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I’ve always prided myself on telling it like it is. I’ve blogged about: Bad Real Estate Marketing, The Real Estate Industry’s Fear of Change, my Frustrations with Brokerages, my Frustrations with Real Estate Licensing, Ethics and Douchbaggery in the Industry. Today, I want to share with you 4 Dirty Truths About the Real Estate Industry that no one wants to talk about.
1. Denise and Mark Don’t Exist (aka, the Truth About Door Knocking & Cold Calling)
A few months ago, we had a property listed for sale. It had been on the market for about a month, when one day, our Sellers received a note in their door from a REALTOR:
“My clients Denise and Mark are looking for a home in your neighbourhood. They are a young couple, blah, blah, blah….and are desperate to get into your neighbourhood. I’d love to talk to you about selling your home.”
Problem 1: There was a For Sale sign on the lawn and the house was already on MLS. That note contravened the real estate industry’s rules that prevent an agent from contacting another agent’s clients.
Problem 2: The house had been for sale for 30 days and that REALTOR had not made an appointment to see it.
Truth: Denise and Mark don’t really exist. Real estate agents are taught to door-knock and cold-call people as a way to find Sellers. They’re taught that homeowners will be most likely to respond if they think the agent has a real Buyer, so stories and scripts are crafted to make it seem legit. It usually goes down like this: The unwitting homeowner gets excited that someone wants to buy their house…the agent convinces them to put in on MLS to attract more Buyers..and everyone conveniently forgets about Denise and Mark. Boom – agent makes a commission.
Note: Sometimes, Denise and Mark really do exist, and agents are truly trying to find real people a real house. But trust me, this is the exception, not the norm.
In the case of the letter to our clients, we called the agent and asked him why he hadn’t brought his clients to see the house yet. What I haven’t mentioned yet, is that this house was part of a townhouse complex of identical houses – so if Denise and Mark really were looking to get into the neighbourhood, they would have seen it was for sale. His response? As expected. ‘I have a marketing company that sends out those letters everywhere to help me find Sellers’.
The Lesson: Next time an agent calls you or knocks on your door and tells you about their Buyer who wants to buy your house….be VERY suspicious.
2. Most REALTOR awards are BS
You’ve probably suspected this already, and I’m here to tell you: it’s true – a lot of REALTOR awards are BS. Most brokerages ‘award’ their agents every year for sales – you’ll see President’s Awards, Chairman’s Awards, Platinum Awards, Diamond Awards, 100% Club, #1 Awards, Top Producer and a whole bunch of other meaningless stuff.
Truth: These are all INTERNAL awards, meaning that they merely represent an agent’s performance vis a vis other people in their own brokerage…so the size of the brokerage is critical in determining what that performance award really means. Sometimes, that agent is #1 in a 5 person office. Sometimes they are a ‘Top Producer’ yet 75% of realtors sell more homes than them. Sometimes, everybody gets an award, even if they’ve only sold 3 properties.
In every organization, internal awards serve an important purpose – to reward and motivate the people who are part of that organization. But why have real estate agents and brokerages chosen to turn those internal awards into marketing messages? I can’t think of any other industry that advertises their internal awards this way….you don’t see Coke marketing themselves as the best at Coke. Better than Pepsi? Maybe. But not the best at Coke.
Buyers and Sellers don’t know the difference between Platinum and Diamond and Chairman when it comes to real estate awards – heck, I’ve worked in the industry a long time and I don’t know what they mean. I wish the goal of boasting about awards was to inform the public rather than confuse them.
Updated: I stand corrected. I’ve been informed that most of the awards at one of the BIG brokerage (think balloons) relate to the amount of commission the agents make…so an agent claiming to be part of the Executive Club has made between $50-99K in commission (or has sold 2-5 properties in Toronto). So basically they are advertising how much money they make, which actually feels worse than advertising an internal award.
I also wish I didn’t routinely see ‘2007 Top Achiever Award’ on business cards…in 2017.
Most agents abide by the advertising rules with a bunch of asterisks that explain the award..and if your eyesight is better than mine, you might be able to understand what they won the award for.
I’m all for recognition of accomplishments and celebration…but when everyone wins an award for something, and it’s all internal awards, I start to get suspicious. Buyers and Sellers are smarter than most agents think…and I believe most people care more about experience and expertise than they do about internal awards they don’t understand.
3. Some Agents Pay to Play
Get this: the agent on the cover of that magazine might have paid to be there. For example, Top Agent Magazine, which touts itself as featuring ‘the top-producing and most accomplished agents in the real estate industry’. Truth: They reach out to (almost any and every) agent and tell them they are being considered to be featured as an expert…then they interview them…and make them pay to be able to share the magazine (with their photo on the cover) with their friends and clients.
Also: not all reality TV is created equal. While there are some great shows featuring top real estate experts on HGTV, there are also a lot of reality TV shows (on different networks) where the agents pay to be on the show. For example: Top Million Dollar Agent. Don’t be fooled….the people you’re watching may not be top agents, and they may not be selling luxury properties. The one thing you can be sure of? They paid to be there.
Now don’t get me wrong: I have no problem with paid advertising…but I do have a problem with paid advertising masquerading as something it isn’t. Deception: not cool.
4. It’s not a coincidence that that agent called you.
Picture it: You’ve got your property listed for sale for 90 days. Much to your dismay, it doesn’t sell and the contract with your REALTOR expires. Suddenly, your phone is ringing off the hook with agents who have a Buyer for your place – are you still interested in selling? Notes and postcards start arriving at your door telling you how hot your street is. Coincidence? Not a chance. You have an expired property and every agent wants to sell it.
I’m serious – we’ve had clients of ours get upwards of 15 calls a day after their listing expired.
There are entire seminars and training sessions devoted to teaching agents how to “convert” expired listings into new listings…and how to get around the rules in place to prevent would-be Sellers from being harassed by eager agents.
Truth: If that agent had a real Buyer, they would have brought you an offer while your property was listed with your agent.
Pro Tip for Ontario Sellers: When you signed the listing agreement, you agree (or not) to be contacted by other agents if your listing expires. If you didn’t agree to it (I hope you didn’t), and are getting calls, record the names of the agents and report them to RECO – they could be fined (or at least dissuaded from continuing the harassing phone calls).