Defining “success” in the real estate – or how not to choose a real estate agent

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TeamworkSuccessIn surfing the net, I discovered an on-line version of an article by Ben Brody and Laura Gurfein that appeared in last months Westchester Magazine about the county’s “top” Realtors. The subtitle declared “In good times or bad, whether buying or selling, these are the agents you want on your side.”

Now, I have nothing against the Realtors who were chosen  as the finest agents in Westchester NY real estate. None at all.    it was fascinating to see how the authors chose to define “success.”  They used a simple unbiased metric  – the bottom line.  They defined success in terms of .sales volume in dollars.  The theory being – the bigger the sales volume the better the “track record.”  This kind of boggles my tiny mind.  In a twisted way it reflects the public antipathy to Realtors in general because it emphasizes that “success” is defined in dollar signs.

This got me thinking – how exactly should one define success in real estate?  How should these bottom line numbers like sales production and number of listings held factor into a home owners decision about who to sign a listing contract with?

Well, realistically, an agent has to achieve two goals.  Certainly, over time, the agent must be able to turn a profit or they will go out of business.  This is much harder to do than most people outside our industry think.  I have to make a living this way and turning a profit is absolutely essential or my bills don’t get paid.  But for all the delusions of real estate agents being “rich” without any effort, the failure rate is enormously high – north of 80% in most of the country (over 90% locally.)  So posting sales volume  is a major component of success.

But, what does this do for the client? The home seller or home buyer?  The article indicated that whether selling or buying – these agents were the best.  But by looking at sales volume only, the article missed the mark altogether.

1. Is this agent primarily a listing agent or a buyer’s agent?  If they have an even number of sales in both categories – fine.  But I looked at the sales history of a couple of these superstars. They were primarily listing agents and did relatively few sales as a buyer’s agent.

2. On the listing side, what is their success rate?  After all, an agent can make a bundle listing in volume. The percent of listings that actually sell is another matter.To that end I took a look a closer look at a “top agents” sales record for 2009.   I picked an agent on the list at random and found the following.

 

  • This agent’s 2009 figures were way off from 2008. It’s a tougher market in which to sell homes and their sales volume was down nearly 4-fold.  That’s quite a drop.  Granted Westchester home sales are well down from 2008.  Although this agent was working a niche which has been badly hit  in the market, it is still a stunning fall in volume over one year.
  • During 2009 the number of expireids/cancelleds was nearly equal to the number of actual sales.  So when a seller listed, they had about a 50% chance of getting their home sold.  A few of these properties were rented.  If you include those as successful then the seller had a 68% chance that his home would be either sold or rented by that agent.

Compare these stats with those of another agent that I selected.  This agent will probably  never appear in the “top 20” in terms of volume. But their record speaks for itself.

  • In 2009, this agent actually increased production – showing that they could negotiated just as well under far more difficult circumstances.
  • Every single listing either was sold or rented.  The one expired was relisted immediately.  With this agent 88% of the listings sold, the other 12% were rented.

Which type agent would you rather have listing your home? The more successful earner, or the one that truly gets the job done for the vast majority of their clients?

Now there are more criteria for sure.  I did not measure days on market or final sales price vs. list price.  The point is that are many factors beyond market share and raw profits that define greatness in the real estate industry.  From the consumer’s perspective – sales volume should be the least of these.

© 2009 Ruthmarie G. Hicks https://thewestchesterview.com. All rights reserved.

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