There was an article in Inman News that was written by a broker from Colorado. He talked about the number of bad agents and how that is impacting the reputation of our industry and eroding the confidence of consumers who choose to work with a Realtor®. This type of article is written regularly throughout the year. This is an enormous problem and the most serious threat to our industry. It is a problem that we have faced every year before today, and one that we are going to face until consumers simply stop working with Realtors and start hiring companies that supervise Realtors. That day may be far off, or it may be happening widespread today. Let’s unpack the problem.
There are about 1.4 million Realtors in America today, perhaps over 2 million if you count licensed agents who are not members of NAR®. The simple fact is that 2 million people performing 12 million sides are condemned by the laws of large numbers to produce some horrible outcomes. Remember – not only are there bad Realtors®, but there are also bad circumstances, and plenty of bad customers. I will spare you the tragic stories as I am sure that you have piles of your own.
“Raise the Bar,” said NAR. “Code of Ethics, certifications, fines, and training can fix this problem.” That was also the resolve of the broker who penned the Inman article. This does not work.
Fire bad agents – Brokers can do this, but they will have a job at the brokerage down the street within minutes. This strategy does not fix the problem.
There has been countless efforts to solve this problem – one that does work: Allow consumers to share their story, ergo agent ratings.
“Agent Ratings,” said Marilyn Wilson of the WAV Group. She spent years pounding the drum of agent ratings. The industry failed to react with a few exceptions – namely Zillow and Redfin.
Today, Zillow is only passing off customers to agents that have high consumer ratings. No more purchasing leads. Agents need to pay 1/3 of their commission as a referral to Zillow and be the most responsive and best rated agent to earn a customer referral from Zillow. Redfin started this model years ago, too. I believe that you can confidently assess that both Zillow and Redfin are winning with agent ratings. Are you?
Zillow and Redfin have it right. Agent ratings are the only path to some form of resolution. Ratings must be gathered and published for all consumers to see. I believe that NAR should take up the challenge, but I doubt that they will. They have looked at it many times but the board has never had the leadership to require it. I understand why, and find little reason to cite the list of reasons.
Here is the saddest truth. By the time that the industry is desperate enough to launch a mandated agent ratings program, it will be too late. In fact, I would say that it may already be too late.
The real estate industry is changing at hyper speed. Agents have been able to spend billions on acquiring strangers as customers to overcome the bad customer experience – but that is changing. You cannot buy your way to a lead on major portals anymore. You need to earn it. Our research shows that Zillow and companies like them, who mandate agents to perform at their best to get a great rating, are delivering change in an industry that will not fix itself.
Thank you Zillow and Redfin for your leadership. In many ways, you are a reshaping America’s Realtors to be better. Your companies have made the hard decisions with courage. You have made agents better, and separated out those who do not perform. You have taken a beating for it, but emerged stronger.
As for the brokers who supervise agents, Associations who uphold the Realtor Code – I hope that you will consider taking a page out of the Zillow and Redfin’s book. No small broker or group of brokers should be the source of truth on Realtor performance. But that is the way that it stands today because you failed to commit and take early action. But it is not over – bad Realtors can be exposed and cured. The next move is yours. Will you take it?
If you are a business leader – share this with your management team or board of directors. Let’s see who has the determination to be better. Will it be Keller Williams? EXP? Compass? Side? BHHS? Realogy?
Will it be you?
What choice will you make?
Over 90% of all real estate transactions are perfect. Realtors are not bad, but there are a few that consistently disappoint.