Real Estate has always been a big referral based business. It makes sense, you have thousands of agents in your local area to choose from and they are all pretty much charging the same exact price for their services. This makes the choice hard and causes people to worry over making the right choice.
It comes down to trust really, just like any other referral based business. Enter Mom’s Bunko buddy who has a real estate license. She’s a little wacky, atrociously unprofessional and probably only sells a few houses a year (to people referred to her during a cheap-wine-infused game of Bunko with the gals) but hey, Mom wants you to use her. You have to use someone, at least we know this lady is honest and it would be terribly uncomfortable for your Mom to show up at cards and let slip that her child sold their house with someone else. So boom! Your decision on who will handle the purchase or sale of your family’s largest investment is made this very important financial transaction is now in the capable hands of Bunko Betty.
Believe it or not, this is how a lot of people “end up” with the agent the end up using. Maybe its not Mom’s friend, but the guy that everyone from the office uses, or a personal friend or family member who has a license and sells a little real estate on the side. Not having them represent you could cost you a friendship or damage a relationship, so you acquiesce and hire them. Regret in this decision arises most often, shortly thereafter.
Here’s a question though…Would you hire Bunko Betty to manage your 401k or stock portfolio? Probably not. Even though the money in these accounts that your Money Manager is dealing with on a daily basis is less than the amount you put Bunko Betty in charge of.
It’s an interesting conundrum that is unique to the real estate industry. The lack of professionalism in the industry is probably the industry’s biggest problem, but one that is hard to solve. How do we eliminate the unprofessionalism in residential real estate?
Here are just a couple of thoughts:
1. Brokers need to differentiate on price. To think that every Agent out there is worth the same amount of money for what they do is ridiculous. Give consumers a choice in what they pay for and what they get and if an agent is better than the rest, they should charge more, and vice versa.
2. Raise the barrier of entry to get a license. The licensing requirements could require at least an associates degree or a bachelors degree. The number of pre-license hours of education could be increased greatly. See our post : Why Hiring a Cosmetologist is Safer than hiring a Real Estate Agent.
3. Brokers could require their agents to commit to a full time schedule and not hire anyone who is not in this business as their main profession.
At the end of the day however, consumers will need to demand a true professional to help them with their purchase. Better yet, a team of agents specializing in different facets of the complicated real estate transaction working for you instead of the Jack of all trades. That’s what Terrace 24 is doing for its clients every day. Learn more about us….