Redfin just published MLS data from seven counties across the U.S. on the likelihood that a listing activated in 2009 sold by August of 2010. It turns out that the listing agent got a sale 47% of the time, a number that seemed surprisingly low to us, particularly since staging, photographing and marketing costs can add up.
It’s a pointed question for us. Having spent years focused on buyers, we are just beginning to learn how to make listings profitable. Today we still make more money from our home-buyers than our sellers, and our sellers are more work.
In thinking through the target success rate for our business, we’ve wondered if the 2009 data are aberrational. Have success rates been significantly higher in past years? In 2009, were listings just loss leaders for agents to meet new clients and build their brand? Or do you think that the 2009 rate is what a brokerage should expect every year? What do you think the customer expects?
Maybe a hard year is a necessary prelude to a good year. Adam Wiener, a licensed agent who runs new business initiatives and analytics at Redfin, emailed me this morning to note that many listing agents prefer to catch listing customers on the rebound from their first agent, after their listing has failed to sell. We are getting some of that business, and giving some of that business away to others too; hopefully for everyone the second time will be a charm.
Jeff Brown says:
Glenn — Of all the brokerages in the free world, yours should know what makes listings sell, regardless of whether it’s the first try, or the fifth. It’s priced right, is as foxy as it can be made, it’s super easy to be shown, and is generally the best buy for the buck on the block.
Waiting for home owners to emerge from the cloud of wishful thinking isn’t a strategy, any more than hope is. You’ve already demonstrated your ability to effectively adjust to the market as it relates to your company’s strategy/tactics on the buyer representation side. It seems becoming just as swift on the listing side would be a piece of cake for you.
I’ll go out on a limb here, and say that if indeed home sellers are more work for you than buyers, you’re definitely not doing something right. 2009 was indeed a challenging year. However, for experienced listing agents it was a year in which they were able to showcase their superiority over those refusing to adhere to professional standards. For every listing they took, there were multiple listings on which they passed.
I bet if you were to survey your firm’s buyers — say the last couple years worth — the answers they gave you for their ultimate purchase choice would pretty much give you the template for a pretty successful listing program.
Am I making sense to you?
August 17, 2010 — 7:54 am
Dan Scher says:
Hi Glenn,
A few weeks ago I wrote to you about an office manager’s understanding of the business vs technical (computer) knowledge. I copied Adam Wiener. My point was that it takes years and alot of grass routes experience to understand (and be effective) in our business. I believe your experience (and this posting) proves my point. Technical expertise for the real estate business will only take a week or two, but knowing how to secure a relationship so the seller stays with their agent even after the initial listing period is a skill that very few people can teach. The same is true of setting up the relationship between the agent and the seller so the property will be reduced.
Hopefully, you will contact me this time.
Respectfully,
Dan Scher
Redfin NJ Broker of Record
cc: Adam Wiener
August 17, 2010 — 8:34 am
Sean Purcell says:
I’ll go out on a limb here, and say that if indeed home sellers are more work for you than buyers, you’re definitely not doing something right.
Glen, I have to echo Jeff’s comment. I’ve been doing quite a bit of surveying over the past year in preparation of a new model I’m (slowly) deciding on and – at least locally – the ratio is well over 2 to 1 in hours spent on buyers vs sellers. Specifially, the average number of hours spent last year by an agent on the buy side, from acquisition of the client till closing of the escrow, was between 70 and 85 (depending, interestingly enough, on the brokerage). The average hours on the sell side, same parameters, was low 30s with some outliers near 40.
If your model reflects greater “work” on the sell side over the buy side, I think you have to look at two issues: How is “work” being defined? How are your agents attracting listings?
August 17, 2010 — 9:56 am
Greg Swann says:
> the average number of hours spent last year by an agent on the buy side, from acquisition of the client till closing of the escrow, was between 70 and 85
Wow, that number really sucks. The would put the agent Jeff is talking about at around 100 hours of line-work a week, with nothing left for staff-work or blue-sky efforts. I would think that really productive buyers’ agents are topping out at around 30 hours per closed client, with at least a third of that being handled by lower-cost people. If an agent is spending 85 hours per closed client, it’s because the houses sell for so much he has time to waste, IMO.
August 17, 2010 — 11:20 am
Sean Purcell says:
@Greg, Two points of clarification: First, I’m surveying agents in general and not agents specializing in idx-type drip campaigns. The agents I speak to are “meeting” their clients much earlier in the process than Jeff’s example, who I suspect doesn’t spend any time until the prospect has not only raised their hand but most likely has already found the house they want. Second: I should have put more of a disclaimer in my comment regarding this being local surveying because I agree: those numbers suck. But here in San Diego, through most of ’09 and the first half of ’10, the average buyer had to write over 15 offers before getting one accepted. Yes, you read that right: average was over 15 offers. Our inventory is down below 3 months and in some areas / price points ($300K), the inventory is south of 2 months.
In a balanced market I suspect the number might drop to as low as 40-50 hours, but then the listing side would drop to 30 or less as they become more plentiful. I can’t imagine a market in which the buyers’ agent is spending only 30 hours, on average, because we easily spend half that just in escrow matters and needless paperwork (California’s new Motto: “We Protect Everything But Trees”) and that doesn’t account for pre-escrow activities. I don’t know that I’ve ever seen a market in which the buyer’s side was even equal to the seller’s side, never mind less than. I would still put the ratio of hours spent on buy side to sell side at 1.5-2.0 to 1, which leaves me with the same two questions for Glen.
August 17, 2010 — 11:53 am
Jeff Brown says:
My guy said he made 10 offers last week, getting two accepted.
August 17, 2010 — 1:20 pm
Karen Brewer says:
the word around here is… first girfriend,second wife,third broker”
August 17, 2010 — 4:30 pm
Sean Purcell says:
Was that 10 offers for the same client?
August 17, 2010 — 6:31 pm
Jeff Brown says:
Dont think so, Sean, cuz he ended up with a couple deals. He doesn’t handle investors, at least that I’m aware of.
August 17, 2010 — 6:41 pm