First things first – I adore the folks at Diverse Solutions. They are the people behind all of the real estate searches you see here and on my other websites. Their platform remains one of the slickest I’ve seen – there’s a tweak here or there I might suggest but on the whole, it’s solid.
Which is why I was curious to see what might come from their participation in the Connect Create challenge at last week’s Inman Real Estate Connect conference. Those involved in the challenge were tasked with creating a new web-based real estate platform of one sort or another during the conference itself.
What Diverse Solutions settled on was an Agent Scouting Report using … well, here’s what they had to say on their blog …
We pulled in agent and office information, open houses, all information on the active, pending, withdrawn, canceled, expired, and sold listings over the last 10+ years, and all of the change history for every single one of those listings.
We then analyzed that data to create a number of algorithms that give us ranking statistics that we could use for each agent. Some of these statistics include the following:
• Popularity: How many homes have they sold in the last 180 day, 1 year, and 2 year periods?
• Salesmanship: What was the average number of days on the market
• Knowledge of market: How many times did they drop the price from the initial listing?
• Experience: How long have they been a member of the MLS?
• Ability to negotiate: How close was the last list price to the final sales price?
• Diligence: On average per listing, how many open houses do they have, how many photos do they load in, and how lengthy are their descriptions?
• … and more.
On the surface the idea seems solid. But there are holes here that are little to big to ignore, especially if someone is deciding what real estate professional they should use to sell their home.
For instance, the open houses – is more simply better? If I have an open house every week for three months on a listing does this mean I’m the better agent or does it mean that I’m really ineffective at selling a house at an open house? And is there really any direct correlation between the number of open houses and the number of sales an agent has? Personally, I don’t believe so but I’m also not a proponent of the open house as anything more than a vehicle for agents to collect new buying clients.
Let’s go to average days on market and here I’ll use one of my own examples. If you check my short sale listing on 17th Way, we’re sitting at 265 days on the market. Now here’s the reality – I had a contract in hand in three weeks. Our local MLS rules are such, though, that the proper status while waiting for an answer from the bank is Active with Contingencies. And for properties in AWC status, the days on market continue to roll, which means the number you see is plain wrong.
The number of price reductions required to sell a house is a squishy subject. Some agents, working under the idea of getting a sign in a yard no matter what, will take listings above the going market knowing they’ll need to reduce to sell. I’d agree this could be a cause for concern for a seller, but only for a seller willing to price realistically from the beginning. For those who want to play around and test the market (and usually fail), this may be just the agent for them.
Conversely, this could be a sign of an aggressive agent who is willing (with the sellers’ permission) to do whatever it takes to get a home to sell.
Personally, I have a short sale listing with the language that I’m allowed to reduce the list price by up to a certain percent every two weeks until I have a contract in hand. So what do the price reductions for this listing really mean? I’d argue damn near nothing.
Sample size and variant locations also can become an issue …
Something else to keep in mind is that most agents are not good everywhere, so we included the ability to drill down into different cities, areas and tracts to see their specific score for those areas.
Next week I’ll have buyers closing on a golf course property in Corte Bella, a retirement community northeast of Sun City West, for under $300,000. Based on the market there, this one sale would make me a god – sub-$300,000 golf course homes are rare. But this is just one home. You need a better sample size and for many, many agents they just aren’t going to have a meaningful sample size for multiple neighborhoods.
Personally, I’ve never sold a house in the subdivisions near Cactus High School – a couple of townhouses but never a house. Does this make me unqualified to sell here, even if I’ve lived here for more than six years?
In fact, and this one is my own hunch, but I wouldn’t expect to see too much deviation from one agent to the next on the percentage of final sales price to final list price. I can tell you the average here locally and tell you it hasn’t been that much different for the last few years. If an individual agent has any sample size (in other words, if they sell a few homes), logic dictates their percentage will gravitate toward the mean.
I like the idea of checking the number of photos suggested though I believe there ought to be some sort of cap or metric based on the size of the house. If you’re taking 30 photos of a 1,200 square foot house, you’re down to photographing the light switch covers. There’s usually not something notable every 40 square feet in a basic starter home.
Length of time in the business is interesting though to me that’s like looking at inventory levels without a filter. It matters less how long you’ve been in the business than what you have done with your time in the business. Would your average seller be more interested in a 10-year veteran averaging a sale every other month or a 5-year veteran selling two homes or more a month? Seems like an easy choice here …
Which also makes me think that total sales – both buyers and sellers – ought to be factored in (it’s not clear whether they were in this experiment.) It stands to reason that someone who is successful in attracting buyers in general would be successful in attracting buyers for a given property.
My final thought in answer to their final thought:
According to the California Association of REALTORS’ most recent consumer study, some of the consumer’s top complaints are that the agent didn’t negotiate hard enough for them or that their house didn’t sell quick enough. Could providing this type of information to them help them find an agent that is best suited for their needs or possibly reduce their unrealistic expectations?
This is a tough one. No matter what an agent does, there is the possibility a buyer or seller will feel their agent didn’t negotiate hard enough. In some cases this may be accurate. In some cases the seller may never be reconciled to what their property’s real market value might have been.
As for selling quickly enough, if you want your home to sell in a week it’s really easy to do – put a one-week price on it. Mark your house down at a 60 percent discount and I have almost no doubt you’ll have a buyer. Now price the house at 110 percent of the going market because “those other homes all are foreclosures” and watch how long it sits.
Sales time can be a function of the agent but it’s also a factor of price and condition. And these, dear readers, aren’t really in the agents’ hands.
Again, this was an experiment and I’m viewing it as such. There’s a solid idea here, though I think it’s going to take a little more tweaking to get it to a meaningful place.[tags]Phoenix real estate[/tags]