Games people play in real estate

games people play

Studies suggest that your experience during a real estate transaction may depend on you and your agent’s ability to communicate. Clear communication between you and your agent should leave no doubt about your intentions, as well as your agent’s ability to convey and interpret motivations from your counterpart. How to understand the games people play in real estate.

A pop-psychology theory called Transactional Analysis, originally used as a psychotherapeutic tool, has been touted as a way to facilitate communication and assertiveness. One of the giants in the field was Dr. Eric Berne, whose work seems to carry more weight in the corporate world today as it did when his self help book “Games People Play” was first published in the 1960’s.

Games people play during real estate transactions

Have you ever wondered why a certain person makes you respond in a way, which, after the fact you thought was unpleasant or embarrassing? Transactional Analysis theory suggests that, unbeknownst to many, we often react and interact with each other in a way that can be described as games. Not so much the games that you might think, but more precisely these are psycho-emotional games that are played to satisfy unconscious needs that were not met during our childhood and adolescence (also called ulterior motives). And because these behaviors and traits are part of our behavioral “repertoire,” we are more than likely unaware of them in many situations. These ulterior motives can get in the way of a successful real estate transaction.

A simple explanation of Dr. Berne’s theory is that there are three mindsets from which we interact: the parent, the adult, and the child. When you interact as the “parent,” you are acting much like you perceived how your parents’ responded to situations; acting as the “child,” you react as you would have when you were very young. However, when you interact as the “adult,” you are reacting autonomously and objectively. Conflicts can arise when the mindsets are not amenable.

For example, if you’re butting heads with your agent because both of you are claiming to be the expert and the other should listen intently, chances are that both of you may be interacting with each other in a “parent” mindset. Likewise, if a home buyer and seller tantrum and attempt to bully each other over accepting the other’s offer, they are most likely reacting as the “child.” While the objective “adult” interacts and reacts free from unconscious motivations, and is most likely to communicate clearly and resolve most issues that interfere with a successful transaction.

Negotiation, like communication, is sometimes described as a game of personalities. It is a common misconception successful negotiators are good at bluffing; this belief may actually originate from a person’s own unconscious tendency toward dishonest communication described by Berne as “ulterior motives.” In fact, top negotiators happen to be honest communicators. Even though Sun Tzu’s “The Art of War” is often thought of as a metaphor for negotiation, it might be considered an early precursor to Transactional Analysis, since the piece is about sizing up and dealing with your counterpart.

This article not meant to give psychiatric advice (please seek a mental health professional if necessary); rather, this is meant to offer an alternate perspective of communication with your agent and counterpart. Regardless of the outcome, communication is a key factor in determining whether your home buying and selling experience will be positive or negative.

by Dan Krell
© 2013

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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. Copyright © 2013 Dan Krell.

Realtor production or customer satisfaction – importance and meaning of rankings

realtor rankingsWhat’s more important? The number of homes your real estate agent sells; or the customer service they provide?

#1 Real Estate Agent.” “#1 in Sales.” “Top 1% Nationwide Producer.” If you’ve spent some time with real estate agents, you may notice how many tout themselves as being #1. And although some of these rankings are legitimately given by a recognized organization; many agents may be creating their own production ranking designation to use for marketing purposes.

by Dan Krell © 2013

Ranking designations are used in various industries to demonstrate a superlative product, or excellent service. One of the most recognized organizations that bestow ranking designations is J.D. Power & Associates. J.D. Power & Associates is most notable for ranking customer satisfaction in the auto industry, but they also rank satisfaction and other industries including real estate. In fact, you may see the J.D. Power & Associates ranking on a home builder or national/regional broker.

Production ranking is more prevalent in the real estate industry, however, and there are a number of organizations that rank the production of agents, teams and brokers. With the growth of the internet, unofficial production rankings can be found on many home search and real estate data websites. REAL Trends (realtrends.com) is a company that is dedicated to providing analysis of the residential real estate industry, and offers real estate data online; the site provides agent, team and broker production rankings in the U.S. and Canada

The National Association of Realtors® has been toying with the idea of adding a ranking system on the consumer home search site Realtor.com (operated by Move.com). The pilot program, called “AgentMatch,” has not been received well by many agents. There are concerns about the perceptions created by the displayed production statistics; some critics cite issues about statistics that may not be representative of production, which also may not tell the entire story behind of many transactions.

Another NAR initiative in agent ranking is a pilot program called the “Realtor Excellence Program.” Currently the program is being tested in several U.S. markets; and as a recent Chicago Tribune article (Realtor group testing agent ratings program, March 15, 2013; by Mary Ellen Podmolik) reported, it is being received well. What’s different about the “Realtor Excellence Program” from other agent ranking programs is that this program provides agent ranking through customer satisfaction. A quote from Laurie Janik, general counsel of the Mainstreet Organization of Realtors® says it all, “I’m looking at reducing liability. I want happy sellers and happy buyers…Right now we measure agent performance based on how many deals they did…But was (the transaction) a train wreck?

This distinction between agent production and customer satisfaction is an important one. Although you might think that high volume production and customer satisfaction are not mutually exclusive, the relationship usually has some negative correlation; customer satisfaction typically takes a back seat when production goals increase. If a high volume real estate agent or team is invested in maintaining or growing their production, you need to ask about their commitment to customer satisfaction.

Many agents use national averages to determine that they are in the top percentile in production. Using these averages and stats, I also find myself in the “top tier” of various categories. Be that as it may, many consumers deem self promotion about production in a service industry as gauche and trivial. Many consumers are less interested in hiring agents whose focus is about being #1; rather, consumers want to be treated as #1.

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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.  This article was originally published the week of November 18, 2013 (Montgomery County Sentinel). Using this article without permission is a violation of copyright laws. Copyright © 2013 Dan Krell.

A glimpse into home buyer and seller behaviors

homes for sale

Buying and selling a home can be one of the most expensive and complex transactions you may undertake in your lifetime. Many are increasingly seeking assistance from real estate agents; according to the Highlights of the 2012 National Association of Realtors® Profile of Home Buyers and Sellers (realtor.org), eighty-nine percent of home buyers purchased their home through a real estate agent (a substantial increase from the sixty-one percent who indicated they purchased through an agent in 2001), while eighty-eight percent of sellers listed with an agent.

If you plan to hire a real estate agent, conventional wisdom dictates that you should interview several before choosing an agent. However, the logic is countered by the survey results. Approximately two-thirds of home buyers and sellers only contacted one agent. Additionally, a majority of buyers and sellers reported that the top means of finding their real estate agent was through a referral from a friend or family member. Forty percent of home buyers and thirty-eight percent of sellers found their agent through a referral from a family member or friend. First time home buyers were most reliant on their friends’ and family members’ referrals.

Repeat business was also a frequent way indicated in choosing a real estate agent. Although ninety percent of home buyers and eight-four percent of sellers reported that they would work with their agent again in the future; only twenty-three percent of home sellers and ten percent of buyers reported that they had worked with their agent in the past.

The internet is increasingly viewed as an important source of information for home buyers. Ninety percent of buyers surveyed indicated that they used the internet for their home search; the percentage rose to ninety-six for buyers under the age of 44.

Ultimately, your home purchase or sale falls upon the experience and skill of the agent you hire. Because of the increase in specialized transactions (such as short sales, 1031 exchanges, etc), it is probably a good idea to find out if the agent has the experience if your purchase or sale falls in this category.

A recent research study by Bennie Waller and Ali Jubran (“The Impact of Agent Experience on the Real Estate Transaction.” Journal of Housing Research 21, no. 1 (2012): 67-82) highlights the notion that an experienced agent can yield a better result than an inexperienced agent. They concluded that hiring a “veteran” agent will have a positive effect on your home sale. The data indicates that “rookie” agents, those who have had their real estate license two years or less, sell homes for less, take longer to sell homes, and are less efficient during the process.

Asking friends and family for referrals as well as calling the agent you previously worked with is a good way to find a real estate agent. However, vetting out potential issues can be achieved by asking the right questions before you hire them.

Regardless of how you find your real estate agent, it is probably a good idea to find out more about them. A conversation about their experience, knowledge, and expertise is probably a good way to start. Additionally, knowledge about the local market is extremely important these days as market trends have become hyper-local. Not understanding the neighborhood market can lead an agent to over or under price a home.

by Dan Krell
© 2013

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This article is not intended to provide nor should it be relied upon for legal and financial advice. Using this article without permission is a violation of copyright laws. Copyright © 2013 Dan Krell.

The next real estate technology breakthrough

by Dan Krell © 2013
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Real estate predictionsBesides face to face meetings, the telephone was the only way real estate agents could communicate with their clients up until about 1990.  By the mid 1990’s the fax machine was a fixture in every real estate office and was a major method to send home listings and contract addenda to clients.  By the housing boom in 2004, large numbers of home buyers turned to the internet to get the latest home listings before other buyers; and during that time, many real estate brokers and agents were taking to the internet finding rudimentary uses for email marketing.

Much like the advances in previous technologies that made the “business” of real estate easier, current advances also seek to make the process increasingly convenient and efficient.  Before the internet was widely used, the increasing abilities of fax transmissions made communication faster and more accurate.  And even though there has not been a major technological advent since the internet, the internet experience has much improved due to the exponential advances in computing power as well as widespread wi-fi access and increasing bandwidth.

Ten years ago, most home buyers and sellers used their desktop computer to access the internet; mobile computing was somewhat in its infancy.  Advances in mobile technologies, including smart phones, have untethered home buyers and sellers; they now have access to real estate information at their finger tips any time of day, wherever there is a signal.  Additionally, real estate websites can now send listing alerts via text messages.   Technically known as “short messaging service” or sms, texting is not only allowing  the “set and forget” convenience of the home search, but allows anyone to communicate contract details and showing instructions with minimal effort.

The internet as a platform has really changed the home buying and selling experience.  Home buyers and sellers don’t have to wait for their agent to send listing information; and because they don’t have to meet with their agents to sign documents, fax machines have basically become obsolete.

Electronic signing is a technology that is becoming increasingly popular, especially for those who have busy schedules.  The technology allows a person to review and electronically sign a document it via the internet.   Too bad for Fed-Ex, as e-signing has all but eliminated the need to send packages of documents to be signed; most notably, the use of electronic signatures has made the process easier for international home buyers and sellers.

It might seem as if technology is not only allowing consumers to conduct the business of real estate with increasing convenience and efficiency, but also lessening the reliance on real estate professionals.  Ten years ago, most home buyers relied solely on their real estate agent for home listings.  Today, however, a majority of home buyers search the internet for home listings and public information.

However, as information is increasingly available, real estate professionals have become even more relied upon to decipher and provide perspective to the information that consumers are accessing.  A real estate agent’s role is continually changing from the information “gate-keeper” to information analyst.

So, I don’t expect real estate agents to be replaced by androids or Star-Trekesque holo-decks in ten years time; however, new technologies will continue to make the home buying and selling process easier and increasingly efficient.  But, who knows, maybe one day the holo-deck could allow buyers and sellers, who are thousands of miles apart, to attend settlement together.

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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 the week of June 17, 2013 (Montgomery County Sentinel). Using this article without permission is a violation of copyright laws. Copyright © 2013 Dan Krell.

Your real estate agent’s experience is more important than you know

by Dan Krell © 2013
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Why your real estate agent’s experience is more important than you think:

Real Estate AgentsThe National Association of Realtors (realtor.org) publishes an annual profile of home buyers and sellers that includes data and descriptions about how consumers go about choosing a real estate agent.  There are obviously many factors that are involved in the choice, but it is striking that an agent’s experience is not a major reason for their hire; it seems as if most buyers and sellers hire an agent who was referred by someone the consumer knew, and that many buyers and sellers did not talk to more than one agent.

Even though experience is not heavily weighted in agent choice, it may be one intangible that should be considered when you choose your real estate agent.  A recent research study by Bennie Waller and Ali Jubran (“The Impact of Agent Experience on the Real Estate Transaction.” Journal of Housing Research 21, no. 1 (2012): 67-82) highlights the intuitive notion that an experienced agent can yield a better result than an inexperienced agent.

They concluded that hiring a “veteran” agent will have a positive effect on your home sale.  The data indicates that “rookie” agents, those who have had their real estate license two years or less, sell homes for less, take longer to sell homes, and are less efficient during the process.  Data collected from their sample indicated that rookie agents sold homes for about 10% less than experienced agents, which according to their sample data yielded an average net difference of $18,000 (the average list price was $201,297).  Homes listed by “veteran” agents sell about 32% faster than inexperienced agents.  And, experienced agents are more likely to expedite the transaction to completion.

One possible explanation provided by the researchers is that the experienced agents are more likely to list higher quality property that typically sells faster and for more money.  Although they concede that they cannot substantiate this rationalization by this study, they suggest that veteran agents are more successful in obtaining luxury real estate and new home listings.

Real Estate AgentA more likely reason for differences between rookie and veteran agents is the mindset brought forward to the business of real estate.  The investigators discuss how those who consider selling real estate their career are more successful and have better outcomes for their clients than those who do not.  They also suggest that those who consider themselves as “part-time” agents are less likely to achieve as high of a result in their transaction as the full time counterpart; they contend that successful veteran agents are dedicated and devoted to their career.

Other possible reasons for their conclusions (but not discussed in the study) are that veteran real estate agents are more acquainted with the nuances of the housing market and have an increased ability to engage the parties in the transaction.  Full time agents are invested in being aware of listing and sale activity in their respective markets, and network with other agents to compare notes.  Additionally, experienced agents may have developed the ability to easily connect with home buyers and sellers; as well as have greater capacity to understand the specific needs of buyers and sellers – thus facilitating a smoother and successful transaction.

The business of real estate is increasingly complex and difficult.  Rapidly changing demands on home buyers and sellers can be challenging and frustrating for those in the market.  Your agent’s experience, both general and specialized, could make the difference in your success.

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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 the week of April 8, 2013. Using this article without permission is a violation of copyright laws. Copyright © 2013 Dan Krell.