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The Next Big Opportunity: Agent Reviews…and Trust

Search is a lost cause (IMHO), at least for the industry. Just like it took outsiders like Zillow & Trulia to overtake Realtor.com, it’ll likely take another outsider to make a serious run at Zillow & Trulia sometime down the line.

So, what’s the next opportunity the industry will be fighting to win?

Buyers find a listing, and then they need what? An agent.

What do consumers really want to know?

Who to trust.

That’s the reason people largely use a friend or a friend of a friend as their real estate agent. They trust those people. When you’re making the largest financial decision of your life, you want to know that you have a trusted advisor at your side.

What’s the end solution?

zillow agent reviewsA destination I, as a buyer/seller, can go login with my Facebook account — and instantly see which of my friends (& friends of friends) are real estate agents. Team that with an agent reviews system, so as to see reviews about those agents. The bonus would be to have transaction history directly from that same experience. The hard part, as always, is scale. The solution requires all my agent friends to have signed up, put reviews into the system, and added (or associated) their transaction history to their profile. If you don’t get all — or a big chunk of — agents, I would rather just reach out to my 2-3 agent friends I trust individually.

In my mind, the starting point for that scenario is agent reviews — since that’s the extremely fragmented original content to make the solution defensible. Someone is going to figure out a way to get to critical mass of reviews. Once they do, they will be in a prime position to monetize the agent selection process. The question is, will the industry figure that out on their own and control that destination to bring the cost of leads down for agents, or will an outside player take the prize (which will surely end up as a pay-to-play destination)?

Who is poised to make a run at it? RealSatisfied, of course, comes to mind first. But there are other players such as and Reach150, HomeLight, and ReachFactor. Of course, Zillow, Trulia, and Realtor.com are all thinking about this opportunity as well.

Who do you think stands the best chance to be trusted as the industry leader in reviews?

About Drew Meyers

Founder of Geek Estate Blog / Geek Estate Labs. Zillow Alum. Travel addict & co-founder of Horizon. Social entrepreneurship & microfinance advocate. Fan of Red Hot Chili Peppers and Kiva.

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  • I think your right about this trust thing. In fact, I believe that it’s the prime reason that the real estate industry has not been “disrupted” by the internet like other industries have. Oh, and by “disrupted” I mean a major technological innovation that is such a game changer to the industry that it puts serious downward pressure on the prevailing commission structure. Here’s how the cycle goes for the listing side of the transaction (there is a similar cause/effect chain of events for the buyer-side of things) :

    Seller decides to make a move. They completely ignore all the marketing stuff that’s been thrown at them by a good number of high-profile agents and hire a friend that they TRUST to sell the house. The friend charges 6% and seller doesn’t bat an eye because they trust the agent-friend and they believe (correctly) that if they were to go with a “big shot” agent they wouldn’t save much at all over what their friend charges. So thy go with the friend – who may do 6 or fewer transaction sides per year. Thus sellers who choose friends who are part time agents and do not fiercely negotiate commission with those friends help keep commission rates floating where they are. Oh, and there are a LOT of these people. So many that the venerable 80/20 rules does not apply in real estate – at all.

    As there are so many of these types of “little guy” agents who successfully leverage their relationships to grab a few deals each year, more serious agents who want to dominate an area (and not just work sphere contacts but earn business from strangers on a day-to-day basis) must spend a LOT of money in marketing both to get leads initially and then to nurse them along until they are ready to list. The extra cost of the marketing necessitates charging a full rate…or else their business will quickly become insolvent. So marketing is a reaction against relationship which also forces upward pressure on commission rates.

    So we see how this heavy reliance on trust in real estate transactions (vs less serious transactions like travel arrangements) is the major factor preventing paradigm-shifting change in our industry. There is no technology that I see on the horizon which is going to trump this “trust effect”.

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