2006-08-27T22:20:00.000-05:00

You Don't Trust Us, You Really Don't Trust Us!
by Greg Cook

A press release recently came to my attention regarding a poll on the most trusted professional to give advice conducted by Harris Interactive (The Harris Poll #37, May 10, 2006). The poll, conducted over several days in March asked more than 2,300 US adults to rank the level of trust they place in the advice given professionals in 11 different professions. The professions chosen by Harris to be studied are all fields in which competent and trustworthy council would be considered the critical factor in choosing to do business with the professional.

The question asked of all those who participated in the poll was, "If you were getting professional help or advice from each of the following, how much would you trust them to give you advice which was best for you?" The results are posted below (Please refer to the press release at Harrisinteractive.com for more detailed information):

A Doctor
Completely 50%; Somewhat 43%; Not At All 4%; Not Sure 3%

A Dentist
Completely 47%; Somewhat 44%; Not At All 4%; Not Sure 5%

A Nurse
Completely 46%; Somewhat 46%; Not At All 3%; Not Sure 4%

An Accountant
Completely 28%; Somewhat 58%; Not At All 7%; Not Sure 7%

A Lawyer
Completely-18%; Somewhat-62%; Not At All-14%; Not Sure-6%

A Banker
Completely-16%; Somewhat-67%; Not At All-12%; Not Sure-6%

A Financial Advisor
Completely-16%; Somewhat-64%; Not At All-12%; Not Sure-8%

A Mechanic
Completely-12%; Somewhat-68%; Not At All-14%; Not Sure-6%

An Insurance Agent
Completely-9%; Somewhat-63%; Not At All-21%; Not Sure-7%

A Real Estate Agent
Completely-7%; Somewhat-65%; Not At All-20%; Not Sure-8%

A Stockbroker
Completely-6%; Somewhat-57%; Not At All-25%; Not Sure-12%

As you may imagine I took issue with this, could it be possible that more than 90% of people distrust real estate agents at some level? And at the same time I began thinking about some of the situations I've come across over the years with other agents, and can certainly understand how some agents could be thought of as less than trustworthy, and I acknowledge that some are less than trustworthy, as it is in any profession.

I decided to do some more research and I performed a google search of the following phrase, "Never Trust A Real Estate Agent", to which I received 82 results, some of the more memorable ones include:

A Yahoo! Answers search which includes the post, "Never trust a real estate agent... real estate agents are compulsive liars.

Another one is a post of a movie review of "The Amityville Horror", which begins with the phrase, "Never trust a real estate agent who says a potential property has a "vibrant history."

A more unsettling post comes from Kim Settles(pun intended) with Remax of Spokane, Washington who operates a web site called www.fsboguide.org, where she bashes real estate agents for their potential to violate the agency laws of her State on her post "Never Trust a Real Estate Agent". (I chose not to give her a link on this post until I settle [once again, pun intended] my trust issues with her, as her site said I shouldn't trust her because she is an agent.

In my opinion, the Gold Standard of the media casting dispersions on the real estate industry comes courtesy of a television commercial from T-Mobile. In this commercial the cell service provider, in an attempt to illustrate the capabilities of their network, show a "motivated" real estate agent over a several hour period in constant communication with her clients. This in most cases would be considered accurate and complementary except that on each call she contradicts the information from the previous call, for example on one call, presumably with a buyer, she claims we are in a sellers market, in the next call, this time a seller, she claims that we're in a buyers market.

Reviewing this information confirmed to me that real estate agents do, in fact, hold the dubious honor of being seen as less than trustworthy by the general public, and at the same time, it has been documented time and time again that the right real estate agent will provide their customer or client with a fast transaction, minimal inconvience and the best price and terms available. I decided to review multiple resources including The Survey of Florida Home Buyers and Sellers and The National Survey of Home Buyers and Sellers. The information provided is very telling. For example:

In 2005 Homes were purchased in the following channels:

Through an Agent/Broker 77%
Through a Builder 12%
Through a For Sale By Owner 9%

In 2005 the Average Sales Price of a home sold through:

Broker/Agent - $230,000
For Sale By Owner - $198,200
Difference - $31,800 or 14%.

Seventy-two percent of recent buyers wanted there agent to find them the right home.

Seventy-eight percent of home buyers used only one agent in their home search.

Seventy-one percent of home sellers contacted only one agent before selecting one to assist in the sale of their home.

Thirty-seven percent of buyers and thirty-nine percent of sellers received a recommendation from a friend, neighbor or relative before selecting a real estate professional.

Sixty-four percent of home buyers and sixty seven percent of home sellers would definintely use the same agent again.

Based on this information we can make the following assumptions:

Realtors are invaluable to the real estate transaction bringing sellers a higher price and helping buyers find the right home.
In most cases people only interview and hire one agent.
Most people rely on someone else's opinion when selecting an agent.
Less than three out of four consumers would use the same agent again, whereas the most successful agents enjoy a satisfaction rating in the mid to high 90's.

Needless to say the real estate community is responsible for most of this bad press. Better training, more accountability and more brokerage involvement in customer service would go a long way to resolving many of these issues, and at the same time comsumers should not stop using real estate agents because of the obvious financial benefits and convienience they bring to the table. I would recommend than since in most cases real estate is the biggest investment they have, consumers do the following when hiring an agent:

References from friends and family are always a great place to start, but always make sure to interview several agents till you find the right one.
Always ask for personal references that you can speak with.
Experience is important, but not as important as the agent's level of professionalism. Did the agent show up on time, were they prepared, did they have the necessary documentation including a resume, market statistics, a comparative market analysis and a net sheet showing your proceeds from the sale. Don't be concerned if they can't answer all of your questions off of the top of their head, no-one has all the answers and it's better that they get you the correct answer rather than make one up.
Ask about the agents list price to sales price ratio and average days on market versus the MLS statistics.
Don't select an agent based on the commission they offer you, or the price they reccomend. It has been documented that homes offered at a lower commison through the MLS often sell at a lower price than homes offered and the market norm or higher. It would also stand to reason that if an agent cannot defend their own commission to you then how effective will they be in defending your price to a buyer, or your offer to a seller. Regarding price, after speaking to several well prepared agents with all the necessary documentation a price range should emerge.
Finally, once you find the right agent listen to their advice, that's what you're paying them for.

2006-08-15T21:08:00.000-05:00

The New Normal
by Greg Cook

In my line of work people ask me what I think is going to happen in the real estate market in Broward County. Not only my clients and prospective clients, but colleagues I work with in my office and other companies. My clients and colleagues wonder, “When will the market return to normal?” I always think, “That depends on your definition of normal.” The new normal of the South Florida real estate market is a foreign concept to most of my clients and peers, either because of a lack of experience or, I believe in many cases, selective memory.

I first heard the phrase, “The New Normal” on several national news broadcasts in reference to the changes in the airport check-in and security process by the Department of Homeland Security in response to a foiled plot by terrorists to bomb several commercial passenger jets flying from the U.K. to the USA. The more I heard this phrase used the more I began to see how useful it may be in explaining the current and future market conditions to my clients and peers.

For my colleagues the new normal means understanding that in order to sell their clients properties, agents must look at pricing homes 7-10% below the previous comparable sales. It also means that agents must have a well defined customer service plan because the changes in this market require closer monitoring of list and sales prices as well as more personal contact with the client over a longer period of time because homes are on the market two to three times longer than they were a 18 months ago. This change also requires that agents have the necessary training and skill sets required to convey these changes to their clients with credibility. Agents in the market also need to understand that based the current level of available inventory they may have to carry five to ten times more inventory than they are accustomed to in order to make the same number of sales they were making 18 months ago. This increase in inventory creates additional expenses in the form of administrative costs, supplies (lock boxes, yard signs, property brochures) and marketing, which requires an even greater listing inventory to offset increased expenses and maintain previous years income levels.

For my clients the new normal means understanding that time is truly of the essence in the sale of their home in order to maximize equity preservation. It also means an understanding that if they choose to “wait till the market turns around,” to sell their home they may need to be prepared to wait as long as five to seven years for the market to return to its current valuation. The new normal also requires my clients to understand that in order to create value in the eyes of a buyer they should either have the lowest price home with similar features and benefits or offer the buyer more features and benefits for the same price as the competition. In this market, to charge a buyer for additional features and benefits that the seller installed in the home for their own enjoyment only serves to make the home more expensive rather than more valuable in the buyers eyes. My clients and prospective clients also need to understand that installation of new roofing, landscaping or flooring do not make a home more valuable but only bring the home up to selling standards. All homes need roofs, landscaping and flooring.

I can’t tell you exactly what the “New Normal” is, because it is changing on an almost daily basis. I can only tell you that it’s not the market we were in 18 months ago and probably will not return to that type of market for some time. The good news is, as always, motivated buyers and sellers are entering contracts and closing transactions with us every day.

Broward Florida Real Estate Blog