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Part 1: The Perfect Storm

February 16 2011

test quiz checklistAll service professionals have been rated since the beginning of communication between people. Word of mouth sharing of opinions is perhaps the core foundation of interpersonal communications.

"As societies have evolved, so too have ratings systems. In many ways, civilization is reaching a crescendo as a result of the information age. There are dozens of ratings systems for everything – doctors, lawyers, restaurants, products, entertainment. You name it, it's rated," says Victor Lund, partner of WAV Group.

Over 20 years ago Larry Romito, CEO of Quality Service Certified and father of agent ratings, watched the germination of two key forces taking place in the real estate space collide. The result was a need for agent ratings.

Need for Agent Ratings

Since then the concept of agent ratings has continued to develop and spur conversation, as agents and brokers weigh their value of making consumer feedback available to America's homebuyers via the Internet.

When discussing the topic of agent ratings, Romito provided some context about the genesis of this technology, "The rapid growth in interest regarding agent ratings is the result of the collision of two forces: a strong consumer interest in reliable facts and actual past customer comments relative to their service experience to help them make better choices and decisions; Second, the growing recognition that the real estate industry needs to provide more transparency, higher accountability and better consistency in service."

He goes on to explain that time is scarce. We are all incredibly busy individuals. We do not have time to conduct independent research about every decision. Increasingly we rely on the opinions of those around us, and those who appear to be objective; third parties. The Internet has greatly facilitated both the access and depth of available information. Consumers trust other consumers more than the marketing spin of product and service providers. An actual customer experience trumps the self-serving claim of the service provider. Websites and companies that offer seemingly reliable customer service experience and details are attracting more prospective purchasers and influencing consumer decisions and choices.

It's clear consumers want a way to easily access trusted evaluations from similar people about a service before they "buy." This is no less true in finding and selecting a real estate professional.

Looking at the real estate industry specifically, Romito outlined the need for the industry to elevate service quality and customer satisfaction. "Real Estate both epitomizes what's wrong with service in general and wallows in its own set of problems. Not only is the process of service different from company to company, it is different from office to office in the same company, different from agent to agent in the same office and is different from morning to afternoon with the same agent. Service delivery processes, standards, accountability, discipline, consistency and reliability simply do not exist."

Agent ratings provides real estate professionals with important and necessary service quality and customer satisfaction feedback to reinforce the positive, identify improvement opportunities, and raise the bar. Agent ratings offer consumers information that they want and move the focus from one of provider centricity to consumer centricity. How can we truly be serious about service if we don't measure and assess the outcome?

"Too often the agent who gets the business today is not always the better service provider, but more often they are simply the better promise maker. Agent ratings helps determine the better promise keepers and better helps agents keep their promises," concludes Romito.

State of Agent Ratings in the Real Estate Industry

The real estate industry has had ratings systems for a number of years, but no one solution has been widely adopted nationwide.

"The Houston Association of REALTORS® launched the only significant regional adoption of ratings in the industry in Houston. Under the leadership of CEO Bob Hale and their board of directors, they partnered with Quality Service Certified to survey every consumer on every transaction to measure the customer's satisfaction with their agent. Aside from HAR, there have been many brokers who have adopted agent ratings to measure the effectiveness of their agencies at serving the consumer. There have also been a fist full of other companies who have made some inroads, but no significant industry-wide rating system has been achieved," says Lund.

Today, we are entering a new era whereby agents are being rated by vastly different criteria, by a blender of technology solutions that range from Agentopolis to Zillow.

Concerns about Agent Ratings

As agents proceed to evaluate the benefits and needs for this service, they also need to consider the drawbacks of choosing the wrong solution and consider all the pros and cons.

As we move into discussions outlining particular agent rating solutions, pros will expound. As they do, keep in mind a couple of these points:

When talking to Alex Lange, CTO of MarketLeader and former Roost executive, he pointed out several elements agents and brokers should consider when appraising various agent rating solutions. "The problem with a lot of agent rating solutions is that they give too much of an opportunity for past clients to spew subjectivity. Opinions are not facts and while we are watching the Internet shift paradigms, favoring ratings and subjective referrals, it would be nice to offer a solution that asked for clients to help qualify some of their opinions with facts."

As you go through this series, keep in mind if you were a homebuyer looking at each solution, how will you be able to tell the results were not doctored? How can you tell authenticity?

When asked what agents should look for in a solution, Lange says, "At the end of the day, agents and brokers simply need to find a platform that tells homebuyers two things: how long a client's house was on the market before the agent sold it, and the final sales price (i.e. profit for the homeowner.)"

Victor Lund outlines several questions that should arise in agents' and brokers' minds when they consider agent rating solutions:

  • What is the right way to rate agents?
  • Who should rate agents?
  • Where should consumers go to get agent ratings?
  • What happens if an agent gets a bad rating?
  • What prevents nefarious ratings?
  • How do you prevent the system from being gamed?

Coming Soon...

RE Technology is reaching out to a string of agent rating technology vendors who have and insight on this topic to frame a discussion.

Contributors to this series include:

  • Larry Romito – CEO of Quality Service Certified (CEO), father of agent ratings
  • Michael Becker – Founder of Mountain of Agents
  • Suresh Srinivasan - Founder of ReachFactor
  • Jennifer Noseworthy – Product Manager, Zillow
  • Ken Horst – Agentopolis
  • Kelly Pflugrath – Active Rain