Technology TransactionsIs The Real Estate Industry In A Value Crisis?
Is there a value crisis in the real estate industry? According to Larry D. Romito, president and CEO of Quality Service Certification, Inc., there is. He says that consumers believe they are paying way too much in brokerage fees for the service they get, particularly the higher they go in price for a home.
"The process of buying and selling a home is unclear and mysterious," says Romito, "The steps aren"t part of a process that the individual practitioner can follow, so many make it up as they go along, but for the consumer there is a price expectation continuum, from inexpensive to expensive. As the consumer moves toward expensive, they expect more. Part of expecting more is consistency, reliability, accountability, and responsiveness. This is true for all products and services.
Romito says he knows this from hundreds of surveys and focus groups, that validates what his company is doing - training agents to provide sterling service. One statistic he throws out is startling. "In a normal real estate market, only about 60 percent of homes listed sell with the firm that originally listed them. That"s a low batting average, says Romito. "And the practices that would lead to a better batting average simply aren"t being followed.
In Romito"s mind, service can be produced in the same way a manufacturer fabricates a product. "When we talk about most of the products that we buy today, most people feel we are getting good quality and pricing. The manufacturing process has accountabilty, a consistent and reliable product. On the service side, service industries have not embraced systems and processes and accountability in the same way manufacturing has."
But that can change. Consumers are saying they want more and that makes service a serious business.
"60 percent of global economy is service based," says Romito, "Consequently, the happy-go-lucky, improvisational approach that many Realtors have doesn"t cut it any more. They need serious systems, processes and accountability."
The real estate business has less systems than other service-oriented industries because it leaves service and personal accountability up to independent contractors. The infrastructure has not been defined and developed which includes recognition, rewards and awards for excellent customer service. Recognition and rewards are reserved for those who produce, not those who please.
"Where the industry has excelled is in customer acquisition and doing deals," says Romito. "It has not excelled in serving consumers. How do you measure service? Satisfaction. How can you manage service with the same level of confidence as you can with a product?
"If we were manufacturing pens, and went to a board of directors to approve a system where we make and sell as many pens as we can, and that our compensation goes up based on our production numbers, and it doesn"t matter how many break or leak ink all over consumers, no board would approve that," claims Romito. "In the real world, boards look at maximizing production and minimizing defect and failure rates.
"In real estate, we look at productivity maximization without any systems for quality control, with few systems for customer feedback. Those that do provide feedback are usually self-serving. We don"t reward the quality side of service. That is a huge threat to business because in the world that is emerging new people aren"t caught up with our traditions.
"We look at the world from the inside out. We look at what"s good for ourselves and not at what is good for the consumer. Most other industries that are thriving are consumer-driven. They have reorganized to meet the needs of the consumers."
An example? "Call a real estate office for service and in many cases you won"t get assistance because that information is funneled through the agent. A conscious decision is made to place the needs of the listing agent first and the needs of customers second or third. We understand why that is done, but any organization who makes the decision to put someone in line in front of the consumer first is taking a risk," admonishes Romito.