After the latest attempt at publishing MLS sales statistics for real estate agents in a public forum went down in an inglorious blaze, many people inside and outside the industry are still interested in the possibility of a second try. It may be an outside 3rd party that creates such a service, but I’d be more inclined to believe that a push from within the industry would lead to the creation of a more comprehensive database. That may or may not happen, but it makes sense to discuss the proper way to deliver it if it were to come to fruition.
No model will ever be perfect, but let’s start with the big issues:
- MLS data input accuracy
- Off-MLS sales
- Teams vs. solo agents
- Transparent interface/display
- Agents changing offices/teams
- MLS rules: Should we do it?
MLS Data Input Accuracy
Let’s be honest and say that many agents feel they’re too busy to spend time double-checking their data input. Put in place a system of warnings, disciplinary measures, and monetary fines for repeat offenders. Occasional mistakes are inescapable. Rampant, repeat mistakes say that you don’t respect the organization and don’t deserve membership. Random, intermittent data checks are enough to create the fear of a fine, and create the appropriate level of attention to detail. We’ve adopted some of this in the NWMLS in Seattle. We may not all have loved it at first, but I certainly have it in the back of my mind every time I input statistics in to the MLS these days.
To accomodate for agents who sell homes off-MLS and don’t get credit in the system, there would need to be an input method for these records. This would require more scrutiny that an average system since it would be very tempting for some agents to input bogus sales to inflate numbers. However, we can’t ignore the builder’s new construction agent who sells 60% of his homes off-MLS. Just like the last topic, the presence of disciplinary measures should be enough to keep this at a minimum. Each non-MLS transaction might even need a quick look-over from an MLS staffer. This could be time-consuming, but also necessary.
Teams vs. Solo Agents: Unique Identifiers
This is where it gets trickier. The combination of agents’ statistics into large and small groups has always thrown a wrench in calculations of sales.
- A single agent sells 20 homes.
- Two agents partner and sell 20 homes, each claims to have sold 20 homes.
- 6 agents form a team and sell 20 homes, each claims to have sold 20 homes.
- 12 agents form a team and the team leader takes credit for all 20 homes sold
These agents would all look equal to a consumer viewing solely individual sales numbers, but there are clearly different production levels coming from these agents.
The answer doesn’t seem particularly complex, however. MLS organizations will have to implement a team identifier. Every brokerage, team, and agent have their own unique ID number and all three IDs are attached to every transaction the agent is involved with. On a 12 member team, members will get individual and team recognition for each sale, but we will also have the ability to classify it as a team sale. This gives a much clearer picture to the consumer if they’re working with John Doe or if they’ll be working with his dozen apprentices.
There is no way to display this information in a snippet without bludgeoning the value out of it. Individual agents’ stats need to be displayed within the context of their team, their brokerage, and their overall business model. It’s the only way to ensure we’re allowing each different agent’s business to be seen in an equitable fashion.
A simple potential example of an agent’s statistics:
John Doe, Managing Broker
Big Brokerage ABC
(150 agents, Past 24 mo Total Sales: 800, Total Volume: $300 million Office Agents’ Median Sales: 10)
XYZ Team Statistics (12 Team Members)
Buyer Side: 25 sales past 24 mo, $12 million gross, median price $300,000
Seller Side: 25 sales past 24 mo, $13 million gross, median price $300,000
Median Listing Days on Market: 90
If an agent is solo, their stats are reported in a more straightforward fashion. The only downside to this model is when a team tries to “game the system” and lists 12 agents as individuals but still only gives 1 credit for the sales. This would make the one individual agent look, inaccurately, like a solo real estate rockstar, which is why the office stats are needed (see the Agent median sales). Any team or company employing this model would have a majority of agents with zero sales, and their stats would read “Office Agents’ Median Sales: 0”. Some might think this is penalizing one business model, but we are trying to be transparent, and gaming the system in that fashion is anything but.
Number of price changes: This stat has no value.
- $500,000 home’s price is lowered 12x – $5k/wk for 3 months, sells for $440k
- $500,000 home’s price is lowered 3x – $20k/mo for 3 months, sells for $440k
- $500,000 home sticks to price for 3 mo, asks to bring all offers, sells for $440k
What does the number of price changes tell us? Nothing more than that there are different marketing strategies. All homes sold for the same price, in the same amount of time. It doesn’t produce a valuable comparison tool for the consumer.
SaleTo List Price Ratio
I don’t think there’s a lot of consensus on this stat. It’s interesting, but so difficult to really draw conclusions from. REO agents sell homes under value and get multiple offers on the first day, many times above the list price. Does that make them great marketers or do they just have less-concerned clients?
Having a good sale/list ratio may say more about an agent’s ability to talk a seller into a lower price than their marketing ability. Could the sellers be pricing their homes too low and leaving money on the table based on the recommendation of an agent with a great ratio? It’s a great ability to have as a salesperson, but is that really what consumers perceive when they read this statistic? At the same time it can show an agent’s ability to price correctly vs. “buying listings”. I’m on the fence about this stat’s relevance, but if consumers want it, so be it.
Agents changing offices/teams
We can certainly create an amalgamation of one agent’s stats from a number of teams and companies, but it will be a mess. I’m going to take the easy way out here and say that it’s one of the sacrifices agents make when they change businesses. Their stats will be off, and it will be up to them to educate their clients on their track record until they’ve built up a better one with their new company. I’d be happy to hear suggestions.
MLS Rules: Should we do it?
Herein lies the crux of the whole issue for agents. It’s not as much about whether or not we can publish our own stats on our own websites, but whether our competitors are allowed to advertise our stats. To take it further, can they attempt to gain market share online by advertising a web page with a title, content, and statistics all about a competitor’s business? I think that this is the real fear of most agents.
(NOTE: The Realtor Code of Ethics will be an issue in some ways. Not all agents are Realtors, but many are. Some will construe “refrain from making unsolicited comments about other practitioners” to include reporting competitors’ sales statistics unsolicited.)
Plenty of other businesses in the marketplace have competitors write about them and their statistics, but this is different. We would be providing a database that’s officially approved by those competitors. In effect, the stats on Company A’s site about Company B would have Company B’s seal of approval. This isn’t done in other industries. It’s why agents are so concerned that if it’s done, it’s done with exhaustive research and deliberation with all parties.
While I’m fine with the idea, I also won’t throw on the halo of transparency and flog my fellow agents who aren’t. This isn’t some public government database that, by its nature, must to be available to anyone who wants it. Tens of thousands of agents spend hundreds of dollars and countless work hours every year to update, maintain, and improve it. I know that all of my tech friends are screaming “Why don’t they want anyone to see it, then?”, and I understand your frustration.
But, it’s not your choice. It’s theirs. You have to understand the mindset of a real estate agent if you want to convince them to change. Some of these people have poured their hearts and souls into their communities for decades. They don’t care about your tricked-out new website. They’re not some fly-by-night salesperson looking for a quick IPO payout. They care about selling their neighbors’ homes. They truly are well-respected figures in their communities and have worked their whole lives to earn those reputations.
The “old guard” might have been coaxed along slowly with a gradual transition to an agreed-upon format. Instead, they feel that they were slapped across the face with a sloppily-tested affront to their business. It will be very difficult to undo the damage that was done to the reputation of the idea itself. This is one tough industry to crack, and anyone trying would be well-served to offer agents the ability to opt-in to their ideas as opposed to throwing a wet blanket on them and yelling “Surprise!” Right now, this industry is a hornets’ nest and it’s boiling. The next contender had better be on their best behavior.