Real estate agents in Australia are facing a new wave of online innovation in which consumers use the internet to rate agents and read the ratings that other consumers have posted. In a sad attempt at a surfing analogy, 
let’s say that agents can either catch this wave or let it dump them.
A few days ago I attended an event at which Peter Williams, CEO of Deloitte Digital, (photo courtesy of Sydney Morning Herald) spoke to about 250 real estate agents (and me and some other folks from realestate.com.au) about the online trends affecting their industry.*
One of the critical issues Peter talked about is agents’ loss of control over their reputations to consumers online. US real estate blogger Joel Burslem called this “online reputation management” in our interview last week. He thinks it’s one of the most important issues agents face.
But how?
What both men are saying is that the rise of new tools online is giving consumers the ability to (in Joel’s words) “rate, rank and review” agents. Worse: agents might have little or no say in the matter.
To describe these tools using old media terms: It’s like having a single copy of the Yellow Pages (back when people used them) for the entire country. As people look up vendors they also write comments and reviews in the margin. They might say things like “This barber is terrible,” or “This agent was fantastic.”
Before long, the comments written by other consumers become more important than the original ads themselves.
Here’s a real-life example. On HomeThinking in under a minute I found an agent in Los Altos, California. On his profile, I could see that Owen W Halliday “usually sells 2-bedroom homes around $1.25m in value.”
I could see all nine of Owen’s current properties and four of his past sales in list form or on a map. And, I could rank him. (Luckily for him, past rankings have given Owen a positive-looking row of yellow stars next to his name.)
That doesn’t sound too scary, until you read Homethinking’s manifesto, which in its first line starts out with a reference to the “ruthless, sweet-talking and conniving real estate agents, with no regard for their customers” in the movie Glengarry Glen Ross. It then goes on to ask, “As a home seller, would you want any one of them selling the most important asset you own?”
This is what’s already happening in online real estate. The only reason you haven’t heard about it yet is because it has started in other countries before Australia.
However, you can bet good money on betfair.com that this will be coming to the sunburnt country.
[NOTE: realestate.com.au doesn’t have any plans to introduce such a service (although the site is giving consumers the ability to comment about their street and neighborhood). However, realestate.com.au General Manager Shaun Di Gregorio says he fully expects someone to do so.]
The agents who have the most to fear from losing control of their reputations are those who provide the worst service. However, even good agents should worry. We all know how emotional people can get about their houses and their money–and agents deal with both. Just one former customer with a vendetta–whether justified or not–could cause many potential new customers to avoid you.
How Agents Can Take Control
Agents can take control of this situation by working with their industry bodies or with online leaders like realestate.com.au (this is my personal opinion, not official doctrine at realestate.com.au) to develop their own ratings site.
Don’t leave it to someone who may be unfriendly to agents, like Homethinking.
Instead, seize the opportunity to do something that consumers clearly like, and to do it in a way that protects good agents in the process. This could involve–for example–giving agents a chance to rebut each negative charge against them, so that no nasty complaint goes unanswered.
The details would have to be worked out, but the mission is clear: the real estate industry should take ownership of the next wave of online innovation to the benefit of agents and consumers.
Relevant Links
–Joel Burslem has some online reputation management tips on his blog here, here and here.
–For a list of some of the sites that rate, rank and review agents in the US, see this post on Transparent Real Estate.
–Read Peter Williams’ July profile in the Sydney Morning Herald.
*Full disclosure: the event was organized by realestate.com.au as a service to agents.
25 Comments
Stephen Sharry
Dave Platter’s comments are relevant and do preempt a major challenge for real estate agents in the near future in Australia.
The ability of the consumer to comment on all service providers across all industries is a reality. As the internet becomes more a part of life for the consumer the harsher this reality will become. Poor and shoddy service will attract negative comments and good operators will become caught up undeservedly. It is a fundamental requirement of law that the accused be given a chance to face their accuser, that balance is required so that both sides have an opportunity to comment and the consumer can decide.
The current benchmark model, although a long way from perfect, would have to be ebay. Seller and buyer reputation is vital to success in the long term and is guarded jealously.
Shaun DiGregorio’s comment that Realestate.com.au had no plans to introduce consumer feedback is a bit of an “avoidance” or “head in the sand” mentality. If the need to provide balance is so important, why not introduce a servcie so that balance can be provided and managed. If this is unacceptable then ensure that link partners such as streetadvisor.com provide the service and provide this balance or they lose the link.
To suggest that the industry has the capacity to take control nationally is sadly unrealistic. The industry, through the REI’s, could not even produce a national web portal to market property on behalf of its own members that would have seen a very different marketplace and a very different realestate.com.au had it happened.
Sorry Dave, if the country’s largest and most successful real estate web portal cannot take the initiative and ensure that such use of the internet is fair and balanced then who else will? This does not have to be a direct service but can be influenced through link partners.
Peter Ricci
I think REA like the idea, but will test it in the marketplace first with something fairly minor to begin with. I would like to see some kind of interaction.
snoop
I think its good
Gives the industry transparency and will force Principals to be more focused on deliverring professional service.
Take a look at how ebay rate buyers and sellers.
If someone can come up with a workable systetem to do this it can only be good.
But lets face it small players can build sites but in the main nobody goes there as cost of customer acqn is high and the market is too small in aust.
Glenn Batten
The potential for sabotage and wholesale fraud is so huge with review and rankings systems. There are plenty of rankings systems around the world in different industry’s and the only one I see that works fairly well is eBay’s but I don’t think that is going to be portable to real estate because with eBay everybody involved in the transaction and the ranking system is a registered user.
I remember watching an Episode of Kitchen Nightmares where Gordon Ramsey confronts a restaurant owner with printouts of all of these fantastic reviews from a number of leading restaurant review websites. He accused the guy of writing all the reviews himself and it took few minutes but he finally admitted that they were all his handiwork. How could you trust a restaurant review ever again.
Transparency is ideal and outing the problem agents in our industry is admirable but it should not be at the expense of tarnishing the reputation of good hard working agents who are victim of fraudulent campaigns by a desperate opposition.
Greg Vincent
They say that the customer is always right but in many instances within the real estate industry there is a lot that goes on behind the scenes that the general public never see. ( most good – some bad). If an agent had an over critical consumer & their criticism was unfounded what could they do to stop a barrage of criticism appearing around them when people search for them on Google?
Did you see what happened when that guy picked the Kryptonite 2000 lock with a ball point pen? Type in Kryptonite lock into Google & on the first page the slamming appears its even worse if you type in Kryptonite 2000 lock. This almost destroyed their company within a period of 10 days over the internet.
How could an agent control this at all – especially when there’s more negative spread than good? Generally agents start on the back foot with public opinion already?
I know they could set up their own blog or start posting on other highly visited blogs. Is there anything else they could do?
snoop
Another new site and concept?
Anyone think this has legs?
http://2bid2.com/index.php?page_id=2
Stephen Sharry
Both Glen and Greg have a similiar point, and that is about managing the process. If there is not a reputable and highly profiled process that consumers can look to with respect and confidence, then criticisms will come from many other internet sources and they will dominate.
The industry is highly competitive and there is no doubt that some participants would use the process to denigrate their competition or to create their own profile. The only control is transparency.
The vast majority of real estate professionals in Australia are hard working honest individuals who work with integrity. They have to negotiate the maze of legislation, work in fluctuating economic conditions that they have no control over and deal with vendors who want unrealistic amounts and buyers who want to pay as little as possible.
I guess the only answer is, as Dave is suggesting, to have a highly profiled, respected and credible site for consumer comment, from both parties, that includes some verification, that other consumers can turn to. This then could possibly drown out or negate any other sources of comment. The question is, who does it ? how do they do it ? when do they do it ? and who pays for it ?
PaulD
Snoop,
There is not much that Michael Davoren doesn’t know about real estate in this country, and overseas for that matter. So at least they have a very competent person at the helm. That’s a big bonus. I guess when you compare the success of eBay, it was only a matter of time for real estate. Whether the take up rate is good enough for it to flourish, is another matter. More than likely, it is the way auctions will be conducted in the future. So the question ” has it got legs ?” I would say yes.
Greg Vincent
Snoop, I noticed that they have a success fee of $100 + GST. Being that you already pay to put the property for auction onto the site, not too many agents would want to have to pay this? Maybe they’d be happy to pay $0.50 for every $1000 they sell the property above the reserve. This option could be quite lucrative for the site but to pay a success fee if the final selling price wasn’t so good, not sure?
John
Interesting debate. You should read the just released 2008 edition of the Swanepoel Trends Report. In chapter 7 the report actually discusses HomeThinking.com together with a group of other new business models such as HomeZill, RealUmbrella, SharpBuyers, IggysHouse, etc. Its pretty clear from Stefan’s 170 page report that the USA real estate industry is very much struggling with which business model is the right one. Stefan’s website is http://www.retrends.com
Dave Platter
Thanks, everyone, for your fascinating comments.
Stephen suggested that realestate.com.au should be the site to help the industry institute a “rank, rate and review” agents feature. I’d personally love to see that.
But, precisely because such a feature on realestate.com.au would reach many consumers, my personal opinion is that the site won’t do it unless they can get more agents like Stephen to vote for such an initiative.
I’m not involved in that decision-making process, but it seems to me that if two out of every three minutes spent looking at real estate in AU is done on realestate.com.au, agents would raise holy hell if we did something like that against the wishes of a majority in the industry.
Stephen is a clear example of a forward thinker. What do you all think? What percentage of the industry would be opposed?
The other issues I want to reply to is about business models. I love talking about business models. For this discussion, however, I think they are irrelevant. (apologies John)
Consumer ratings sites can turn the real estate business on its head–even if they never make two cents of profit. They only have to be there to make an impact. Profit is their worry; ours is their impact on agents.
Glenn Batten
Dave,
Looking at what percentage of the market place would support it is putting the cart before the horse. I wish life were that simple but even “forward thinking agents” understand that it is more complicated than that. Depending upon “how” this is done the answer would vary from single digits up to 80%
As previously stated I believe that the reason eBay’s ranking system works is because both parties are registered which reduces the incidence of false and misleading comments and rankings.
The other reasons it is successful is that the ranking is simple… basically “good” or “bad”.. also the system prompts for a response after every transaction so all the good rankings get counted not just the bad ones. People with a grievance have the right to have their issue noted and counted but they are not provided with a forum to blow it out of proportion and when there is an negative comment, the seller has the right to supply a comment to state their perspective on the issue. Comment length is kept short to keep everything concise and easy to read.
I have been thinking more on this over the past couple of days and so far have come up with the following:
REA already has the ability for an agent to register the email address of a property owner so that they receive email updates of their property views. This could form the part of a registration process for a rating/ranking system.
Technically this means that is up to an agent whether they participate in the process or not.
If a system was kept to a simple ranking of “good” or “bad” experience and the ability to vote is linked to each listing then a good agent could feel comfortable that their good work would be on show for all to see and they would be insulated from vexatious attacks by disgruntled clients and competitors.
Agents would soon find that higher numbers and good ratings would be after a sought after ideal that brings further business much the same as a high rating works well for eBay sellers. Its a sign of trust. Consumers and Agents would have faith in such a system and if an agent did not participate consumers would be asking why?.
I think it is possible for REA to get the majority of the industry on side…. but its also just as possible to get them offside. It all depends on the application of such a system and whats its aims and intentions are.
Glenn Batten
Dave..
Just mulling over your 2 out of every 3 minutes quote in your last post… Wow.. thats a pretty big claim to make..
I assume you are restricting your those statistics just to those few agents, groups and portals that Neilsens track? If so that is a bit misleading isnt it?
Whilst REA’s market reach is indeed impressive I cant see how you could be including the traffic to the 10,000+ individual agent websites in that calculation.. let alone what seems like a countless array of minor portals.
This got me thinking.. By my calculations (using the Nov 2007 stats you provided… your website is not updated more than that ) REA racks up around 240 years of visitor time every month. That is massive..
A check of Google analytics and multiplying our visit count by the average visit time our site creates just 16 days worth of viewing time a month. When compared to REA this is comparatively is tiny.. miniscule even, however if you use that as a baseline for all agent websites we end up with 440 years worth of visitor time in comparison to REA’s 240 years.. (these are scary figures hey!).
Now I know that is a big assumption to use 16 days for each agency.. but each site generates some sort of traffic… so even if the average agent was much less say just 5 days … I still cant see it being possible for “two out of every three minutes spent looking at real estate in AU is done on realestate.com.au” especially when you throw the other portals into the mix.
I rushed through the calculations so maybe I am missing something or I have stuffed my figures up? Feel free to correct me if I have it wrong somewhere.
Dave Platter
Glenn, you are so right. Industry support for any ranking initiative, by whoever executes it, would depend on how it is done.
Regarding the 2 of 3 minutes, you are also right that the source is Nielsen//NetRatings Market Intelligence. Technically, according to my Excel calculation, 1.983824019 of every 3 minutes spent looking at a NNR-tracked real estate website in Dec. 2007 was spent on realestate.com.au.
Have a great Sunday everybody.
Louisville Real Estate
Wow Dave, I’m amazed that you actually calculated that all out. Way to go and thanks for the info! 🙂
Peter Ricci
I think REA and Domain should rethink the whole pay extra and get higher mentality. I know that this will not happen…..
So. How about having listings appear below these results by how much information is provided. More pictures, land size, building size etc the higher they appear in results.
This will have a two fold effect. 1. Vendors will place pressure on agents because their listings are not appearing and 2. Agents will compete on quality and quantity of information provided.
Greg Vincent
Peter there are many agents who have the idea that when marketing over the internet less is more. Some feel that by not providing much property information over the internet encourages the buyers to call & ask questions.
Does anyone know of any stats to support which way actually works best?
BTW I’m amazed at how many listings come through my client alert without any photos attached as agents rush to get the listing uploaded. Great first impression for buyers & potential sellers. Not!!
Dave Platter
Greg, I can’t lay my fingers on the data, but I recall being told that the agents who put less information and fewer photos up tend to get more phone calls/emails asking about very basic listing information. This doesn’t translate into more leads, because they spend a lot of time dealing with people who would have had no interest in the property if they had had more info about it from the beginning.
Also, realestate.com.au’s consumer survey found that the most important deciding factor for consumers (58%) is professionalism. Little sly tricks like that would certainly undermine one’s professional image, and one would imagine it would lead to fewer referrals and fewer walk-in clients.
The full list of the top 5 factors affecting vendors’ choice of estate agents are:
Professionalism 58%
Local market knowledge 48%
Percentage commission charged 41%
Presentation 39%
Responsiveness 39%
Source: realestate.com.au Quarterly Property Consumer Insights Report (Sept. 2007).
Scott
Apologies for posting on a “stale” blog – I notice the last post on this was nearly a month ago.
I am not a real estate agent, but have on several occassions had to face the deliberation on which agent to choose to sell my property. In all I’ve had to make that decision 4 times so far.
How much were those decisions worth to me?
1)Commission: Lets say 2.5% commission on 4 properties of average value of $500k in todays $ – that’s $50k.
2)Price realised on sale: lets assume the difference in price realised by a great agent over a crap one is say 10% of the property value – ie a good agent might achieve $550, a bad one $500k for the same property. So thats 10% of 4 properties at $500k = another $200k.
So all up these decisions have been worth about $250k to me. More than likely the most significant $ decisions I will make in my life.
So what information did I have to inform these decisions worth $250k? 1)Market share:Which agent appears to have the most properties for sale. 2)Pretty advertisements: who’s advertisements/property magazines look the best, 3) Personality of individual agent :Which agent came across as a decent and capable guy 4) References from friends / family, 5) Commission: who is asking the lowest commission.
Not much to work with for such a major decision huh?
What a I getting at here? Well I guess what I am saying is I think agents should spend a bit more time putting yourselves in the shoes of your customers for a moment. They need to make the biggest financial decision of their lives and they have very very little real data to go on..
1) to 3) are very flaky reasons to choose one agent over another.
4) is fine if you actually know anyone who has used a particular agent before. Problem is that unless you really trust this person their opinion ain’t worth much anyway. (Hmm…Now if there were 20 strangers telling me the same thing…!)
5) is where I suspect many of you end up in your negotiations with potential customers – mainly because its the only tangible info you can use to make a decision on.
Bottom line is vendor’s need more tangible info to use in the decision making. Given the alternative of 5) above – (capable) agents should be embracing this because it means more $.
Nick
Check out agentgrade.org. Here’s a place where at least some agents are getting the idea that buyers want more to go on than just your sales numbers or your years in the business. They want to know about your track record!
Robert Simeon
Just when are your number of sales and years of experience *NOT* an itegral component of an agents track record?
Obviously a new definition of track record is headed our way from America! Just as interesting is that the real estate models that Australian real estate agencies copied from America ie Remax have been a distinct failure which further explains why agencies are dismantling these useless concepts of agents buying desks in an agency and then “pay the owner to stay”.
Little wonder the monkeys were climbing the climbing the walls throwing peanuts at anyone who came in sight.
Shane
I think it would be a great thing, I was appaled with my last agent and it would have been great to find out what other people thought of him first.
The website that I run allows people to leave reviews and ratings for apartment buildings, so I’m definitely for this type of thing.
Question is, who’s going to be the one to release such a site?
Jeremy
Are there any updates on this subject?
The rating system can prove to be a “double-edged sword”, because, aside from an obvious benefit for the buyers, by allowing the public to rate you or your employees you are opening the door to slander and libel by disloyal competition.
Dave Platter
Jeremy, thanks for your question about online reputation management for real estate agents.
In the three years (has it really been that long!?) since I wrote that post, things have changed a lot. The sites we were talking about died (or are still dying) a slow, painful death. And, something new came along to take their place.
How did these ranking sites die (or descend into irrelevance)?
Well, Snoop’s comment on the original post proved prescient. The ratings sites on the whole were created by groups with limited resources and without much ability to generate traffic. Just like a newspaper can’t succeed if no on reads it, a ratings site can’t succeed if no one reads or leaves ratings on it.
Large players, like realestate.com.au and others, had a strong disincentive to get involved in a site that could come to host negative ratings that could be embarrassing or even harmful to some of it’s customers. So they never put their resources behind such a project.
As a result, the ratings sites suffocated.
At the same time, something new came along. The online world was changing. Facebook, Twitter and other social media became the most dynamic part of the internet, and, today, online reputation management means almost one single thing: social media marketing.
So, how do you do you manage your reputation online? Well, you talk directly to customers and build relationships with them. People post the most amazing things online, including how delighted or furious they are with their real estate agent.
You’re a person, they are people. If they are happy, you say how wonderful it is. And, if they are angry, you find out why and try to fix it. In that way you build relationships, defuse problems and build your reputation.
The idea of social media reputation management for real estate agents is a big topic, and deserves several posts of its own. But, I hope this introduction is enough for here and now.
Take care, Jeremy.