Wednesday, December 4, 2013

Realtor.com Creates a Major Uproar Over Its Agent Rating Beta Test

[Published Dec. 5, 2013, in the Jeffco editions of the Denver Post's YourHub section. A slightly abbreviated version also appeared in five Jefferson County weekly newspapers.]

Realtor.com, which is owned by the National Association of Realtors (NAR) but operated by a for-profit company called Move, Inc., has dipped two big toes in the turbulent waters of providing agent ratings to consumers, and I wonder whether it will end up abandoning the effort under the fire it is receiving from NAR members.

Rating agents has a long and troubled history, because the truth is that the vast majority of agents, including those of us who pay $500 per year in dues to be members of our local, state and national Realtor associations and thereby call ourselves Realtors, are not doing nearly the business we’d like prospective clients to think we’re doing.

The average NAR member earns less than $40,000 per year in gross commission income, and I’m told that a large percentage of us didn’t have a single closing last year.

The numbers speak for themselves.  There are, I've been told, 17,000 members of Metrolist, Denver’s MLS, and there were only 48,823 transactions in the first 10 months of this year in which those 17,000 agents shared an estimated $750 million in commissions.  That averages out to roughly $44,000 in gross commission earning per agent — before splitting 26% on average with their brokerages and before paying their automotive, cell phone, and numerous other expenses. 

However, that’s the average, not the median agent income. Since the vast majority of that $750 million in commission income was earned by the top 10% of agents, the median income is far less than that figure suggests.

What this means is that the majority of NAR members are understandably furious that the organization to which they’re paying $500 in dues would allow the operator of their website to feature agents who are top producers so that those top producers get more business and other NAR members find it even harder to get a piece of the commission pie.

IRES, the MLS which serves northern Colorado, including Boulder, is one of two MLS’s nationwide which have allowed realtor.com to use MLS data to feature the top 16 producers in any given neighborhood where they have listings. To see how it works, go to http://agentmatch.realtor.com and enter any northern Colorado address, neighborhood or city.  You’ll see how many current listings each top producer has in that area, how many of their listings sold in the last six months, their ratio of listing price to sold price, and average days on market.

It’s pretty cool and, yes, pretty helpful to sellers who want to find a good and successful listing agent for their area. However, I’ll be shocked (and impressed) if this effort lives beyond its beta test.

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