The Question Came Up This Week and It Has Gotten Me Thinking.
The National Association of Realtors released a report on the public's view of the real estate profession, and and assessed changing trends in the industry, and the conclusions were pretty ugly.
The report is titled the "D.A.N.G.E.R. Report," for "Definitive Analysis of Negative Game-Changers Emerging in Real Estate." [NOTE: Quite a mouthful, I have to say. Also, the goofy acronym is a little bit over the top]. The entire report is 164 pages long, with many additional resources available on the D.A.N.G.E.R. website. A two page overview of the report methodology is available here, if you want to just hit the highlights.
According to the report, the No. 1 threat facing agents is:
"Masses of Marginal Agents Destroy Reputation - The real estate industry is saddled with a large number of part-time, untrained, unethical, and/or incompetent agents. This knowledge gap threatens the credibility of the industry."
Based on my nine (9) years as a full-time agent, I completely agree.
I posted a link to this Washington Post article by Ken Harney, summarizing the entire report, on my Facebook page, with the following comment:
"I'm glad the NAR commissioned this report and released it to the public. The barrier to entry is indeed too low. Consumers, ask your agent how many transactions they have done in the specific geographic area where you want to buy/sell. Why would you hire an agent who has done only a few transactions to handle what is likely most significant financial investment of your life?"
The article and my comment generated some interesting dialogue from other agents, several of whom took issue with the idea that statistics on how many transactions one had done and where would be a good yard stick of an agent's competence. It got me thinking.
Can a Good Agent Represent Anyone, Anywhere?
My personal opinion: With very limited exceptions, I don't think so. Here is why.
1. Experience doesn't equal expertise, but you can't become expert without experience. Real estate sales are complicated financial transactions. Helping the buyer find the "right" house is the easy part. Putting a property into the MLS for a seller is the easy part. The hard part, the part that requires skill and expertise, is negotiating the contract. Managing the transaction from contract to closing. Knowing how to work with the inspector, the appraiser, the lender, the agent on the other side, AND your client. All of those pieces of managing a complex transaction.
2. There is too much to know. There are different types of residential properties - new construction, income-producing properties, historic properties, condominiums, etc. - all of which require different types of specialized knowledge. On top of that, different geographic areas require different types of specialized knowledge. Do you know about shrink/swell soil? How about the condition of a major homeowners' association? Which elementary school has the best music program? How does the City of Richmond's tax abatement program work? I don't think the average agent can do enough transactions across all these property types, and/or all these geographic areas, to be experienced, much less expert, unless and until they have been in the business a long, long, LONG time. Shoot, I don't think an agent doing 50+ transactions a year can know enough about these different property types and geographic areas to be expert in them all.
3. Our clients are looking for expertise. The purchase or sale of a personal residence will be the most significant financial transaction in which most buyers and sellers ever participate We, as professionals, owe it to our clients to be EXPERTS, not just competent.
Part of thinking may be a result of my background as a "Big Firm Lawyer." I come from a professional world that evolved from generalists a generation ago to specialists and sub-specialists today. As recently as the 1970s, perhaps even the 1980s, if you were in a large law firm, you were a transactional lawyer or a litigator. Back then, a transactional lawyer would handle mergers and acquisitions, securities issuances, corporate governance, real estate, and any other type of transactional legal work. A litigator might be in court on a utility easement dispute one day, and a product liability case the next. Now all of those things are handled by lawyers with very specific specialties. You are no longer a "business lawyer." You might be in asset securitization, or securities, or corporate healthcare. You are no longer "just" a litigator, your specialty might be mass torts, or bankruptcy, or product liability. The world has gotten faster and more complex. In complex transactions, more specialized knowledge is required.
Medicine is another great example of a profession that has evolved from generalists - internists and surgeons, to try to maintain the same construct as my transactional lawyer and litigator - to specialists and sub-specialists. Now you don't go to "just" a surgeon, you go to a specific type of surgeon - a hand surgeon, a cardio-thoracic surgeon, a brain surgeon. You might even have further specialization - a transplant surgeon, a pediatric brain surgeon. I don't think anyone would argue that these advances in medicine have not led to a huge advance in healthcare outcomes for patients.
It seems to me consumers deserve the same type of specialization from real estate agents that has occurred in so many other professions. If we want to be considered professionals, we need to evolve the same way other professions have.
We Need to Stop Trying to Be All Things to All People.
This is just my personal opinion. People are free to disagree. It's really hard, when the bank account balance is looking scarily low, to turn down or refer a piece of business in an area or of a type with which you are not experienced. BUT, I think we really need to think long and hard about whether or not we are doing our clients a service when we take that business.
And for the record, I don't just have criticisms for the way the system operates now, I have suggestions for ways the system could operate better, for agents and for consumers. But that is a topic for another day and another blog post.
As always, thoughts and comments are welcome.
