There’s lots of good information on real estate websites, but ratings of individual agents probably aren’t worth much.
According to the latest report from the Consumer Federation of America, you should approach such ratings with a healthy sense of skepticism. “Consumers will learn far more about agents if they read all the customer reviews,” said the study’s author, Stephen Brobeck -- the key word being “all.” Many, or even most, of the reviews on a given site might be positive. You’ll have to read every last one of them to find out if a previous client had problems or issues you should be concerned about.
“There has to be a critical comment in there somewhere,” says Brobeck, who headed the CFA before relinquishing that post to become a senior fellow. “So read all the reviews carefully and look for details.”
Even at that, though, you may not get the full picture of an agent’s prowess.
Most reviews are accurate, at least on Zillow’s website, Brobeck’s study found. The site vets all legitimate reviews that are submitted, and agents are not permitted to remove the negative ones.
However, on the other sites studied -- realtor.com, HomeLight, Yelp and Facebook -- the agent has the option of including only favorable reviews, according to the report. And as this column pointed out in early January, sites operated by agents often include fake reviews from friends, colleagues or the agents themselves.
Customer ratings can be even more bogus, according to the study. Ratings are usually on a scale of 1 to 5, but nearly all of the hundreds of agents studied by the CFA were rated at 4.0 or better, with “a large majority” of the sample receiving a 5.0.
It’s strange, indeed, that there’s not an average agent in the bunch.
The study found numerous cases in which agents with “very few and sometimes only one customer comment” were anointed with a 5.0 rating. A “significant minority” with a 5.0 rating had three or fewer customers.
“The ratings are not that helpful,” Brobeck told me. “They are inflated and do not provide a reliable basis for comparing agents.”
The new report is the fourth in a series on real estate from the CFA. Two of the previous studies dealt with issues concerning agent representation, and the third covered the commissions agents and their brokers charge.
Nine in 10 buyers and sellers use an agent, yet most of them undertake limited searches before hiring one, if they search at all. According to research from the National Association of Realtors, 75% of buyers and sellers interview just one agent.
But, as the CFA report points out, “there can be a huge gulf between the quality of services offered by different agents.” And they usually charge the same, whether they’re experienced or not. That alone is reason enough for buyers and sellers to do their homework.
Unfortunately, most people go with the first agent they speak to, without looking into past sales, when those sales were completed and whom the agent represented -- the buyer or seller. Without that information, Brobeck says, it is difficult to determine whether the agent has had recent clients.
Here, Zillow earns high marks. Based on a sample of active agents in 30 cities, the study found that the popular site is most likely to include date and party represented for past sales. NAR’s website, realtor.com, came in second, but it only listed past sales in little more than half the agent profiles, and only 1 in 5 profiles included customer reviews.
The others were far behind, even worse than the agents’ website themselves, which tended to list past sales and more customer reviews than Yelp, Facebook or HomeLight.
Even at that, Brobeck warned that Zillow’s customer reviews “are not unbiased” because almost all of them are from customers who have been asked by their agents to post their thoughts. Obviously, agents don’t ask their unhappy customers to report how they feel.
The report also notes that some of the sites trade high ratings for advertising dollars. “An agent receiving a rating below 5.0 isn’t likely to cooperate with the site, let alone pay for advertising,” it says.
In studying agent profiles, consumers would be better served by paying particular attention to their recent activity. They should also look at the price history of properties listed by the agents to learn how long it took them to sell and whether the selling price was marked down, and by how much.
Recent sales mean the agent is active in the market, while substantial price reductions could indicate that the agent inflated the original asking price and had to lower it to net the sale. Days on the market can also indicate whether the place was priced right or not.
When you’ve picked a few agents who seem to stand out, interview each one in person. Ask if they are part of a team in which the work is delegated, and ask for an explanation of why the property is worth what the agent believes it to be. Determine how long the agent has been in the business, and whether they have worked in the specific community or neighborhood where you are buying and selling.
As Brobeck points out, it’s far easier for a realty agent to secure a license than it is for hairstylists. In some states, an agent can obtain a permit after only a month or two of training.