Why Most Real Estate Agents Fail

According to the National Association of Realtors 2009 Member Profile, the average real estate sales associate in 2009 made about $27,000.  That’s the average, meaning that for every top producer putting $200,000 or $300,000 in his or her pocket, there are a dozen agents making basically minimum wage.  Put it this way: a receptionist in an office can make about $30,000 to 35,000 a year, which is more than most of the agents in that office probably make.

This is just an astounding, tragic statistic, one that most people in the industry just blithely accept in a commissioned sales environment.  Yes, it includes a lot of part-time agents, or agents who are new to the business, but that’s not really the reason that most agents make what is essentially a minimum wage.

So what’s the real reason?  If I ask a group of agents why, they’ll say that most agents don’t do enough lead generation.  Some will say, of course, that their brokers don’t do enough lead generation, like Shelley Levene in Glengarry Glen Ross complaining that he never gets “the good leads.”  But no matter how you slice it, it always comes back to sales opportunities: agents would sell more houses if they had better leads.

That’s just nonsense. The problem with our industry isn’t the leads — we have plenty of leads. NAR says that 5 million homes are going to be sold this year.  (Of course, NAR also has about a million members, so do the math).

Here’s the reason: most agents aren’t very good at their jobs.  It’s as simple as that. If you’re a doctor, and you don’t have any clients, it’s not a matter of not having enough sick people. If you’re a lawyer, sitting around all day waiting for phone to ring, it’s not because people stopped having legal problems. It means you’re not very good at your job.

That’s the sad truth, but it’s not the agent’s fault.  It’s the industry’s, which has never focused training on core competencies, instead allowing licensing classes to devolve into long discourses on “fee simple absolutes,” coaching courses to be dominated by prospecting methology, and ongoing education to be dedicated to ethics, compliance, and the hot topic of the month (the eight hundred or so short sale certifications that are now out there).

And the problem certainly is not that we don’t do enough as an industry to teach agents how to generate leads — indeed, virtually the entire sales training apparatus in the industry is about lead generation, whether it be through prospecting or sphere development or marketing online or whatever.

No, the problem is competency. Agents who are good at their jobs sell a lot of houses, just like doctors who are good at their jobs develop thriving practices. Show me a group of top performing agents, and I’ll show you a group of people I’d probably be willing to list my home with.  They’re probably agents who have basic sales skills, of course, but I bet that they also know how to take care of clients, how to do their jobs.

Think about how ludicrous it is that the industry spends so little time teaching competency, instead focusing on prospecting or ethics compliance.  The industry spends all its time teaching agents how to prospect on the sales coaching side, then spends the rest of its time on the NAR side scaring everyone about ethics and compliance.  No one teaches basic competency: learning skills that actually matter in the field, and learning how to deliver an amazing client experience.

One reason, of course, is that NAR itself is an organization largely staffed by people that don’t sell a lot of houses — all those nattering busybodies filling our local boards who themselves sell three houses a year and therefore have the time to devote to going to a lot of meetings to debate policies over coffee.  Look at a local NAR board, and add up all the transactions closed in 2010 by all the members put together, and I’ll bet in most cases there are 50 agents in the local region who sell more homes than the entire group. Go ahead, prove me wrong, send me your local board members and their 2010 production. There might be exceptions, but I’m betting that I’m right about the rule.

Listen, my point is not to denigrate our profession. I love real estate agents, even the ones that for some unholy reason don’t work with my company.  But we all know that this profession has to become better at servicing the needs of clients, and it starts with each individual real estate agent.  It should be shocking — and bracing — to hear that most real estate agents don’t make as much as the receptionists.  The question is what do you do next?  Do you keep doing the same old things that don’t work for you, or do you start building new skills, following new systems, and taking a new approach to your business.

What do we do about it? If you’re an agent, take a client-oriented approach to your business.  Stop working on lead generation, unless your lead generation activities are actually providing a service to your clients. Work on your own client service skills.  Learn how to do a better job for your clients.  If you build up those skills, the deals will come.

How do you get there?

If you need to do something RIGHT NOW to get you started in the right direction, take these three simple steps:

  1. Take a look at each of your listings, and make sure that all the details are correct, the descriptions are correct, and the pictures are high quality and in high-resolution.  If not, you have work to do.
  2. Call every one of your buyers, whether they are active or not, and touch base with them.  Find out if they need you.
  3. Do a new CMA for every one of your sellers, unless the listing is less than a month old, and send it to them.  Set a date to meet with them to review the results of your marketing plan, review the pricing environment, and decide whether you need new pictures and a new description.

And if you want to start building your knowledge and skills, keep tuned to this blog.  We’ll be publishing a lot of information and advice about how to build your skill base and take a client-oriented approach to your business.  If you want to catch up, read up on some of the back posts, which will tell you where I’m coming from.

The fact that you want to become better is the most important thing to keep in mind right now. If you want to succeed at this business, and are willing to do the things that will help you succeed, you will.

Reviewing the iPad Apps from Realtor.com, Trulia, and Zillow: The New Home Search Paradigm

I love my iPad. Seriously. I find myself curling up in bed with it, with no particular idea of what I’m going to do with it other than that I want to play with it. I read my books on it, surf the web, read blogs, and I’ve even started reading comic books again because they look so cool on the display.

But what I’ve been doing recently is looking at real estate. Not just because I’m a broker, but because, like a lot of people, I just like looking at real estate.  When I started using the iPad2 for home search, I used the Zillow app because it was the only one available, then tried out to Trulia when that came out, and immediately test drove Realtor.com’s app when I saw Brian Boero’s post that it had finally been released.

Having used an iPad2 to look for a home, using all the major iPad apps, I can tell you that tablets are the future of real estate search. It’s really a new search paradigm, built from the Godlike perspective of looking down on an area and seeing what’s available on a big map, rather than setting up a set of criteria and reviewing a list of responsive properties.  Right now, most people start a home search online by building up — identifying what they want (location, price, bedrooms, bathrooms), generating a list, and then reviewing the list.  On a tablet, you don’t build up, you narrow down — you start by looking at a map and seeing every property for sale on that map screen, then you winnow it down by putting in restrictive criteria.  The tablet flip the search experience from a building to a narrowing process, and that is bound to change the kinds of homes that buyers end up becoming interested in.

Moreover, tablets provide a gamechanging experience for most consumers through GPS search, something that most consumers never had on their laptop.  My wife and I drove through the New Jersey shore with an iPad2 in her lap, using Realtor.com’s app to constantly refresh homes for sale that met our basic price and size criteria.  We did drive bys of about 25 properties, something that would have been impossible to set up using more traditional real estate sites.

Finally, the iPad experience is much more immersive than a laptop or computer.  It’s just seductive, almost addictive, to poke, prod, and swipe the screen looking at properties on the big map.

Having spent so much time playing on them, I thought I’d put together a review of the Realtor.com, Trulia, and Zillow apps (the only other major company with a search app is Coldwell Banker, but as of now it only has CB listings on it, which is pretty limited to most buyers who don’t say to themselves, “I really just want a Coldwell Banker listing”).

I broke down the reviews like so:

  • Overall Impressions
  • Main Display
  • Property Details
  • Search Experience
  • Other stuff I liked and didn’t like.

To test the apps, I not only had my experience searching for shore properties, but also looked at properties in my market area. I didn’t find a major difference in the inventory, although I didn’t really look that hard at the issue.

Overall

Overall, I will say that I liked all the apps.  They all provide truly immersive experiences, to the point that just looking at random real estate is one of my favorite things to do on the iPad.  The extent to which I’ve elaborated on differences is a little bit of hair splitting, because any one of them would be great for most home buyers looking for a home.

In my experience, though, I found myself liking and using Realtor.com the most. Realtor.com has the ugliest main display, and I don’t understand why they are still using those thumb-tacks on the map to display properties when a house icon indicating price is so much more effective. But the drawing tool in the search function is a game-changer, and so far only Realtor.com has it.  I thought Trulia provided a terrific experience, but the lack of saving features kept it from being a contended. And I was a little disappointed in Zillow, which had the best overall display but was too heavily about Zillowish stuff (i.e. Zestimates and agent advertising) and not enough about what the client actually wants in a search app.

 

Main Display

All three sites follow the same basic format, with the main display a map that shows properties for sale and a list along one side of the screen with more details about the the listings. All three allow you to view the map either as a street view (like a map) or a satellite-hybrid view (a Google Earth photo view with streets superimposed on it).

I thought that Zillow’s layout was terrific, very clean and easy to follow, with more space given over to the listing details rather than the map. That allowed for larger pictures and important information like property address to be included in the list of properties.

Trulia’s display was laid out the same way, but less space was given for the actual property details, including not providing the property address in the list unless you click on the property. That’s a pretty serious omission. The pictures were also significantly smaller, making the list view less helpful.

Realtor.com’s list view provided address information along with other pertinent sales information, but its pictures were even smaller than Trulia. I also didn’t like that Realtor.com’s default view of the map showed the listings as virtual “thumbtacks” without displaying prices. The other sites show the listings as tiny houses showing the price of the home, which is much more helpful. (You can see the tiny houses with prices on Realtor.com in the “scout” view, but I don’t know why that’s necessary). I did, though, like that Realtor.com allowed for a “gallery” view if you want to see the properties laid out for you rather than see them displayed on the map.

The Winner: Zillow

This was a close call.  All the displays are inviting and intuitive, but I thought Zillow found the best balance between space given over to the map and detailed information on the property displays.

Property Details

Although the main display of the apps are similar, the way they display actual property details is very different. In Trulia and Realtor.com, clicking on an individual property takes you to a new “property display” that shows the pictures of the property and all the details in a tabbed format. But Zillow works entirely through the list view along the right hand side of the screen, so if you click on a particular property the list view disappears, replaced by the property view. You then scroll through the details from top to bottom.

The Winner: Realtor.com

Realtor.com has the best property display, hands-down. When you click on a property, you default to an “overview” that has the property description, listing date, and the broker information along with a reasonably-sized picture. Realtor.com also gives you a large section (probably too large, frankly) to take notes, give a rating, or send the listing and a separate details tab to look at a bunch of jumbled details about the property (I wish it were organized better, and highlight the more important areas of taxes better). Most importantly, Realtor.com allows you to save the listing, which is crucial during a home search and is something that Trulia does not have yet (but promises at some point).

Trulia has the prettiest display, making the pictures more prominent than Realtor.com, and it has a great section on Tax and Price History that Realtor.com should add. But it is missing some really important property details that are included in Realtor.com. Most importantly, the inability to save a listing makes the app a nice way to surf around, but unusable for a prolonged property search. They indicate they’re working on that.

I really did not like Zillow’s property display. They limit you to looking at the property in the narrow bar that normally contains the property list view. That’s okay, since you can scroll down to get details rather than touch on different tabs. And you can save favorites, which is so important. But some property details were missing, and the setup was a little awkward when looking at individual properties. You use the same motion to swipe through photos as swipe through properties, and the display is narrow, so people like me with fat fingers are likely to accidentally swipe out a property when they’re just trying to swipe through pictures. Also, Zillow’s silly Zestimate functions are too prominent. Zillow’s “zestimates,” particularly the “Rent Zestimate,” might as well be a random number generator for all of their accuracy.  They’re a waste of valuable real estate (ummm, forgive the pun) on the app.

Search Experience

All three apps need some work refining the search experience, at least in my opinion. They all want you to search on the map, to the detriment of traditional searches based on parameters like town location that are often important to buyers. For example, a buyer wanting to stay in the town of New City (which is where our main headquarters is) in order to get the local school district will have difficulty limiting her search to just New City using all the apps, since the apps want you to use the map to define your search area.

My feeling is that map searching is an amazing thing, and one of the reasons to use these apps, but many buyers still define their searches primarily on town lines. I would suggest they make the location search easier and more prominent to accommodate those users.

The Winner: Realtor.com

Realtor.com wins for its overall more nuanced search capability, including being the one app that allows for restricting searches by area designations. Realtor.com not only has more detail based searching (such as restricting searches to homes with pools), but it was the only app that you could use to search for a particular town, and which would only show you homes in that town even if you moved off the map.

But it not only has the best area-based search, it also has the best map-based searching, simply because it has its “drawing” function that allows you to literally trace a circle on a map and search only for properties within that circle. I love that function. Although I think you need area-based searching, I think that if you’re going to have map based search, the best way to do that is to actually define your area by hand when looking at a map.  I think that it’s enormously helpful to buyers who are really just looking in a neighborhood.

For example, I was doing a search for near-beach properties at the New Jersey shore, and was able to use the drawing function to only show me properties that were near the beach, as opposed to using a town-based search that would show me everything in the town. This is the perfect application of map-based searching, and it seems to be a Realtor.com app exclusive.

My problems with Realtor.com? I found some oddities in the location-based searching, including properties from out of the area. It’s also unclear to me why Realtor.com won’t show you all the properties responsive to the search, instead giving you a prompt to “Show More Listings” without any indication of how many listings you’re not seeing.

Trulia

Trulia’s search function was great if you want to start with a map-based search. As you move on the map, the search refines itself to show you responsive properties to your search terms (price, size, etc.) within the map space. My problem is that if people want to limit a search to a town, they can’t move around on the map without refining the search to the map space. So I started a search in New City, got only New City properties, then moved south on the map only to find that the search terms automatically refined to include the map area, which included areas outside of New City.

Also, Trulia doesn’t allow you to save properties that you find in the search, or to save your searches. That’s a deal-breaker. You can’t do a rigorous home search without the ability to save properties or save your searches. Hopefully, they’ll fix that soon, because the map interface is great.

Zillow

Zillow search function is the weakest of all the apps, because it is entirely map based. You can’t search for particular towns, you can only set the map for an area and then “filter” the search for your basic parameters (price, type, size, etc.). This can be a little limiting. If you want to search for homes in Town A, you can put “Town A” in the search bar above the map and the map will go to Town A. But if the map also happens to include part of Town B, Town B listings will also show up on your search. That’s not as useful to most buyers, who often need to limit their searches to particular towns (to stay in a school district, for example).

The search (really, the “filter”) function is also littered with typical Zillow nonsense like viewing “Zestimate Homes” or “Make Me Move” homes. I’m surprised they ported those over to the app, since they’re deemphasizing them on the site.

Miscellaneous

Here are some other things I liked and didn’t like about the apps:

Realtor.com

  • I liked the prominent placement of the listing agent on the property detail page.  I just feel like these apps should reward the listing agents that provide them with the inventory that drives their sites. From the service perspective, it also makes sense to direct interested buyers to the person who knows the home best, rather than to someone whose primary qualification is the willingness to purchase advertising space.
  • I liked the ability to take notes on the listing, or assign ratings. Very prominent.  Maybe a little too prominent, because it takes up a lot of space on the property details display. But a serious buyer will like that feature, particularly to share notes with a co-purchaser (i.e., like a spouse sharing the account).
  • I liked the ability to go to a “gallery view” of properties, which the other apps did not have.
  • I liked the ease of saving and going back to saved searches.
  • I liked sharing shortcuts available on the settings section, which allowed me to set up my wife as my sharing “friend,” so I didn’t have to put her email address in every time I wanted to send her a property.
  • I didn’t like the necessity to go to “scout” view to see the home prices listed with the icons on the map, and didn’t understand what scout view even was.
  • I really didn’t like that the app would not show you all the properties on the map, but simply indicate that “more listings were available.”  That’s not helpful.  Put them all on the map, even if it creates a big mess, and I’ll zoom in to clear it up.

Trulia

  • I liked Trulia’s contact page, which provides a simple contact form that goes to the listing agent (at least on the properties I checked).
  • I liked Trulia’s property display, putting the pictures in a more prominent place and displaying them in a larger size. The other apps give you smaller pictures, but allow you to click on them to go into a slideshow mode.  Trulia starts in the slideshow mode.
  • I liked the tax and price history, although the data was often incomplete or wrong.  but when it was there, it was very insightful.
  • I liked the idea of Trulia’s research-y sections, involving cool shaded overlays on the maps to show you different average price ranges, and the ability to see neighborhood lines, restaurants and other amenities, and school locations.  Most of that stuff didn’t work for the areas in which I searched, but I figure they’ll build it out.
  • I didn’t like Trulia’s separation of core “property facts” from the agent-written “property description,” or the need to toggle tabs from one to the other.  They really should be combined in some way.

Zillow

  • I liked the prominent placement of “last sale” and tax info, which was tougher to find on the other apps.
  • I liked Zillow’s provision of comparable sales, which if available I could not find on the other apps.
  • I liked that Zillow allowed me to search by sold properties, which I could not find in the other apps.
  • I didn’t like Zillow putting “Zestimates” above the property description in the scroll list of information about the property was a ludicrous, self-serving choice. In particular, including a rental “Zestimate” on most properties is a waste of space, and probably should be an option for people who self-describe as investors.
  • I really didn’t like Zillow’s business model of putting competing broker advertising on a listing, directing consumers to approach buyer agents simply because those agents are paying for advertising on Zillow. Typically, Zillow suggested three “buyer agents” with contact information and a picture, then buried the actual listing agent’s name and contact information at the bottom without a picture. It’s simply wrong to take listing data from participating brokers, stock your website with that data for free, and then sell advertising space on that broker’s listing. It’s why many brokers will probably pull their listing data from Zillow, which will make Zillow a much less useful search tool in the future, although probably too late to impact their public offering.

Conclusion:

I should disclose that I have absolutely no idea what, if any, relationship my real estate company has with any of these organizations, although I am pretty sure that we give at least some of them a good deal of money to enhance our listings. I have no connection with anyone at the sites or the apps, and didn’t tell anyone I was writing this to get their insight into the app. I just used them the way consumers would use them.  So if you think I’m completely wrong, I came to my misjudgments honestly.

Also, if I have gotten something wrong factually, or if the apps are updated such that I can amend some of this, I hope someone will let me know. I’m happy to discuss this in comments.

UPDATE: this post has been modified slightly from the original.

Buying a home is easier than buying a car.

When you talk to clients about how our real estate market works, remember this.

Buying a home should be harder than buying a car.  It should be, but it’s not.

I mean, yes, it’s harder in the sense that you generally need a lot more money, and you have to sign a LOT more documents.  But FINDING a home is actually easier, and more fun, than finding a car.

Why?  Two things.  First, you get your own agent to help you. When you’re buying a car, everyone works for the seller.  It’s not like you go to the car lot and someone comes up to you to help you identify the right car for you, assist you in getting the right financing, and negotiate your deal.  I mean, you’ll get someone to help you with those things, but they won’t be working for you, they’ll be working for the seller.   But when you buy a home, you can retain a buyer agent who has a fiduciary duty to represent your interests — against the interests of the seller.

(As an aside: Can you imagine how great it would be if someone created a company that provided for “buyer agents” for car purchases?  Someone who would research all those car styles for you, help you figure out which car was right for you, and then negotiate your deal, your financing, and your insurance?  I LOVE that idea.  Please, someone steal it and create that company.)

Second, the broker-supported (i.e. MLS) real estate market has developed into almost a perfectly fluid market — virtually all the inventory is available on that market, virtually all buyers and sellers participate in the market, and the result is that homes pretty much sell for what the market will bear.  Think about it: almost all sellers in the Hudson Valley put their homes in that MLS-created market, almost all brokers will work to show and sell all those homes, and every buyer who participates in the market will find every one of those homes if she looks for them.  What that does is create a fluid market where prices rise to the level of the real demand.

You don’t see inefficiencies that, for example, would create a situation where a home on one street sells for $X, and an identical home a block over sells for $X-plus-a-lot.  You see that in car sales a lot, since most people don’t have very good information on how much similar cars are selling for in the area  — you don’t get “comps” when you’re looking at cars.  And my sense of car dealerships is that even two identical cars might sell for very different prices on the same day from the same dealer to two different buyers.

The other nice part about the open and fluid real estate market is that you don’t have to visit every real estate broker to SEE that inventory.  It’s not like car dealerships, where that dealership can ONLY show you the cars on its lot (or in inventory), but can’t sell you the cars offered by other dealers.  So if you’re buying a car, you have to visit the Ford dealer, and the Chrysler dealer, and the Chevy dealer, and the Honda dealer, and the Nissan dealer, and so on.  And you can’t even just visit ONE Chrysler dealer, since the other Chrysler dealer in the next county over might have other cars you might want.

Now, I’d certainly like it if every buyer came to Better Homes and Gardens Rand Realty to see our listings, since we have more listings in the Hudson Valley than any other broker. That would be pretty good for us.  But we all know that the Rand listings are available to all MLS brokers, meaning that you can see our listings whether you’re working with one of our agents, or another company’s agent.

So because of the way the real estate market works, you have a nice open market with someone who will guide you as your fiduciary through the whole process.  But when you’re buying a car, you have a closed-off market that requires a lot of extra work for you to hunt down what you want, and throughout the process you’ll always be working with people who work for the seller.

Buying a home is a great experience, or should be when you’ve got a great agent.  Tell your clients that.

What Would the World’s Best Real Estate Agent Do?

We just had a great session today with about 300 agents covering how the World’s Best Real Estate Agent would develop her business.  The question I’m posing to the class is “What Would the World’s Best Real Estate Agent Do?” with regard to all aspects of her business. How would she manage her clients? How would she deal with other agents? What tools would she use? And how would she build her business?

I’ve set up the Discussion space above for agents to submit their thoughts. Make suggestions, share ideas, write about your success stories, or give us an idea of what we could do to create a better service experience for agents and clients.

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