How Do Consumers Choose An Agent? Part I
I was talking on the phone the other day with Alex Chang from Roost and, through a broad-ranging discussion, we touched on the question of how consumers select an agent. I’m very interested in honing in on how listing search is relevant to agent selection. I mentioned that last week when I was at the Clareity MLS Workshop, someone flashed a statistic that said 68% (or something lke that) of agent selections were by referral from someone the consumer knew (parent, sibling, friend, co-worker, etc.).
Upon reflection, that statistic wasn’t too surprising, because that’s how so many decisions are made. When I moved to Fargo from Minneapolis ten years ago, I selected an agent in Fargo from a referral from my brother. Think about this: I was coming to work for an MLS software vendor used by all the agents in Fargo, such that I had available to me all the data I could ever want on the productivity of every agent and yet my decision was made based on a referral from my brother. Why is that? We’re all looking for short-cuts. There is so much information available to us today that we need short-cuts, a way to synthesize the data and tell us what to do. If the 68% statistic is accurate, apparently those we already know and trust are just such a short-cut.
The last few days, I’ve been discussing with Greg Swann, Mike Farmer and others the value of a “seal of approval” as a short-cut for consumers. Greg’s theory is that we need an Underwriter’s Laboratory for real estate agents. Brian Boero from 1000Watt Blog agrees and adds the possibility that agent review sites like Homethinking, Agent Scoreboard or Incredible Agents might help fill the gap, too. The commonality of these endeavors (let’s call them “agent search” or “agent recommendation systems”) is to provide the consumer a short-cut to deciding which agent to choose, as well as providing the agents a path (network) to the consumers.
In many ways, agent recommendation systems are the essence of the web movement, exposing more information to individuals and giving them more control. The questions I want to pose in this post, however, are two: (1) is agent recommendation related to listing search; and (2) is agent recommendation likely to be ineffective or maybe even too effective. I’m going to discuss the first question in this post and the second question in a later post.
Let’s go back to the beginning of the post, where it was posited that a large number agent selections are made by recommendation from people we know. In light of this, listing search would seem to be quite separated from agent search. If a consumer is looking for listings, have they already found an agent or are they wanting to find listings first and then find the agent? Perhaps more important, is there a path from listing search to agent selection? In many ways, the two seem in conflict, because the listing search is going to identify listing agents representing the seller and not the buyer. (VAR Buzz has been conducting a great discussion on single-agent dual agency, showing the inherent conflicts in that practice.)
This raises a significant question about MLS listing portals that I’ve been pondering a lot lately. During the Clareity conference last week, I was once again enamored with Bob Hale’s presentation regarding HAR.com. Chris McKeever from CRT was there, too, and he posted some details regarding the presentation. Clearly, HAR.com is driving a lot of traffic back to listing broker sites. The question I have, however, is what is happening to that traffic? How does a listing agent convert a buyer inquiry on their listing into a client? Presuming most are not practicing single-agent dual agency, the most obvious answer would be that they refer the inquiry off to another member of their firm. Is that what the consumer wants? I’d love to see more data about how leads from MLS portals convert to customers.
Listing search does seem related to agent search on IDX sites, where the site owner is promoting mostly listings that are not their own. Yet, the question remains, is a consumer looking for an agent when they are looking for listings? In other words, are they going to pick an agent from their IDX site? This question is raised most prominently by Roost’s model of a national portal rotating IDX sites. When a consumer goes to Roost, they are directed into an IDX portal of a particular broker and inquiries on specific listings are directed to that sponsoring broker’s web site. So, the question becomes, will the consumer value the tools being provided by that broker enough to select them as their agent? Rephrased again, will the click-throughs convert to leads and the leads to customers? That question likely will be answered in the near-term as Roost and other IDX vendors collect data on these metrics, and I look forward to learning more.
Unfortunately, I have more questions than answers about how or whether listing search relates to agent selection. The path certainly doesn’t seem direct and yet listing content remains the gold everyone seeks. The question is what is the most natural path for the consumer to take from listings to agent selection, or are the two really distinct?
Tomorrow, I’ll turn to the second topic I raised above, namely whether agent search or recommendation sites are a more natural path for consumers to select an agent. One tentative title I have for the post is The Tyranny of Ordered Lists.