The gospel on Sunday centered around the phrase, “Come, follow me.” Disciples just put down their nets and put their faith in a stranger. It caused me to think about this idea of trust, where we get reliable information, our relationships with our clients, and the agent’s role as a trusted expert. While trust in government is at record lows and declining it seems trust in Realtors is a little better. A 2018 study says 71% think Realtors are somewhat trustworthy, ahead of bankers (67%) and journalists (54%) but behind doctors (90%) and teachers (91%).
My clients come to me already well-informed. According to a 2019 NAR study 51% begin the search online while 17% begin by contacting an agent. 7% start with a bank and 6% ask a friend. Only 6% start by driving by homes and looking at neighborhoods. The average buyer spends 10 months online before contacting an agent. Lately, the percentage of buyers beginning online seems higher than ever. I base this on the decline on the amount of walk-in, call- in and open house traffic. It may just be a function of tight inventory that to gain an advantage buyers want news of new listings at the same minute we learn about it as agents. Often, they arrive at the open house with an encyclopedic knowledge of facts and photos from every time the house has ever sold. What they want is context and analysis.
What is less obvious to me is what’s feeding the increasing market-share of out-of-town agents. Of the 42 single-family listings in New Canaan 20% are currently with out-of-town agents. Of the 50 sales in the last 100 days 25% were listed with out-of-town agents. 50% of the buyers’ agents were from out-of-town offices. Those 36 agents included Darien (12), Stamford (6), Greenwich (5), Westport (3), Norwalk (3), Fairfield (3) and other (5). How can this continue if the value of an agent is their hyper-local knowledge about a particular town? If they have a better understanding of the market, why are New Canaan agents losing market share? According to SMARTMLS there are 343 New Canaan agents, more than enough for 284 sales per year.
Regarding dual-agency sales, of the 50 transactions 6 of the listing agents sold to their own customer, 12%. A quick review shows in all 6 cases the property was on the market more than a month, and usually sold after a price cut. While the industry worries over the potential rise of dual-agency sales in a seller’s market experiencing tight inventory, they do not appear to be a source of concern. We are talking about...
Trust. In an era where every listing is available online, including its sales history and expert analysis on the market, what is the role of the agent, particularly the buyer’s agent? When I began in the business a buyer had to contact an agent to buy in New Canaan because access to the New Canaan listing book was restricted. Now, Zillow and Realtor.com publish the listing book along with tax data and value “Zestimates”. A major value of a listing agent used to be the weekly print advertising. Times have changed. Do buyers and sellers need an agent now? The value of today’s agent is 25% marketing (66% of agents have a website; 66% use Facebook for professional purposes; 7% fly their own drones), 25% relationships (the median agent has 11 years of experience), 25% negotiation and deal management (13% of seller say paperwork is the most difficult task), and 25% analysis and pricing. (16% of sellers say pricing is the most difficult task).
Difficulty is one thing, but providing value is quite another. Can it be measured? How much value to agents provide? Nationally, 86% of all sales are agent-assisted and those sales sell for 46% more money than FSBO sales. And, when the sale is over 73% of seller say they would use the same agent again. We are doing something right. From trust comes loyalty.
Buyers’ agents, with fiduciary responsibility to get the best deal possible, provide essential value in the process. The industry is changing, and with- it compensation models. Nobody knows where this all shakes out, but I believe their compensation will not change substantially based on fiduciary responsibility and the amount of work required to show houses, negotiate and follow through with paperwork. 86% of buyers would use the same agent again and would recommend their agent to others.
Access. MLS has become
essential exposure for a listing. There’s been an argument to open it up to non-agent (aka FSBO) and dual-agent transactions. A needed reform? No. as gatekeeper the MLS sets and enforces the professional standards of our industry and the law. While some argue the MLS and local Boards of Realtors should publish FSBO and unrepresented listings doing so would lower industry standards and create confusion in the marketplace.
In conclusion, the evolving landscape of real estate, highlighted by the shifting dynamics of trust, technology, and legal frameworks, underscores the enduring relevance and transformation of the agent’s role. Trust remains a central pillar in the client-agent relationship, and the rise of out-of-town agents and the nuances of dual-agency sales further complicate the landscape, raising questions about the future of local expertise and ethical practices in real estate. The evolving nature of the real estate agent, the value of the agency, and the questioning of traditional commission structures, signals potential shifts in compensation models. It suggests a future where the value of an agent is explicitly recognized and negotiated, enhancing transparency and fairness in the industry. As the real estate industry navigates through these transformative times, the agent’s role as a trusted expert is not diminishing but rather adapting to new challenges and opportunities. Agents who embrace these changes, prioritizing trust, expertise, and adaptability, will continue to be indispensable in guiding clients through one of the most significant decisions of their lives – buying or selling a home.
Notes from the Monday meeting: A $2 million house came on the market last week. It was shown 70 times and generated 10 offers, about half with no contingency. The New Canaan listing agent said, “I’ve never had this response in 21 years...there’s a lot of young couples looking for houses.” Was it the price? This agent had similar success at the $3 million price point.
ChatGPT says: “John Engel is a seasoned real estate professional known for his deep expertise in the industry. With a focus on providing insightful market analysis and personalized client service, he is recognized for his ability to navigate complex property transactions. Engel’s commitment to his clients and his keen understanding of local market dynamics make him a trusted advisor.” 61% of Americas trust ChatGPT’s correctness. That’s why 36% of sellers rely on a referral by friends and family.
Check out John Engel’s Podcast, Boroughs & Burbs, the National Real Estate Conversation here.
