NAR should promote Realtor Authenticity

Realtor Authenticity
Rules of Authenticity (infographic from MarketingWeek.com “How to be an Authentic Brand”

Several years ago I told you about the National Association of Realtors’ attempt in shifting consumer attitude towards Realtors.  They are pivoting away from selling Realtor integrity, to selling Realtor value.  In 2014, the NAR voted on creating a Code of Excellence to demonstrate competency.  It wasn’t until this past November that the NAR approved a framework of competencies for agents to achieve.  The eagerly anticipated implementation will allow Realtors to assess and grow their skills and knowledge in many aspects of the business of real estate.  But this Commitment to Excellence, as it is named, may help Realtors increase their competency; but in the end, just like being proficient in the Code of Ethics, it will likely fall short in building consumer trust.  The NAR should promote on Realtor authenticity.

Having agents commit to more training is a good idea in building competency among real estate practitioners.  However, research has demonstrated that showing off accolades and awards doesn’t instill value, nor does it increase sales (Valsesia, Nunes, & Ordanini: What Wins Awards Is Not Always What I Buy: How Creative Control Affects Authenticity and Thus Recognition (But Not Liking). Journal of Consumer Research. Apr2016, Vol. 42 Issue 6, p897-914).

Realtors have a trust gap.  And a badge indicating competency and a Commitment to Excellence won’t bridge that gap.  The business of residential real estate is likened to a game of smoke and mirrors.  Instead of encouraging Realtor authenticity, agents are often taught techniques of persuasion to increase sales.  Many agents devise gimmicks and expensive marketing materials to entice you to do business with them.  Even before you meet with a real estate agent, they are likely scheming how to gain your trust.  Whether or not they earn it is an entirely different matter.

Instead of creating another Realtor badge, designation or code, the NAR should consult with James Gilmour and Joseph Pine II (of the Strategic Horizons LLP).  The title of their 2007 groundbreaking book sums it up nicely: “Authenticity: What Consumers Really Want.”  Realtor authenticity is sorely lacking in the industry, and it’s not just the NAR; it stems from the brokers who train real estate agents as well.  In order for Realtors to build trust, they need to be authentic.

A brief 2004 article by Michael Angier (Authenticity Matters: Are you the real McCoy; Sales & Service Excellence Essentials. Vol. 4 Issue 9, p10) highlighted the necessity for authenticity in the sales environment.  He stated that “People like to do business with people they like. And they like people who are like themselves… Buyers today are savvy. They have more choices. And they can tell whether the company and the people in it are congruent. They seek out, resonate with and tend to be loyal to companies that are authentic. Your uniqueness and the things you’re best at doing are part of your differentiating position. It’s who you are—your identity. It’s what people can relate to. If there’s anything false, made up or covered over, your prospects will sense it. And they can’t even tell you why they didn’t buy…”  Realtor authenticity would certainly positively affect client satisfaction.

Realtor authenticity will not only build trust but can also increase sales.  And indeed, a 2006 research article by Allen Schaefer and Charles Pettijohn (The Relevance Of Authenticity In Personal Selling: Is Genuineness An Asset Or Liability? Journal of Marketing Theory & Practice. Vol. 14 Issue 1, p25-35) confirms that authenticity is related to sales performance.  Their results indicated that salespeople who felt more authentic in their roles performed at higher levels and had a higher commitment to “personal selling.”

What do you think?  Below is the framework of the Commitment to Excellence Program as adopted by the NAR is below (from nar.realtor/policy/commitment-to-excellence). It seems to me that Realtors should already be striving to be competent in these areas:

1) Being current and knowledgeable about the laws, regulations and legislation affecting the real estate disciplines the REALTOR® engages in, and about real estate in their community generally.

2) Understanding the Code of Ethics is a living document, and keeping themselves informed about its duties and obligations on an ongoing basis.

3) Providing equal professional services to all consistent with Article 10 of the Code of Ethics.

4) Advocating for property ownership rights in their community, state and nation.

5) Acknowledging and valuing that honesty and integrity are fundamental and essential to REALTORS® being known as consumers’ trusted advisors.

6) Becoming and remaining proficient in the use of technology tools to provide the highest levels of service to clients, customers and the public, and facilitating cooperation by sharing accurate, current information with consumers and with other real estate professionals.

7) Keeping up-to-date on laws and regulations governing data privacy and data security, and taking necessary and appropriate steps to safeguard the privacy and integrity of information entrusted to them.

8) Committing themselves to enhancing their knowledge and skills in the real estate areas of practice they engage in on an ongoing basis.

9) Providing superior customer service.

10) Appreciating that courtesy, timely communication and cooperation are fundamental to facilitating successful real estate transactions, and to building and maintaining an impeccable professional reputation.

11) As a broker-owner or principal of a real estate company, being committed to creating and maintaining an environment that promotes excellent customer service consistent with these standards.

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Disclaimer. This article is not intended to provide nor should it be relied upon for legal and financial advice. Readers should not rely solely on the information contained herein, as it does not purport to be comprehensive or render specific advice. Readers should consult with an attorney regarding local real estate laws and customs as they vary by state and jurisdiction. Using this article without permission is a violation of copyright laws.

DANGER Report not a mea culpa – but forecasts issues affecting housing market

real estateNews about the D.A.N.G.E.R. Report is making the media rounds, but maybe the excitement is more hyperbole than news. And contrary to the recent hype, the D.A.N.G.E.R. Report is not a mea culpa by the National Association of Realtors®.

D.A.N.G.E.R. is an acronym for “Definitive Analysis of Negative Game changers Emerging in Real estate.” The Report was commissioned by the National Association of REALTORS® as that is part of the NAR Strategic Thinking Advisory Committee’s attempt to identify issues affecting the future of the industry; the Swanepoel | T3 Group researched and authored the Report, which identifies trends and offers the residential real estate industry an impact assessment.

Described as a “…mix of yesterday, today and tomorrow…” the Report is intended to assist those in the industry to “…anticipate the forces taking shape that we can’t yet see;” by pointing out possible challenges, threats, and opportunities. Although the result is meant to “inspire” discourse, the reception has so far been mixed. NAR CEO Dale Stinton was quoted to say, “The D.A.N.G.E.R. Report is like 50 things that could keep you up at night. It isn’t a strategic plan. It isn’t telling you to do anything. It’s 50 potential black swans. It’s for your strategic planning processes. Digest it and cuss and fuss and decide whether it’s right or wrong…” (Anrea V. Brambila; ‘Danger’ report alerts industry to 50 biggest threats; inman.com; May 15, 2015).

One issue highlighted in the Report that has attracted the media attention is agent competency and ethics. The use of Report quotes such as, “the real estate industry is saddled with a large number of part-time, untrained, unethical, and/or incompetent agents…” is as if some in the media are saying “we told you so.” But the truth is that competency does not guarantee ethical behavior, and vice versa; the answers, like the issues, are more complex than you might expect – and do not assure advancement.

Like many of the issues reported in D.A.N.G.E.R., concern about agent competency and ethics is not new. The National Association of Realtors® has for years tried to influence public opinion of Realtors® and the industry by publicly promoting the high ethical standards by which Realtors® are held. Many are unaware that a code of ethics was adopted in 1913 by the association, and has since strived to instill and maintain a high level of integrity in the field. And yet with such emphasis on ethics, you might expect that public opinion would be much higher, but the limited research on consumer perception of ethics is mixed at best. And according to one study, consumers consider price, quality, and value more important than ethical criteria in purchase behavior (The myth of the ethical consumer – do ethics matter in purchase behaviour? The Journal of Consumer Marketing. 2001;18(7),560-577).

The D.A.N.G.E.R. Report may have missed the mark by not acknowledging that the industry’s transformation over many decades has been mainly influenced and driven by market forces, regulation, and technology. Discussing “black swans” with regard to these three areas may have been more valuable and practical to professionals and consumers.

However, as much as we try to identify unforeseen events; they are just that – unexpected and unanticipated. Take for instance the extreme changes that have occurred over the last ten years in the real estate industry – much of which were due to market forces, regulation, and technology.

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Copyright © Dan Krell

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Disclaimer. This article is not intended to provide nor should it be relied upon for legal and financial advice. Readers should not rely solely on the information contained herein, as it does not purport to be comprehensive or render specific advice. Readers should consult with an attorney regarding local real estate laws and customs as they vary by state and jurisdiction. Using this article without permission is a violation of copyright laws.

Skepticism increases 1.3% on conflicting housing data

by Dan Krell © 2012
DanKrell.com

housing dataWhen the National Association of Realtors® announced last week that April’s existing home sales increased 3.4% to an annually adjusted rate of 4.62 million compared to a downwardly revised 4.47 million in March (http://www.realtor.org/news-releases/2012/05/april-existing-home-sales-up-prices-rise-again), I have to admit I was a bit skeptical. The local market is not exactly humming along, so as I read in the above referenced NAR release that April’s existing home sales rose 10% over the figure from April 2011, I thought some perspective is needed.

Let me quote you some housing statistics. The number of Montgomery County single family homes that sold increased 5.1% in February, 14.7% in March, 33.9% in April and 27.9% in May (MRIS data reported by the Greater Capital Area Association of Realtors®; gcaar.com). These numbers are not from 2012; but rather, these are the local stats from 2010 compared to closings from 2009. Yes, as you remember – 2010 was a spectacular year for local real estate!

Sarcasm aside, the number of Montgomery County single family home closings increased 5.8% during April 2012 (compared to 2011); and the number of Montgomery County condo closings also increased 8.1% during the same time. But, Montgomery County year-to-date settlements are still below the number of settlements that occurred during the same time in 2011 (-1.4% for single family homes; and -2.8% for condos). Although the 690 single family home settlements that occurred in April 2012 is higher than 652 that occurred in April 2011, the 2,034 single family home settlements that occurred year-to-date through April 2012 is lower than the 2,062 settlements that occurred the same period in 2011. Regardless, the number of settlements is far lower than what we have seen in past “normal” markets (for example, GCAAR reported that there were 849 settlements of Montgomery County single family homes in April 2001).

It must be noted that although the first half of 2010 seemed to be on a role, the number of 2010 Montgomery County single family home closings actually ended the year slightly lower than 2009. So, even though we have a month of some positive news, let’s be cautious about making assumptions.

housing dataOk, I know you’re going to ask about NAR’s statements about rising home sales. Sure, NAR chief economist, Lawrence Yun, was reported to say that “the housing recovery was underway.” He was also quoted to say, “A return of normal home buying for occupancy is helping home sales across all price points, and now the recovery appears to be extending to home prices…”

However, the latest release of the S&P/Case-Shiller Home Price Indices (May 29th; standardandpoors.com) states “that all three headline composites ended the first quarter of 2012 at new post-crisis lows.” Although there was a 1.6% decrease in home prices in the Washington DC metropolitan area in February compared to January, there was a 1% increase in March compared to February; however, prices have decreased 0.6% for the year.

Although media headlines shout that housing has turned a corner, it’s a little premature to assume that the housing market has normalized with only one month’s data. The housing market has turned so many corners in recent years that I think we’ve made several circles! Just as in 2010, let’s see the final tally. There’s still some data to collect; let’s see how the housing market fares through the remainder of the summer.

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This article is not intended to provide nor should it be relied upon for legal and financial advice. This article was originally published in the Montgomery County Sentinel the week of May 28, 2012. Using this article without permission is a violation of copyright laws. Copyright © 2012 Dan Krell.

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Are internet Realtor® reviews real or fake?

by Dan Krell
©2011
DanKrell.com

internet Realtor reviewsThe internet is a great tool. It conveniently provides access to information about real estate activity and home sales to assist you in your decision making. It’s only natural that people tend to gravitate to the internet because it provides somewhat of a buffer from aggressive real estate agents; it allows a certain amount of anonymity. This may also be a reason for the rise in popularity of internet Realtor® reviews.

But, internet anonymity can be a two way street. Besides reading online what others are saying about your agent, without anyone being the wiser; online reviews are often posted without verification.

An August 19th New York Times article by David Streitfeld (In a Race to Out-Rave, 5-Star Web Reviews Go for $5: Printed August 20, 2011, on page A1 of the New York edition) is an exposé of the fake review business. Yup, fake online reviews. Streitfeld describes how in an effort for online businesses to appear better than the competition, “an industry of fibbers and promoters has sprung up to buy and sell raves for a pittance.” Streitfeld illustrates the “game” as it’s played; posts on websites such as Craigslist and help for hire sites offer a positive review for a fee.

Also known as “deceptive opinion spam” or “review spam, Cornell researchers claim “these fake reviews are fictitious opinions deliberately written to sound authentic, in order to deceive the reader.” They conclude that the detection of fake reviews is “well beyond the capability of human judges;” and recommend an analysis of reviews to include, among other things, psycho-linguistically motivated features. (Proceedings of the 49th Annual Meeting of the Association for Computational Linguistics, pages 309–319, Portland, Oregon, June 19-24, 2011.)

“There have always been fake reviews from employees and competitors,” states Greg Sterling, of Sterling Market Intelligence, in a March 7th blog post “Fighting the Rise of Paid Reviews” (screenwerk.com). Describing the increase of “guaranteed positive reviews” for a fee, “… the increasing importance of online reputation to consumers and the potential influence on rankings that reviews bring the stakes are higher than ever. Hence the emergence of services that will guarantee positive reviews.” He further states, “I don’t know this but my guess is that somewhere in some room … there are minions writing positive reviews without ever having actually used the business or visited its location.”

The National Association of Realtors® (NAR) code of ethics prohibits deceptive practices, which includes posting or encouraging fake reviews. However, Lani Rosales of AGBeat (agbeat.com) argues that there has always been an element posting fake Realtor® reviews and testimonials (“Sketchy new trend – hiring fake online review writers”).

Internet Realtor reviewsWhat to do?

Suresh Srinivasan of agent reputation platform ReachFactor (ReachFactor.com) stated in email correspondence that review spam is a “big and growing problem. It’s extremely cheap to pay others …to write a review of any service professional.” He states that many websites get “gamed” because they only require the reviewer to register but don’t actually verify that a transaction took place with the agent. He points out that even though some popular real estate websites try to read every review, it is not entirely effective in weeding out the fake reviews. Mr. Srinivasan’s company verifies factual information collected about Realtors® so as to ensure consumer transparency as well holding Realtors® to a higher ethical standard.

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This article is not intended to provide nor should it be relied upon for legal and financial advice. This article was originally published in the Montgomery County Sentinel the week of November 7, 2011. Using this article without permission is a violation of copyright laws. Copyright © 2011 Dan Krell.

What is DOM; why some agents choose to manipulate the material facts about DOM


by Dan Krell © 2009

“Days on Market,” or DOM is self descriptive – it is basically the number of days a home is “active” on the market. DOM is used by real estate professionals and economists to gauge the market and home inventory. Since real estate is a major component of the United States economy, these statistics are used by economists in examining the condition of the real estate market and the economy as whole.

Home buyers and sellers have also given meaning and significance to DOM. To some home buyers, the belief that an inverse correlation exists between the length of time a home is on the market and the seller’s motivation gives them the justification to make a lowball offer. But is the correlation accurate? If a home has been on the market 120 days when the average is 60 days, the seller maybe more motivated- but not necessarily ready to take a lower offer. Realistically, the high DOM may be an indication of a home that is over-priced to begin with; some sellers may reluctantly reduce the price as time goes along, while some are apt to hold on to the higher price.

In addition to supply and demand, home prices can be correlated to various factors through equilibrium models, such as price and condition, and price and size. As far as I know, no one has discussed an equilibrium model to indicate a correlation between price and DOM; DOM is not only dependant on market conditions but also dependant on variables such as seller’s personality and financial situation.

Just like home buyers, home seller’s assign meaning to DOM based on conjecture rather than sound reasoning. If a home is on the market longer than the average DOM, many sellers tend to focus solely on their real estate agent’s effort (or lack of effort); conversely, some sellers are led to believe they may have sold for too little if the home sells in less than the average DOM.

Real estate agents give credence to the emphasis of DOM placed by home buyers and sellers; and some agents add their own emphasis such that they are compelled to manipulate a material fact about a home. Yes, my local MLS (MRIS) considers DOM a material fact about a home. Manipulating DOM is not only manipulating a material fact, it also appears to be a violation of National Association of Realtor’s Code of Ethics Article 1 (“…REALTORS® remain obligated to treat all parties honestly.”) and Article 2 (“REALTORS® shall avoid exaggeration, misrepresentation, or concealment of pertinent facts relating to the property…”).

If the reasoning behind the emphasis for DOM by home buyers and sellers is speculative, and the DOM may be manipulated by the listing agent any way- what’s the big deal anyway? I honestly have never had anyone list DOM as criteria for their home search. Need more information about DOM? Talk to your Realtor about DOM and its significance to your purchase or sale.

This article is not intended to provide nor should it be relied upon for legal and financial advice.