estate License Act will, effective May 2011, eliminate the “salesperson” license and replace it with a “new” broker license. The “old” broker license will in turn be renamed “managing broker”. So we’ll go from brokers and salespersons to managing brokers and brokers.]

Brokers are the backbone of any real estate transaction – for compensation they help you list or purchase real estate. Salespersons, though, are on the front lines – typically serving as an independent contractor of the broker and participating “hands-on” in the listing or purchase. The salesperson is usually your main point of contact – in fact you may never meet the broker. However, someone licensed as a broker could also be working the front lines and performing the functions of a salesperson. Salespersons (and sometimes brokers) are commonly referred to as real estate agents. This is because they are functioning as an agent of their brokerage.

So what, then, is a Realtor®? Brokers and salespersons have the option of joining the National Association of Realtors® (for most, if not all, Illinois licensees, membership is effectively mandatory if they want access to a local MLS). Brokers and salespersons who join NAR are called “Realtors®”. The “®” simply indicates that NAR has registered the term Realtor with the U.S. Patent and Trademark Office, and essentially controls its use. So while all Realtors® are real estate licensees (brokers or salespersons), not all brokers and salespersons are Realtors®.

So what do you really need to know? Before working with a real estate professional, consider checking the status of their license (broker or salesperson) with the state. You’ll want confirm that the license is still valid, and see whether there have been any disciplinary actions taken. You should also confirm with the individual that he or she has direct access to the local MLS. Finally, note that one of the main benefits, according to NAR, of working with a Realtor® is that Realtors® are bound by NAR’s Code of Ethics.

I hope this was helpful. More to come!

The potential benefits of using a “top producer” real estate agent (agent who has closed a significant number of deals over a finite period of time) are probably self-evident. You’d presumably be represented by a professional who knows how to get a deal done (both a listing and a sale), has “seen it all,” so to speak, and whose name recognition may prove to be that extra thing that gets you across the purchase or sale finish line.

But are there also potential drawbacks? Is it always best to hire a top producer, or agent who works for a top producer? Does being a top producer automatically make an agent the right one for you and your particular situation?

My position is probably obvious – this is AgentsCompared.com, not TopProducerAgentsCompared.com. I think there is a lot of good stuff to be said about working with a REALTOR® who perhaps could sell a home in his or her sleep. But I don’t think it automatically makes that professional the right choice for every home buyer and seller. Like most things in life, it just depends.

You won’t find a whole lot written about this subject (shame on me for taking so long to write this post!), which is why this blog post last summer from Chicagoland broker Gary Lucido really stood out. I’d be very interested in your take.

While I came up with the idea for AgentsCompared.com during the summer of 2007, a blog post I read the following spring helped to crystalize some of my thinking. Below is an excerpt from that post, written by Michael Wurzer in March 2008 and posted on his FBS Blog. It was the second in a two-part series on how consumers choose Realtors(R).

[I]s it possible to synthesize [consumer feedback] into a “score” or “rank” in order to provide the consumer with a recommendation? This is what I’ll refer to as the tyranny of the ordered list. Whatever the method is for the agent search, the output is an ordered list, with someone coming out [on] top, just like we see with Google search results. The search algorithm is designed to bring the “best” match to the top. Even leaving aside the fact that many of the sites linked above have revenue models that create conflicts of interest to place certain agents near the top of the search results (or at least to the side like Google AdWords), the reality is that matching a specific consumer’s needs to a specific agent’s qualifications remains ridiculously complex.

Are these ranking sites really helping consumers? They are providing more data but is the data useful? The power of a ranked list is daunting, because it provides an easy short-cut. Why look at agent two or three when there is a number one? Yet is that ranking really anything more than arbitrary given the complex factors involved? Does the ordered or ranked list cut off due diligence when it really should just begin?
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In the end, modeling the consumer selection of an agent on-line is tricky business at best, and the personal referral is likely to dominate for some time to come, and, in many ways, I think this is a good thing. I consider, for example, brokers like Jay Thompson who just went independent and is building a great brand on-line through his blog and other sites the cream of the crop as to how an agent can communicate their value proposition to consumers. That value proposition will be very difficult, if not impossible, to measure or rank, but the web makes it possible for consumers to connect anyway.

As a non-Realtor(R) trying to supplement (not replace) the referral process by helping consumers evaluate and compare real estate agents online, these were my takeaways:

1. Be skeptical of algorithms and resulting efforts to list, score, or rank agents.
2. Avoid models that cause real or apparent conflicts of interest.
3. The best agent for you may not be the best agent for me. There is no objective “best”, so everybody needs to do their own homework.
4. Realtors(R) should fully exploit the Internet to present their value propositions to consumers.

You can see that these lessons found their way into my mini-manifesto.

Don’t forget to check out the comments beneath Michael’s post, which include contributions from some smart people like David Gibbons, Louis Cammarosano, Russell Shaw, and Brian Larson.