Be Cautious in Picking your Austin Realtor
New York Times columnist Paul Sullivan recently wrote about this DJ posing as a financial advisor. It was one of those setups like you see on TV. They removed his dreadlocks and body piercings, put him in a suit, taught him some basic scripts like “a 401K is the way to go“, and had him meet with actual financial clients to discuss their financial needs and how he can help.
When he went for the “close”, all but 1 client said they would work with him. He had zero experience, no qualifications (though I’ll bet his conversational skills helped). But since he looked the part and knew some buzz phrases, and the prospective clients didn’t know the right questions to ask, he was able to win their trust just by being nice and personable.
The point of the experiment was to illustrate that the vast majority of financial clients do NOT know how to determine the suitability of the financial planner they are hiring. They just don’t hire well.
The exact same thing is true in Real Estate.
Most prospective real estate customers could sit down with an imposter “Buyer’s Agent” who knows some rehearsed scripts, and be convinced that this person is the right agent to help them. And they would sign a Buyer Representation Agreement within 20-30 minutes. Even if it’s just an unemployed Barista dressed in kakis and a polo shirt, using some scripts I teach him, but with zero experience. Same with listing appointments.
A study on the problems facing the Real Estate industry resulted in what is called the DANGER Report. DANGER stands for Definitive Analysis of Negative Game changers Emerging in Real estate. This article isn’t about that report. But the #1, leadoff, main conclusion of the report was: “Masses of Marginal Agents Destroy Reputation”.
In other words, incompetence and unethical behavior by masses of Realtors. Which begs the question, who hires these dummies and why?
If real estate consumers (buyer and seller prospects) did a better job of interviewing and vetting the agents they hire, the deadwood agents would not exist. They’d wash out of the business quicker than the 2 years it generally takes, and the industry reputation would rise as a result of the increased professionalism. Yet people keep hiring incompetent and unethical agents, by the droves. Because 70% of consumers hire the first and only agent they speak with. And to be the first one they speak with, you ONLY have to be super fast at following up on an email and/or phone call.
Why doesn’t the industry just raise the bar?
I’m not sure exactly. It’s a combination of things I think. The institutional organizations that support the real estate industry (Realtor Associations and State Licensing Boards) benefit from a big head count because, to those entities, each licensee is an equal dues paying member. More is better for them.
Also, making it harder to become a Realtor might draw scrutiny from the government, if it views “raising the bar” as some sort of anti-competitive, exclusionary or discriminatory action.
I’ve been complaining a lot to the Austin Board of Realtors about all of the incompetent agents that have infested the Leasing side of the business. This affects me directly as a Property Manager in Austin who sells to investors and owns and manages rental homes.
It use to be only dedicated leasing agents that did leasing. Now any Realtor who gets a lease lead thinks they can do it. It’s actually 5x more complicated than conducting a sales transaction, with WAY more liability exposure, and about 1/6 of the commission. Most should in fact stay out, because they are a lot more incompetent at leasing than the most incompetent agents are at selling, but they don’t.
Personally, I wouldn’t complain if the annual Real Estate License renewal was upped to $10K per year. That would solve the entire problem. The actual producers, the
80% 20% of us doing all the deals, would capture enough additional business to offset the increased overhead.
Then those entering the profession would have to put some skin in the game right up front, which might cause a more serious analysis of real estate as a career pursuit. At present, many just “jump in to give it a try” while keeping their full time job. Then they get hired, screw up a few deals, give us all a bad reputation, then wash out after a year or two. That’s a really bad system and it needs to change now. I just don’t know if the industry is capable of bringing about that change. Perhaps an outside disrupter will just displace us all if we don’t get serious about the profession.
I’ll end with the video of the DJ Financial Advisor. This could just as easily be about Realtors.