Why People Don’t Trust Real Estate Agents

Posted on Aug 01, 2016


Distrust-yo

There is a trust problem in real estate. It’s our mission to fix this phenomenon.

First, let me be clear – I’m not writing this to disparage real estate agents. After all, I am one myself, and I believe most are competent and well meaning. I am, however, here to shine a blazing spotlight on two misaligned and out-of-date business practices under which most traditional agents work and many earn tremendous incomes. Unfortunately, these business practices are so egregious that they largely contribute to massive distrust of the entire industry.

The very definition of trust is belief that someone or something is reliable, good, honest, and effective. When I tell people about my background and then get around to revealing my current profession, the inevitable question or nonverbal reaction incurs: "Oh, why would you choose that profession?"

It’s no surprise that, according to a 2013 study conducted by Choice Home Warranty , 67.5% Americans surveyed distrust real estate agents, and with the emerging generation of 18-24 year olds distrust is near 73%. Pretty appalling and shocking for a $70 billion business, and disheartening for agents who give it their all every day.

Here are the two fundamental flaws of the traditional real estate brokerage model.

First, your buyer agent’s commission is based on the price you pay for a home. The more you pay, the more your agent earns. So when it comes down to critical deciding factors (such as what is the best initial offer, which property will build more equity in the long run, or which will have stronger rental appeal), can customers really count on agents to provide objective advice?

My point is not whether agents would give self-motivated advice. Most of the agents I know would never do such a thing. My larger point is that it just doesn’t make any sense to put agents in that position in the first place. Fundamentally, the buyer agent’s best interests should always be aligned with their customer, not with the listing agent.

Second, listing agents no longer earn the full 3% to sell your home, and customers know it. Listing agents will always provide necessary value when negotiating and managing transactions and closings. However, in terms of actually selling your home, the MLS (Multiple Listing Service) and automated marketing systems does most of the work. It used to be that outbound marketing was an integral part of the home selling process—sending postcards, making calls, running newspaper ads, etc… Nowadays, because the vast majority of buyers are finding their homes online, the listing agents have a lot less work to do than before. Today, it is sufficient to list a home on the MLS, place an interactive “For Sale” sign at the property, and implement an aggressive online marketing strategy.

Thanks to the internet, prospective buyers (and their agents) will find your home through search portals like Trulia, Zillow, and Realtor.com. In fact, 90% of buyers begin their search on these portals which each utilize the same MLS information. Any other outbound sales tactics are minuscule in comparison. So if a listing agent tries to convince you they have some “secret sauce” for selling you home, ask them if the biggest ingredient is bologna.

So what is a better way? Houwzer is a full-service brokerage company committed to rebuilding the brokerage model around the customer.

Houwzer is how estate brokerage should work.

First, Houwzer Realtors are paid a salary and earn customer satisfaction bonuses based on how well they serve client interests and how well they help find their dream home. We are extremely diligent in the hiring and training of agents to become best-in-class consultants, rather than salespeople. Our agents are evaluated against our company manifesto including expertise, transparency, trust, honesty, reliability, and customer focus. Our agents have your back every step of the way.

Second, since technology has cut the cost of servicing a listing, we are able to provide full-service to sellers for a flat fee of $5,000 - enough to cover our costs. By nixing the listing commission and charging a low, flat fee, we're able to save our clients an average of $15,000! How can we afford to do this? In the traditional brokerage model, real estate agents act as independent contractors. Because all Houwzer agents earn a salary and work together under one big umbrella, we operate more efficiently and are able to cover operating costs with earnings we make on the buy side. Makes sense, doesn’t it?

Houwzer promises full transparency and best-in-class service customers deserve. In exchange, we ask customers for “social currency” – active referrals with friends, family, and colleagues, and to help us bring trust back to the real estate brokerage business.

Appropriately born in our home city of Philadelphia, we’re starting our own real estate revolution right here and invite you to join us.


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