Traditional Agents More Popular Than in 2007?

A couple weeks ago our weekly poll asked: Will you use a traditional real estate agent for your next home purchase?

This poll was actually a re-run from almost seven years ago when we asked the same question.

Here’s how the results of the two polls compare:

Poll: Will you use a traditional real estate agent for your next home purchase?

The sample size on both polls is really just a small fraction of the 25,000 visitors this site gets in a month, but these results were still somewhat surprising to me. Are home buyers really more than twice as likely to use a traditional agent now than they were in 2007?

With the increasing number of alternative brokerages popping up around Seattle, I would have expected the opposite results.

We used the services of WaLaw Realty to buy our home in 2011, and in a heartbeat I’d use just about any of the brokerages I highlighted in last month’s series to buy or sell a home before I would pay a full commission to a traditional agent.

Are traditional agents really getting more popular, or was this survey just a fluke?

0.00 avg. rating (0% score) - 0 votes

About The Tim

Tim Ellis is the founder of Seattle Bubble. His background in engineering and computer / internet technology, a fondness of data-based analysis of problems, and an addiction to spreadsheets all influence his perspective on the Seattle-area real estate market.

20 comments:

  1. 1

    Polls Can and Will Give Suspect Results

    1. Depending on the wording of the poll question.
    2. If a “pro-lobby” infiltrated the poll and skewed it.

    The more diverse and large the polling audience, eliminates much of this error.

  2. 2
    The Tim says:

    By softwarengineer @ 1:

    Polls Can and Will Give Suspect Results

    1. Depending on the wording of the poll question.

    Well that’s obviously not an issue here since it was literally the exact same question, with the same answer choices both times.

  3. 3
    Blurtman says:

    More and more, Taliban RE agents will be used. “You’re offer is an insult to our prophets. KABOOM!”

  4. 4

    RE: The Tim @ 2

    Also, Your Website Audience Seems Diverse to Me

    Both bulls and bears seem in equally abundant supplies.

  5. 5

    What was Redfin’s rebate in 2007 and what is it today?

    Of all the alternative modes you highlighted only WaLaw’s (and possibly Craig’s) has anything significant going for it, and something I would clearly recommend to some people. Redfin is another good referral when I come across an unrepresented buyer interested in one of my listings (or Ray if it’s Tacoma). The one with the virtual tours was laughable, and as noted in the other thread, most of the others are very tiny players. For most if your pieces gave them another client or two that would be a significant thing to them.

  6. 6
    One Eyed Man says:

    I’m not a huge fan of traditional brokerages. The last time I sold my house was 2003. I did it FSBO but I did pay $450 plus 3% to the selling broker to get a non-traditional brokerage to list it in the MLS. But then again, I was a real estate attorney and presumably knew more about selling real estate than the average person.

    “In microeconomic theory, the opportunity cost of a choice is the value of the best alternative forgone, in a situation in which a choice needs to be made between several mutually exclusive alternatives given limited resources. Assuming the best choice is made, it is the “cost” incurred by not enjoying the benefit that would be had by taking the second best choice available.”

    The quote above is from wiki on “opportunity cost.” Here are 4 issues regarding the propensity of current buyers to use a traditional agent. All but item 2 (which is a definitional issue) are to some degree based upon opportunity cost analysis.

    1. Some of the increase in those saying they would use traditional agents might be people who would have done a FSBO in 2007. Back in the early 2000’s I had a fair number of legal clients selling homes FSBO in Kirkland and Redmond because they could stick a For Sale sign in their yard or list it FSBO in Micronews and get multiple buyers to make offers in a weeks time.That’s the non-use of agents, both traditional and non-traditional. They commonly had Microsoft’s pre-paid legal plan that took care of the legal cost to draft a purchase agreement. I’m not sure that FSBO is as common a practice today as it was pre-2007 but a decrease in that category could add to the use of traditional agents without subtracting from the use of non-traditional agents.

    2. I’m also not sure that there is a clear definition of what is a traditional agent and what is a non-traditional agent. Is “The Cascade Group” in Issaquah Highlands a traditional agent in the minds of those who respond to the pole? They offer 1% listing side commissions and they get a lot of listings in certain areas around Issaquah, but I think they still call themselves a “full service” brokerage. Despite the fact that they’re a discount brokerage, I’m not sure that people always think of them as a non-traditional brokerage. For some people, the distinction between traditional and non-traditional may have more to do with the claim that a brokerage is full service and offers more marketing expertise than it does with commission rate.

    3. As Kary appears to point out, a lot of people think you get what you pay for and if they still think that its a little tough for sellers in their neighborhood in 2014, maybe the claimed benefit of potential additional marketing and time spent by a traditional broker seems like a reasonable investment hedge against the risk of a slow and difficult sale.

    4. Back in the 20th Century there was a saying when making the decision to buy new computer equipment for a business in which you were an employee. The saying was “nobody ever got fired for buying IBM.” The point is that if you’re unsure which alternative is the best one, people often go with the big brand names to avoid the risk of criticism from a boss or from friends, neighbors and spouses if things go sideways. In 2007 it might have been a little ahead of the curve and cutting edge to say you would go non-traditional, but perhaps not so much now. And the big brand names are the traditional names like John L Scott, Windermere, etc, not 500 Realty, Redfin, or (does Zip even exist anymore?)

  7. 7
    Blake says:

    Tim,
    I think that your website’s audience back in 2007 was probably a more “alternative” crowd than today. What was the average number of visitors you got per month back in ’07? Probably much less than 25,000…
    Regression to the mean?
    Blake

  8. 8

    By One Eyed Man @ 6:

    The last time I sold my house was 2003. I did it FSBO but I did pay $450 plus 3% to the selling broker to get a non-traditional brokerage to list it in the MLS. But then again, I was a real estate attorney and presumably knew more about selling real estate than the average person.

    As a real estate attorney you would almost certainly be better equipped. Just being an attorney, however, would not. I once ran into an attorney doing what you did who did not know about lead based paint disclosures, and I really doubt his limited service broker would have brought that up when an offer came in. And I’m not certain of the timeframe, but I think back then the forms were still such that it was an issue if a buyer signed them first, so even if the buyer’s agent brought it up there still could have been trouble.

  9. 9
    Mike2 says:

    Around 2007 we tried to use Redfin to buy a house and were very disappointed with how the agent worked in terms of putting in the offer (yhea, one sample is not really indicative I know). Very slow to respond and while the market was just starting to tank at that point we felt they did a very poor job of marketing our below asking offer (which was what the house eventually sold for 6 months later). We then used a semi-full service agent at Zip realty (not sure if they still rebate part of commission but believe they did back then) and felt that was a better experience.

    In 2013 when we went to buy again we used a full service agent from one of the big two in town, who helped up sell in 2012, and while we did almost all of our searching using Redfin’s nicer website we were happy to have her help with running us through the bidding process.

    So I’ll say I’m one of the switching voters who thought in 2007 (having never bought a house) that Redfin’s model sounded great but now in 2014 after buying two houses I reluctantly think that having an agent does add value even if not a full 3%.

  10. 10
    The Tim says:

    RE: Mike2 @ 9 – FWIW, Redfin has modified their business model pretty dramatically since 2007. Back then they were mostly a do-it-yourself option, whereas today they’re arguably more “full service” than most traditional agents. The flip side is that the rebate has dropped from 2/3 to ~1/3 over that time as well.

  11. 11
    Jay says:

    RE: Mike2 @ 9 – I tried using Redfin to buy a house last year, and I had similar experiences as you. They were not full service. My friend used Ray Pepper, and it seemed that Ray Pepper provided more services and guidances than Redfin. Moreover, Ray Pepper refunds twice as much as Redfin.

  12. 12

    RE: Kary L. Krismer @ 8

    The Only Place I’d “Mandatorial” Paint With Oil Based Paint [lead?, probably not anymore]

    Is the homes’ base board before installing flooring [except linoleum, its already waterproof]. In fact the best floor is cheap linoleum base, then put your wood or rugs on top.

  13. 13
    Erik says:

    RE: Mike2 @ 9
    Redfin is a cool website to look up houses and data. It’s free and should be used to look up that stuff. It’s not as a place to find a realtor.

  14. 14
    WhoDat says:

    You cannot conclude that there is a decline in interest in agent-alternatives based on your survey. Both samples are self selecting, so neither is random, nor representative of either your audience (at either point in time) nor, of course the general public.

    A truer measure of the shift would be transaction volume as a percentage of the listed market in areas with non-traditional agent alternatives such as Redfin (i.e., relevant market share).

    My gut says that this market share has been increasing….but that is a combination of gut and observation – both of which might be slanted by my choice of Redfin as a buyer agency last year.

  15. 15

    I think the difference between 2007 and now is that the lines have blurred somewhat between traditional and non traditional agents. There are many more agents working for traditional brokerages who act more like non traditional agents by rebating commissions or charging flat fee commissions. There are more non traditional brokerages who act more like traditional brokerages by providing more service than they used to, and by offering less of a commission rebate.

  16. 16

    RE: Ira Sacharoff @ 14 – I think you’re dead on, Ira. The SB Community – at least the actively commenting portion of it – bears out your comment. I think most or all of the brokers who comment frequently could be considered “alternative” as you point out. That was likely less true in 2007.

  17. 17

    It would be interesting to have the data available by price point. For lower price point buyers and sellers there is no commission advantage to many models because of minimums, unless you go to the bare bones agency.

  18. 18
    john says:

    RE: Kary L. Krismer @ 8

    Kary your response sounds like a scare story..

    You may have once ran into an attorney who did not know about “lead” but there are plenty of attorneys who DO know about lead, and there are plenty of lousy unskilled agents, and lets face it, agents cant interpret contracts, give advice on them as they are not attorneys and are not qualified to.

    Selling a home FSBO is simply a matter of vetting your attorney just as you vet your RE agent, nothing different there at all. And anyone selling a home FSBO just needs to ensure both parties have attorneys, jump through the hoops as the attorney requests and you are DONE for 1 tenth the price.

    I have done this a number of times, I have not background no magic, just 2 cents worth of sense.

  19. 19

    RE: john @ 18 – My response is based on meeting dozens and dozens of people, if not hundreds. But on the attorney front my point is just having gone to law school and passed the bar doesn’t mean you know anything about real estate. Law school at most teaches you things like conveyances and chain of title, so it might help you become an escrow or title officer, but not help you sell your house.

    I agree with you about the quality of agents–more and more every day. But I disagree with you about just needing to find an attorney. That’s fine if you don’t care about price or time on market, although even with the best agent if you don’t follow their advice you can be in the same boat as having no agent.

    And as to your last comment, I’ve known a number of people who have done multiple transactions who still did not know what they were doing. Repetition does not insure competence–if it did then every agent would be a really good agent after 10 transactions, and we all know that is not true.

    Finally, I know several people who should have a lot more concern about Lead Based Paint. They probably have the potential for fines well over $100,000, but keep on doing what they’re doing. That again proves repetition doesn’t mean much.

  20. 20

    RE: Kary L. Krismer @ 5 – Thanks for the – almost – vote of confidence, Kary! For the record, though, it isn’t “Craig’s” its “Quill’s”. I’m building a brand, not my own, personal real estate practice.

    And I gotta add: Quill really does have something going on for it. Every transaction has risk. A Lawyer reduces that risk. That basic principle lies at the very heart of Quill.

Leave a Reply

Use your email address to sign up with Gravatar for a custom avatar.
Your email address will not be published.

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>

Please read the rules before posting a comment.