REALTORS® – The Consumer’s Choice
by Lawrence Yun, NAR Senior Economist
Most consumers like REALTORS®. So says a report from the Consumer Federation of America (CFA). More than two-thirds – 68 percent – of consumers surveyed viewed real estate brokers and agents favorably. The favorable rating is even higher among those consumers who had recently used a professional real estate service (79%).To top that, the favorable rating skyrockets to 84 percent when it comes to a consumer’s own personal agent and broker.
Those findings are consistent with data that we have been collecting in-house at NAR through our customer tracker survey – a web-based survey that agents send to their clients immediately following closing. The survey questionnaire includes many questions that remind clients about specific services that were provided to them during their recent real estate transaction such as local market analysis, price negotiation, and explanations of closing costs. On a zero-to-10 (terrible to outstanding) scale, these very recent clients gave their agent’s service an average score of 9.3.With the memory of purchasing or selling a property fresh in their mind, clients were exceptionally appreciative of the services provided by their REALTORS®.
Despite this evidence, there are still many pundits and those in the media who think they know what is best for consumers. They continue to shout about real estate commissions. Hmm. Services provided by lawyers, accountants, doctors, and hedge fund managers are not cheap either. (After all, real estate commissions are negotiable.) But as with legal, tax, medical or investment advice consumers are making a calculated decision to take advantage of the experience, knowledge and expertise of real estate professionals. It is consumer’s choice!
People always have had the option of not paying any real estate commission – by simply selling their home via a For-Sale-By-Owner (FSBO) transaction. But year after year the majority of sellers have chosen to work with a professional. The FSBO share of home sales has been running at around the 15 percent mark – plus or minus a few points. In other words, 85 percent of consumers want and choose to work with a REALTOR®.This is not surprising considering that FSBO homes generally sell for less than those homes brokered by agents. Yes, there are some cases in which a FSBO seller did come out ahead -- good for them. These people evidently believe that the long hours worked in putting together marketing brochures, signs, answering calls, writing the contracts and a myriad of other steps that go into home selling is worth it. When I got my first car, I changed the oil with my own hands to save few bucks. Now, my time is too important to do that on my own.
Consumers have spoken loud and clear regarding real estate transactions. They want hassle-free professional representation.
Similarly, consumers have spoken loud and clear regarding real estate transactions. They want hassle-free professional representation. That is, again, consumer’s choice. Let consumers vote with their feet and pocketbooks. Let the academics, self-anointed experts, and television network correspondents keep scratching their heads as to why consumers are making the “wrong” choice.
A recent news program featured a story (seemed like more of an infomercial to me) on an on-line only discount broker
age firm that pays its agents a salary rather than a traditional commission. In addition, the home buyer or seller actually has to do a big chunk of the work! But there was a happy couple smiling about their experience with the firm. They listed their home with the company and reported that the home sold at only a few percent off the listing price. But my sources tell me that the story was in development for about one year. I can only say that the market in which the couple’s home was sold was experiencing a housing market boom in 2006 – with home prices rising at one point close to 20 percent! During such a boom, the listing price should have been merely an opening bid!
Another (and long-lived) attack on REALTORS® is about access to multiple listing (MLS) data. This issue should be a nonstarter for anyone who believes in the protection of private property and rights to intellectual property. MLS information is private property. Simple and done.
We in the real estate industry – and especially REALTORS® – have always respected and fought for consumer choice and private property. We value the American way of free enterprise. Yes, there will continue to be attacks on REALTORS® and the professional way in which they serve America’s home buyers and sellers. But most consumers are not swayed – the majority of them value the hard work and level of service they receive from their real estate professional. REALTORS® should take pride in that.
Real Estate Insights / June 2007 / ©2007 NATIONAL ASSOCIATION OF REALTORS®
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