It’s a weird time to be a real estate agent. With tech-driven startups entering more markets every day, and sophisticated data analytics replacing human expertise as the main method to assess value and forecast the market, it sometimes seems like the individual real estate agent is going the way of the dodo.
Luckily, this isn’t actually the case; Americans still overwhelmingly turn to agents when it’s time to buy or sell a home – 93% of home sellers use an agent according to NAR.
However, the role that agents play, and the services they offer, will have to evolve. A recent study by Clever Real Estate surveyed 1000 Americans planning to sell their homes in the next year, and asked what, exactly, they want from their agents. Let’s discuss some of the biggest takeaways, and how they can help agents market themselves in a changing industry.
Be Radically Honest
We know it’s expensive to sell a home; when you take everything into account, including commission, pre-sale repairs and staging, photography, and seller concessions, some experts estimate that the total cost of selling a home and relocating can add up to as much as 17% of a home’s sale price.
The problem is, most sellers simply have no idea how much a home sale costs. This lack of knowledge is wide-ranging and, in may cases, fundamental; incredibly, 45% of U.S. home sellers don’t even know that they’ll have to pay commission to both their agent and the buyer’s agent. Confusion about commission is even more pronounced among first-time buyers, who were 53% more likely than experienced buyers to believe that buyers pay commission.
The study also found that only 1 in 3 sellers knew that commission is typically 6% of the final sale price. When informed that this is the going rate, their reactions were eye-opening; only 19% said it was a reasonable, fair rate, while 46% said it was costly and fair. Most troublingly, 34% said the 6% commission was costly and unfair.
This lack of knowledge doesn’t just backfire on agents; it hurts buyers and sellers, too. Clever’s report found that almost two-thirds of American consumers don’t understand what dual agency is, or how it hurts them. Considering that 40 states currently allow agents to represent both parties in a sale, that’s a huge pool of people who could unknowingly sabotage their own deal.
The lesson here is that an effective real estate agent should be an educator as much as a negotiator, advocate, and cheerleader. The worst-case scenario is a sale thrown into chaos when a seller realizes, late in the game, that they’re on the hook for a 6% commission, on top of the money they’ve already paid for staging and photography. Even if they go ahead with the contract, a disgruntled client won’t recommend you to friends and family, which brings us to the next tip.
Word of Mouth Is King – But Don’t Forget Mobile
Today, smart real estate agents use every platform and medium possible to reach potential clients, from email newsletters to Instagram to yard signs. But the best way to build your client base is still word of mouth. While the majority of people start their home search online, the study found that 50% of people rely on referrals from friends or family to find a real estate agent. (Some top brokerages say they get 90% of their leads from word of mouth.)
Building word of mouth is simple, but it’s not easy. The first step is building a community; a blog or newsletter is an easy way to engage customers. Social media is a must, too; make sure you’re on Twitter, Facebook, and Instagram at the very least. A 2019 study found that 63% of millennials used their smartphone as their primary research tool, so developing a mobile-first online presence is key.
Engage and monitor your customers, and participate organically. And many agents have seen amazing success engaging customers offline, at real-world experiential events. Finally, don’t be afraid to just ask for a referral. Simply asking a happy client to refer friends and family members to you can be strikingly effective.
Emphasize Your Value
However ambivalent Americans might be about commission, they have a very favorable view of agents themselves.
The Clever study found that 63% of homeowners believe real estate agents play an “important” or “very important” role in the home-selling process; on the other end of the spectrum, only 14% see agents as “not important.” Half of respondents said they wouldn’t feel comfortable negotiating with buyers, and nearly two-thirds, or 62%, said they wouldn’t feel comfortable completing closing paperwork by themselves.
Of particular interest was the fact that 46% of respondents who had indicated they were planning to sell their homes FSBO, or without an agent’s assistance, said they, too, were uncomfortable filling out closing paperwork themselves.
The data suggests that FSBO sellers’ discomfort with selling solo is justified; while 14.5% of survey respondents said they were planning on selling without an agent, NAR data from 2017 said only 7% of successful home sales were classified as FSBO. This implies that only half of hopeful FSBO sellers are able to see the sale through without turning to an agent for assistance. And they didn’t do so well; the average FSBO home sold for only $200,000, compared to $265,500 for agent-assisted sales.
The bottom line is that expertise matters, and sellers know this on some level. Agents just have to communicate, clearly and effectively, all they can do for their clients, with a particular emphasis on making a transaction smooth, easy, and uncomplicated.
Customers Want More for Less
One of the study’s most striking findings was that over a third of Americans find the 6% commission “costly and unfair.” This indicates there’s a clear demand for discount real estate services.
In the past few years, there’s been a huge increase in these lower-priced offerings, from straightforward discount brokers, who simply take a smaller percentage, to flat-fee listings, to graduated fee policies where sellers can pick and choose services a la carte, and be charged accordingly. Some brokerages are even offering buyer commission rebates. Although this may seem distasteful at first to some traditional agents, consider that what you give back in rebates, you’ll likely more than make up in volume.
Like the rest of the business world, the real estate industry is clearly trending in the direction of more value, and more choice. The sooner you get on board, the bigger your advantage will be.
Tommy O’Shaughnessy is the Head of Research at Clever Real Estate, the online platform that connects home buyers and sellers with a top-rated, full-service agent for a fraction of the traditional cost.