Fear of Agent Ratings

by Victor Lund on November 25, 2013

Agent RatingsThe real estate industry seems to want to avoid judgments and ratings of any and all kinds. It may be for good reason, or it may be for fear. The reality is that agents resist ratings for fear and reason. Most people react to change with emotion and justify that emotion with logic.

Fear

According to the source of all knowledge, Wikipedia, fear is an emotion induced by a perceived threat that causes entities to quickly pull far away from it and usually hide. It is a basic survival mechanism occurring in response to a specific stimulus, such as pain or the threat of danger. In short, fear is the ability to recognize danger leading to an urge to confront it or flee from it (also known as the fight-or-flight response) but in extreme cases of fear, a freeze or paralysis response is possible.

As we break down the definition of fear, there are a number of keywords like “perceived,” “pull back,” “hide,” “basic survival,” “threat stimulus,” “fight-or flight response,” and “paralysis.” These are all very deeply rooted primary drivers of the human condition. It will take a revolution to overcome this fear, and I think the groundswell of that revolution may have already begun.

Yelp, Zillow, California Association of REALTORS®, National Association of REALTORS®, countless technology firms, and countless MLSs have all dabbled in agent ratings. To be clear, consumers of real estate services demand ratings as part of their selection process. Real estate agents are fearful of the ratings because they may or may not be true depictions of the expected services delivered by an agent. Like it or not, agents will be rated. The real question for our industry is who will you trust to rate you? Who will consumers trust?

Trust

Back to Wikipedia, Trust is when one party (trustor) is willing to rely on the actions of another party (trustee). The trustor (voluntarily or forcedly) abandons control over the actions performed by the trustee. As a consequence, the trustor is uncertain about the outcome… but develops expectations. The uncertainty involves the risk of failure or harm to the trustor if the trustee will not behave as desired.

Who should agents Trust?

I have always believed that the administration of programs like agent ratings should be local – like the local MLS or Association of REALTORS®. These entities are there to develop structure for the agent and brokerage to be successful. They also have developed trust with the agents, and have a solid track record for meeting expectations. However, for consumers to have a brand they can trust for agent ratings, you need something that is more universal and National than the local MLS or Association of REALTORS®. The National Association of REALTORS® or the Council of MLS become brands that consumers can trust.

NAR vs. CMLS

I love the Council of MLS. It is a great organization that is doing spectacular things to move the MLS industry in the right direction to preserve the quality of service to agents and consumers. But I also recognize that on the brand meter, they are at a zero with consumers. That may change with some of the programs they are developing like SourceMLS. But for now, CMLS is not a brand that translates effectively to the consumer for the purpose of delivering a “consumer reports,” rating of agents. That leaves NAR.

The National Association of REALTORS® is a near-perfect delivery point for agent ratings. It is one of the most well known brands on the planet. I say near perfect for two reasons. First, not all agents are REALTORS®. This may or may not be a problem. Second, consumers may not trust the REALTOR® brand to rate themselves.

Keys to Success

Ratings seem to have two paths: surveys and production facts. There are many companies like QSC that send out a survey on every transaction. The key here is “every transaction.” Either the survey results are always displayed, or never displayed. In other words, you cannot game the system by displaying the ratings you like and hiding the ratings you do not like. QSC is the partner to the National Association of REALTORS® for the national pilot they have going right now. The challenge here is that most transactions have two agents. If either one of them is particularly bad or particularly good during the sale – the overall transaction rating will be based upon that. Consumers really don’t see the performance of one agent over another in detail. They just remember the overall sensation. Two great agents equal great ratings. One good and one bad equates to medium ratings. Two bad agents relates to bad ratings. The rating sensation is rarely dependent on the performance of one agent.

The second path of agent ratings is production facts. This is a feature of many solutions that are in competition today, not the least of which is the pilot by MOVE, operators of REALTOR.com. As a near perfect collector of all listings from every MLS in America, they are in a great position to collect and display production facts. But there are problems here too. Realtor.com suffers when there is overlapping market disorder (listings put into more than one MLS). There are also issues related to multiple agents on the same listing, teams, etc. As the venerable Samuel Clemens (aka) Mark Twain once scribed, figures don’t lie but liars figure. As long as market share is a perceived value in marketing, agents and brokers will leverage data to manipulate that perceived value. It will be nearly impossible to get the numbers to be accurate every time.

The New Agent Dilemma

In a marketplace where agents are rated, how do you rate the rookie? A top draft pick may never make the playing field in real estate without a rating. Perhaps a third prong of agent ratings is missing. Recommendations and references have long been a part of the real estate ecosystem, but here is no place for those in today’s popular ratings systems. I would propose that the industry contemplate listing facts (mls production), plus consumer ratings (survey), and add in recommendations. This would allow testimonials to be factored into the equation.

No Search

Searching becomes an issue for all of the ratings metrics. Although consumers want to search by criteria such as name, geography, and possibly expertise by market segment – that may be too unhealthy for agent ratings. I think that the chosen solution for the real estate industry needs to stay away from search. Just display the ratings on agent detail pages wherever their profile exists. If you avoid search, I think that you avoid a lot of the fear that agents have.

Fear and Trust

Because of so many problems, our industry is frozen and paralyzed by fear. Ratings are an imperfect system, and they will always be. Indeed, they always have been. We are rating people, not machines. Moreover, people are rating people making the whole darn process human and fallible.

What I can tell you with certainty is that agent ratings will emerge. As an industry, we need to pick how they will emerge and embrace it. It will not go away and whatever solution is chosen will have problems. If I were able to choose, I would choose NAR, and be prepared to allow the mechanics to grow over time.

If agents want to fear something, they should fear a champion of agent ratings that they do not have a trust relationship with today.

{ 8 comments… read them below or add one }

Giovanni Mascolino November 26, 2013 at 7:15 am

Our “bottom line” as agents and brokers is that people trust ratings – at least when there are enough of them. Speak to anyone shopping on Amazon and I’ll bet dollars to donuts that a large part of their decision is influenced by ratings of customers that have already purchased the item in question. Same for all of the travel, restaurant, doctor and all other sites on which there are ratings systems in place.

But what is more important is that people do not just count the stars, they also value the “content” of the review that goes with the rating, and they weight those ratings based on the user experience. Someone rating a product or service as 5-star that admits they gave the rating while driving home from the store and without using the product will be much less valued than the rating of someone whom has used the product long term.

There’s a very good reason whey HSN and QVC open the phones to users that have previously bought the product – it helps them to sell more.

But there is something to fear. What we can fear is human nature and imperfect algorithms.

The problem with Google in general is that if you are doing actual research on any topic that requires more than simple search results, Google will likely fail you. Google’s current algorithms rely on popularity of similar searches, link backs and even such things as whether or not the keyword appears in current events and news feeds. All of that information results in search results being generic and based on the popularity of the search term. So if you are searching for information about a rare blood disease, and the spelling of that disease is close to the spelling of a Hollywood star, good luck getting results that cover your topic – most results will be about the Hollywood star, even misspelled.

We brokers will suffer the same fate. People will tend to follow and trust those with not only the best testimonial, but also the greatest number of ratings.

As a result, when searching for rated agents, the most popular agents, by sheer number, will appear first in the list of agent search results and therefore get the most contact interest, and subsequently will make more sales, raising their numbers, and increasing again their rankings in the search results.

If you are a specialist and deal with, say, distressed property, or highly complex deals that take more than the typical six weeks, you will rank low on the search for well rated agents, and not have much chance of rising to the top.

This is great news for SEO sales people because they will have a whole new market to which they can sell their optimization services.

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Victor Lund November 26, 2013 at 7:58 am

To be sure, it is a mess – but hopefully some trustworthy group in real estate will figure it out before a nefarious group does.

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Colin Crawford November 26, 2013 at 8:17 pm

>>> Google will likely fail you. Google’s current algorithms rely on popularity of similar searches, link backs and even such things as whether or not the keyword appears in current events and news feeds. All of that information results in search results being generic and based on the popularity of the search term.

I agree that the Google algorithm is not perfect but it has evolved a lot – and the comments above do not really do their current algorithm justice – see
http://searchengineland.com/google-hummingbird-172816 and other articles on that site.

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Victor Lund November 27, 2013 at 7:14 am

Excellent article Colin – thanks for sharing and Happy Thanksgiving. What I have always loved about Google is they give simple answers to very complex questions. The best SEO strategy is “have original, high-quality content.” The original part is pretty easy to digest, the high quality part is fuzzy.

In some ways, I believe that the real estate broker who has a home under contract should be credited for the Original, High-Quality content. The broker built it, curated it, enhanced it, etc – but everyone else takes credit for it. Google has failed to recognize the original content creator in real estate. Perhaps if many sites (like virtual tours on other broker sites) point back to the listing detail page of the real estate broker of record for the property, Google will appreciate this in Hummingbird. We have seen some lift, but only on mega-broker sites. Otherwise, third party sites typically drown out the original content creator, fooling Google or perhaps they simply have romanced google with high-quality content around the listing.

Baby steps, I guess.

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Brian talley November 26, 2013 at 12:36 pm

Agent ratings are imperfect and have the potential to give a disproportionate amount of traffic to those that rank in the top 3 positions – just like search engine results. They provide a further imbalance in new and struggling agents ability to source business in competition with legacy and top producing agents. Once agent ratings are prominent, savvy agents will direct their abundance of happy customers to give them an excellent rating. Bad ratings will tend to come from the most unhappy customers and the comments may not be justified. For example, I recently read a Yelp review from a seller represented by a listing agent that commented on their bad experience in dealing with the buyer’s agent. However, they didn’t say that they were represented by a listing agent and not represented by the buyer’s agent! They just gave a bad review about their agent and said how terrible they were. The broker posted their side of the story in the comments – which were hidden until I found the “unhide” comments section – that the seller was represented by another agent and the broker’s agent (buyer’s agent) was just representing the best interests of their client, which can certainly tick off a seller if things don’t go their way. So as you can see in this example, negative agent ratings can be unjustified and can provide disproportionate negative results on their business.

I believe that most people would agree that a small percentage (25-30%) of REALTORS in a given market are really productive – let’s say over $2M in production as a ballpark. The other 70-75% are new, work part-time, or just can’t seem to get their business off the ground. And getting the business is the hardest part. Agent ratings directing the consumer to the “top” 3 agents makes it just that more difficult for the average agent to compete. I know of a lot of agents that would provide equal or better service than some of the top agents if they only had the opportunity to serve more customers. Without the customer there is nobody to rate them and they are thereby at a disadvantage in the agent rating systems.

The point is that agent ratings are imperfect and will serve to provide even more business to the top agents and those that trick the system to get top ratings. REALTORS should maintain control of their production and performance information and release information that is helpful to their business. If people don’t like their services there are many websites such as Yelp and Google+ to name just a few to voice their concerns. However, mandating agent ratings on websites such as REALTOR.COM is not in the best interest of our industry. Leave it to the broker to make the decision whether they want their agents rated.

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Victor Lund November 26, 2013 at 6:45 pm

I agree – there should not be the ability to search by any kind of ranking.

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Mark Formsma December 2, 2013 at 11:34 am

BROKERS are responsible for supervising their agents and they are the ones who know what the expectations are or should be. It is the broker who should be all about agent improvement (if the agent isn’t). The brokerage won’t survive if the broker can’t train and supervise his/her stable of agents, unless experienced agents are puloined from other brokerages. The person needing a Realtor, not knowing the market (no relative or referral mechanism), usually will pick a brokerage rather than an individual agent, and then accept the luck of the draw once the brokerage is contacted. Clueless consumers just “wade in” and don’t care how good the agent is, instead accepting the agent who’s “there” when they call. Consequently, you first have to be available before you have to be any good.

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Victor Lund December 2, 2013 at 12:13 pm

Excellent remarks Mark. This dilemma is something that consumers bump into a lot, but I am not sure how to fix it. A few months ago I stopped by a Mercedes dealership to look at their full sized station wagon. My wife drives a full sized BMW now, but those are no longer available in the US. When I visited the showroom, I spoke to an excellent agent (sales person) who knew the car really well. When I returned with my wife – we ran into a salesperson who was clueless – did not even know about the third row seat or other features that are important in a full sized wagon. The luck of the draw when engaging a brand or a service can put the consumer into a very unpredictable place. The same thing happened this weekend at an appliance store. It also happens at my bank all of the time. Within a store or a brand, there are lots of variable service providers.

I do not know of a paradigm that really manages this problem. I guess it is up to the office manager or broker to develop systems to get every agent to deliver some minimum quality of service. Your point about being available as a first set of criteria is not lost on me. 48% of the time, consumer online inquiries are NEVER responded to.

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