Reviewing agent performance - the transparency challenge in real estate

by Alistair Helm in


We live in a world fast becoming fixated by feedback mechanisms. I was reading a very amusing article over the weekend from the New York Times entitled “Ouch, My Personality, Reviewed” in which the author obsesses about how her ratings score on Uber is now 4.5 out of 5 and the nightmarish possibility that if it slips to 4.0 then she may not get any more Uber rides!

We seem to be moving from a world where we as consumers, sat on one side of the fence and endlessly filled out reviews about manufacturers and service providers on the other side of the fence, immune to the possibility that those service providers might rate us as consumers. It might just come to the possibility that instead of being told by the call centre recorded message that “this call may be monitored for training purposes” we hear “this call may be monitored to provide feedback as to your response to customer services” - such data being shared with other customer service centres thereby impacting your call-waiting time!

This expansion of customer reviews and ratings has become somewhat of a web 2.1 (whatever happened to web 2.0 and web 3.0??) phenomena - a feedback mechanism that is, we are told pivotable in influencing over 85% of purchases nowadays. It seems (and I know from my own experience) that we check reviews before we buy anything - we check the ratings of cafes and restaurants, hotels and even airline seats. We certainly would not watch a film or listen to music without the collective opinion of as wide an audience as possible. 

So where and how is this phenomena touching the real estate industry? Ask an agent and they will point you to their testimonials - those 14 perfectly manicured and edited references on their website - “from Mr & Mrs A of Blah Blah Street who could not speak more highly of Agent B for their commitment and professional service, how delighted they were to see their house sold so smoothly and efficiently and how delighted they were with the results”. 

Now there is every possibility that Mr & Mrs A were real clients and that they genuinely did rate Agent B highly. The problem is that we as prospective clients looking to appoint Agent B have no context. We do not know when this experience took place - last month or 5 years ago? What and where was the house that the agent sold and what were the circumstances? What was the registered valuation of the property and what was the sale price? How was the marketing plan implemented and what scale of marketing was undertaken? How long was the property on the market and how did that compare with the market at the time? Where there issues and obstacles that resulted in challenges which the agent overcame?

Now certainly I am sure that Agent B would be prepared to provide a contact for Mr & Mrs A for you to call them and chat through, but again playing devils advocate how can you be sure that this client is a fair representation and not carefully curated. Add to which generally most of us, unless you happen to be a HR practitioner, like making unsolicited calls to strangers to get a reference. I wonder actually how many people actually do reference checking of agents?

The fact is real estate is not a business that actually lends itself to social reviews. The activity of service is far too infrequent which leads to too few experiences upon which to provide a rating. The client feedback is always solicited after the completed sale at which time the majority of people are in an elated state as they have got through what has been a nerve racking experience and want to celebrate - so why not show their appreciation for their agent?

It is therefore almost inevitable that all agent reviews will be positive and not just because of the aforementioned celebratory state but because most people transact real estate on such an infrequent basis that it is hard to objectively benchmark.

In someways the better agent assessment should be as I shared in my recent series of articles about selling my home - an assessment of the agents as they pitched for my business. At least making the assessment at this stage would multiply the base of reviews three fold. Ask yourself, would you be interested to meet and evaluate either of the two other agents I reviewed but did not appoint for the service I was looking for given the feedback I provided as to why I did not appoint them?

I know agents might not like this proposal just as they seem to dislike the idea of objective metrics of performance. However there is nothing to fear from not winning a client, as most businesses are discovering in this hyper-networked world of reciprocal reviewing, a negative review is not the end of your business, as long as it is not the only review. People assess reviews on balance and negative reviews demonstrate that there is objectivity in the reviewing process and the person being reviewed is at least human. The other aspect is how you respond to a negative review. Ignore it or challenge it, and it will likely diminish your profile ranking. Respond in an open manner to seek to understand how to improve in the future turns a negative review into a favourable perspective.

I have no answer to the question of how the real estate industry should move to a more transparent interaction for review and rating. I certainly would like to see more objective data around agent performance ideally around the success focused metrics, in addition I think providing a open and trusted platform for clients’ reviews of agent pitches would be a great start. Of course we may at some stage even see agents rate and review their clients.. “Mr & Mrs A could not have been a more helpful and accommodating clients, Mrs A home baking was a delight but I really wish that they could have kept their dog Bruno under better control as every time I visited, it would leap on my lap as I sat down and I was just too polite to tell them .. I hate dogs!”


Living with greater transparency - the challenge for real estate

by Alistair Helm in ,


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Two articles this week prompted my thoughts about the challenge that greater transparency plays in our lives and the impact it will have on the real estate market. I have commented in the past as to the use of obfuscation by some commentators from within the real estate industry when talking about the market, a behaviour that I sense will have no part in the future.

The first article that caught my eye was a tweet which came into my stream as a retweet from a person I do not know but the content certainly made me sit up! 

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A person using social media to reach out to as wide a community as possible to ask a question - a very relevant question as to the condition of a rental property. A question they could have asked the letting agent or the landlord, however they chose to reach out to an open audience to see if anyone could answer the question. This 'reaching-out' to people's connections whether on Twitter or on Facebook or any other medium is what the internet allows us all to do. Rather than historically relying on controlled channels we can look for trusted connections to help us evaluate products and services.

The lesson for the real estate industry from such examples is be open, be ready to engage and answer all such questions and better still, be proactive and provide as much relevant information as possible. If as the case in this example there really is a water-tightness issue with the property (and I have no idea) then take steps to discuss with the landlord to be ready to answer any such question, after all the agent is just that, the agent, not the owner. 

 

The second article was actually a link I saw to a random listing in the US on Zillow. A house that had been on the market for a couple of months. Now; with well over 2 million homes on the market this house is not remarkable in anyway. What is remarkable, and it is not for the first time that I have seen this, but in the context of this issue of greater transparency this property caught my eye because of the richness of valuable information available on the property that we would never see on a property in NZ.

Let me highlight these insights and in so doing provide an explanation of why I think we are being short-changed in regard to valuable property information, not so much from the real estate industry but from at heart the property data industry.

 

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1. Sale Price - this property much like most in the US and in fact most countries has an asking price. Not a sticker price, but a price which based on comparable local sales would indicate that it should be worth as judged by the listing agent, thereby providing prospective buyers with a guide. This property may sell for more than the $339,500 if there is sufficient demand just as would be the case for property in Auckland at the moment. To put a price on a property, every property for sale in NZ would not be extra work for real estate agents, it would not diminish their role or devalue the sale price, it would though I think build respect and openness!

2. Last Sale Price - this property sold for $390,000 just over 3 years ago - FACT. A fact that is true of all houses in NZ, yet we are not given open access to this information, it is locked away behind payment walls by government entities (local/ national) - it is public record and should be openly accessible to assist the property process. 

5410 Ocean Mist Loop, Blaine, WA 98230 is For Sale - Zillow-1.png

 

3.  Days on the market - valuable information, thankfully we do have this insight on both Trade Me Property and Realestate.co.nz in the form of a listed date; although somehow this data structure seems more telling.

4. Estimated valuation - in this case the proprietary Zestimate. A complex dynamic algorithm developed by Zillow to place an up- to-date estimate on every property in the US. Now in NZ you can buy such an estimate from QV for $50, but in the US the data is free, dynamic and referenced as to when it was last updated. QV is joint venture between the Government owned entity Quotable Value Ltd and the US company Core Logic. It's NZ public record data being managed through a US technology company's algorithm to be sold back to us at $50 at a time!

It is interesting to see that QV report an accuracy of 10% variance of sale price to estimate 65% of the time and 20% variance of sale price to estimate 93% of the time, Zillow goes further by reporting 5% / 10% and 20% variance by major city with accuracies of up to 73% at 10% variance and 93% for 20%. So the data model of QV is good - we just have to pay the government and the US company for the pleasure.

 

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5. Price History - not only do property buyers in the US have an asking price and a 'last sale' price they also have an incredible insight into the historical price movements of both sale and asking price as cited by this example.  Here we can see the historical transaction record (a bleak picture in this case as the US property market tumbled and continues to struggle). Two public record sale prices together with details of when the property was listed at what price and price changes as well as by which agency.

I can sense a loud cry from the real estate industry about this data, that it should not be exposed as to do so would be to diminish the appeal of the property. However if all property was laid bare with the true facts, buyer could make informed choices. Property transactions would not collapse. Quite possibly we might not have the rampant property speculation and price bubbles built off the back of sketchy information and hyped frenetic auctions. Maybe, just maybe this greater transparency like sunlight could help us all better understand and operate with greater confidence in the property market!