Recently, I ran across a hilarious little parody website called ReallyRottenRealty.com. The site exposes some of the more compellingly awful business practices of some brokers and agents out there. Check it out, and be prepared to laugh while grimacing.
Turns out, the website is a marketing vehicle for a company called AgentHarvest, based in Dallas, TX. It’s basically a lead referral business, the likes of which we’ve seen before. But there are some interesting, unique things about AgentHarvest that make it worth discussing a bit.
Based on Finding an Agent
Most lead-generation websites in real estate are centered around properties. Homegain, for example, and “media” sites such as Realtor.com, Trulia, Zillow, and others are all focused on property search or home valuation that ultimately create a lead for a broker or an agent.
In contrast, AgentHarvest is centered around real estate agents, and promises to find its customers the best agents for their needs. (To be fair, HomeGain has something called AgentEvaluator that promises the same, but the selection criteria are likely to be slightly different. More on that below.) Most industry people right about now are shrugging their shoulders going, “Uh, so? Doesn’t like every single real estate website out there offer the same thing?” For example, Trulia has Find A Pro, and Zillow has its directory, and every brand website has some way to Find an Agent or Find an Office. So what’s the big honkin’ deal about AgentHarvest?
Enter Performance Statistics
A while back, the announcement by the Houston Association of REALTORS that it would begin allowing consumers to access the performance statistics of real estate agents was received as major news. Respected voices like Marc Davison of 1000watt applauded the leadership shown by HAR with its REALTOR Match tool. The HAR tool, in turn, was inspired by Agent Scouting Report, created in 48 hours by Diverse Solutions for the 2009 Connect Create contest.
At the heart of both of these widely-praised tools is the notion that a real estate agent can be evaluated in large part from his or her production statistics. For example, from the blogpost about Agent Scouting Report, we know that the Diverse Solutions team used an algorithm to take into account:
- Popularity: How many homes have they sold in the last 180 day, 1 year, and 2 year periods?
- Salesmanship: What was the average number of days on the market
- Knowledge of market: How many times did they drop the price from the initial listing?
- Experience: How long have they been a member of the MLS?
- Ability to negotiate: How close was the last list price to the final sales price?
- Diligence: On average per listing, how many open houses do they have, how many photos do they load in, and how lengthy are their descriptions?
In other words, number of transactions over a period of time, DOM stats, years of experience, sale-to-list ratio, and some other activities for which there are stats in the MLS data. There are opinions that such statistics are woefully inadequate to determine the quality of a real estate agent for a variety of reasons, nonetheless, it is a fact that industry people do take production statistics into account. For example, I have as yet to see an agent be named as a “top performer” by a brokerage or an Association or a franchise who didn’t have production numbers to match.
Selection Criteria
What AgentHarvest promises to do is to use performance statistics drawn straight out of the MLS to find consumers the best agent for their particular needs. The owner, Bill Petrey, is a licensed Realtor in Texas, and a member of the local Association. He, therefore, has access to the performance statistics from the MLS, as every member does. As AgentHarvest attempts to break into other markets, Mr. Petrey (or someone like him) will need to become subscribers to the local MLS in question.
Think of it as a human-powered version of HAR’s REALTOR Match or Diverse Solutions’ Agent Scouting Report tools. I got curious about how AgentHarvest goes about selecting agents for its customers, so I emailed Bill Petrey. Based on his answers, it appears that AgentHarvest basically uses the number of homes sold within last six months as the relevant statistic, then layers on both (a) familiarity, that is, has the agent done business with AgentHarvest in the past, and (b) what he calls the “naughty or nice” list based on consumer feedback:
Q: Do you rely on anything other than performance statistics when you make your recommendations? How is that information gathered? (For example, do you have an internal database of showing notes or consumer comments about an agent?)
A: We have a few processes that we go by, but the first round of elimination is solely based on statistics. I think that’s the only way to eliminate all forms of puffing, exaggeration and blatant lies. The first round in the selection process is a list of all agents that sold property, similar in size to the client’s house, within a 5-mile radius of the homeowner’s home (or buyer’s target area) within the last six months. If you aren’t on this list, you don’t get considered for the referral. From this list, we select several agents who have had the most sales and we also choose agents that we’ve worked with in the past and have received favorable remarks from our clients. From these selected agents, we choose three agents to present to the client. We also give the client some information to interview and research all of the candidates before making their selection.
The information we use on our initial round of elimination is gathered solely from the local MLS in that client’s area. Naturally this limits our service territory but we feel that it’s worth doing that way. I’d rather do a lot of business in a few places than a little business in a lot of places. If I’m cold-calling an area I’m not familiar with, like most agent referral services do, I’m not really doing justice to my clients. The information is gathered via MLS and we collect and build our own database of consumer comments regarding agents through our follow-up process after the agent interviews and during the agent’s listing. We call it our “naughty or nice list.” We do blacklist agents that receive bad remarks however don’t release names for OBVIOUS reasons.
The business model is straightforward. Since Bill Petrey is a licensed Realtor, he is able to collect referral fees (~25%) from the agent to whom he has sent the lead upon a successful closed transaction. Every Realtor in the country does this business, and does it all the time. It’s part of the industry’s practices.
So why is this interesting at all?
The Last Hidden Database
I find AgentHarvest interesting because it is (1) a business model I expected to see formally introduced for a couple of years, and (2) partially unveiling the last hidden database in real estate.
Perhaps there have been other companies that have done what Bill does: become licensed Realtors for the sole purpose of lead generation, leading to referral income. But Bill is the first I’ve seen who became a Realtor and will join other MLS’s for the express purpose of using the agent performance data to create a referral business.
In this, what AgentHarvest is doing is reminiscent of what Realtor.com and other property-centric websites have already done: taking information that was formerly the province of professionals alone and providing access to the consumer. We have heard for years that listings are everywhere, and that competing on the basis of listing data is foolish. That’s probably true. But what we also know is that while consumers can go to any number of websites and companies to do research on properties, neighborhoods, demographics, and so on, only the MLS holds all of the performance data on an agent. If property data is now everywhere, the last hidden database is agent performance information.
The only thing a consumer cannot research today with any degree of efficiency is agent quality. I have written and spoken on the topic of how a consumer could tell if a real estate agent is good or bad, and oftentimes, I come back to the conclusion that only other real estate professionals really know who’s good and who’s not. Because professionals, unlike consumers, deal with real estate and other professionals in real estate every single day, rather than once every seven years.
In AgentHarvest, we have a Realtor willing to tell you the consumer which of his peers are any good, using the hidden database of agent performance metrics that lies within his MLS system.
Seems to me, it’s just a matter of time before this kind of referral business pops up everywhere.
Imperfect, But Interesting
I think there are a number of gaps and holes in AgentHarvest as it is today. For one thing, it isn’t clear that number of sales standing alone tells enough of even a high-level story. It may be, of course, that Bill does use all the secondary statistics like DOM and price-to-list as well, and has some sort of algorithm that lets him recommend one agent over another. But deciding how to weight various statistics is in and of itself a real judgment call.
The larger issue is that a company whose entire experience with other Realtors is limited to sending them leads may not have enough direct transaction experience with them to make real quality judgments. Is the agent detail-oriented? Is she responsive? How is she in negotiations? How about managing the transaction? Consumer feedback helps, but remember that they’re consumers — they don’t have enough knowledge to compare.
Nonetheless, AgentHarvest is interesting precisely because it addresses a market need that is currently unfilled: finding the right agent. Automated tools like REALTOR Match and Agent Scouting Report may be the longterm answer, but they have even less exposure to the intangibles like patience, attention to detail, friendliness, and so on. For the time being, I would think that a slightly improved version of AgentHarvest-type of service would be invaluable to consumers.
Time will tell. This could be the start of something interesting.
-rsh
13 thoughts on “AgentHarvest: The Start of Something?”
I'm all for the idea of eliminating the puffery – you could power a small city with the wind blowing from some in this market blowing their own horn when the numbers don't bear out their excellence. But as with any metric there are going to be gaps and inconsistencies. Does having fewer listings make an agent less effective with buyers? Does not holding open houses indicate an agent isn't as good as someone else holding the same home open every week for months? On sales volume, will the numbers be adjusted to reflect a team of agents working under one agent whose name goes on everything given the person on the sign isn't necessarily the agent out meeting with the owners and getting the listing?
Put enough qualifiers on this or any other metric and I'm good with it but I'd hate to see the perception grow that any metric alone can give you an idea of an agent's quality.
That's always the trouble with statistics. Based on stats alone, one could make the argument that Alexei Ramirez of the White Sox is more or less the same as Derek Jeter of the Yankees. But there isn't a Yankee fan alive who'd trade Jeter for Ramirez.
At the same time, AgentHarvest is interesting in that there is a Realtor involved in the weeding/selection process. I think it could be improved, but you know, it's better than nothing.
I know I would be willing to pay for an experienced Realtor's opinion as to whom I should hire 🙂
Yeah, it's interesting, because you're not an agent selling real estate for a living.
If you were, then instead of “interesting”, you'd think, “holy crap!”. Then you'd settle down and ponder the consequences, ramifications and repercussions? Which, I will be doing.
Thanks for sharing.
First, my bias. I was part of the team that put together ASR at Inman last year and my job as part of that team was to put together the ranking algorithm. Save for a few walks and some quick meals, I spent nearly the entire 48 hours building it out and literally weeks before the conference researching the idea to figure out the most reliable way to build it. While I can't discuss too many more details other than what was in our blog post, the final product is something I'm quite proud of.
Anyway, while I realize that some may debate whether or not this is even a good idea at all, there's an interesting corollary debate that hasn't been brought up yet (at least that I've seen). I'd love to hear your thoughts on whether or not the internals of such a ranking or selection algorithm should be opened to the public or should remain closed.
On the one hand, an open algorithm would foster trust amongst agents / brokers with the owner of the algorithm and would perhaps make them more comfortable to have their sales data out in the open. On the other hand, if all the buyer's and seller's ranking factors and the weights of those factors were disclosed, it's likely that there'd be at least a few people who would try as hard as they could to game the system if there was a possibility of getting more business. Google doesn't publish their algorithm for cheating and competitive reasons, but they also don't have to worry that their data source will be cut off if they aggravate just a few key people.
What say you? Should ASR, AgentHarvest, and the like fully disclose what they do with the data, or will the results only be reliable and “spam free” if the data is crunched in a closed system?
Andrew Mattie
Diverse Solutions
Heh, well you can interpret my “interesting” as usually meaning something else, Ken 🙂
Hi Andrew –
You know, that's a GREAT question. I think I would lean towards making the algorithms transparent, because unlike Google's search ranking algorithms, it's much much more difficult to game performance stats.
For example, just how would an agent game price-to-list? If they hold out longer to get a better price, that impacts their DOM. If they do it by getting the client to a lower listing price, thereby getting high price-to-list coupled to low DOM… well, isn't that an indication of agent quality in some respects?
A website, however, could game Google's algorithms since they're dependent on on-page attributes plus inbound and outbound links. All of those things are somewhat divorced from “reality” as it were. Actual production/performance stats are, I think, harder to divorce from reality, absent conspiratorial collaboration by the MLS and all the members of the MLS.
In fact, I'd go further and allow the user (consumer or otherwise) to tweak the weighting himself. Maybe some consumer would rather have an agent who would get the highest price possible, no matter what. In that case, weight DOM less and price-to-list higher.
The missing factor, TBH, is price. Consumers can't weight agent performance on the basis of pricing — not everyone wants or needs a Ferrari; some are happy to drive a Honda or a Chevy, knowing the tradeoffs they're making. As yet, that's impossible in real estate.
But again, a fantastic question. That's my opinion; what's yours?
-rsh
Yeah, I know. The word has mad-range.
Too many stats could prove problematic. Very few of the stats mention consistently and fairly rate an agent's value. For example real estate agent teams enter ALL their stats under one name and that stacks sales volume stats in their favor -vs- single agent sales volume stats. Another problem is that the homeowner's wishes may not produce favorable stats for the agent, such as demanding a higher price or limited showing times. What if the house being listed has serious issues. With short sale delays becoming common, is Days On Market really a fair measurement of an agent's abilities if the fault lies with the bank or buyer? I'd hate to penalize the agent for following problems beyond their control.
Without question the best and most consistently fair evaluation is to find out how many houses, similar to my clients, an agent sold in the client's neighborhood. AgentHarvest answers that question and shows consumers how to find answers for all the others and how to evaluate the results. Plus I make myself available to guide them and help them through the whole agent finding process free of charge.
Bill Petrey
AgentHarvest
I think it is an excellent start to a real problem for the consumer. With volume (feedback) and investment the algorithms will improve. I don't believe there is a “fair” system in choosing an agent (Is the current way consumers choose fair?) but it should not stop Agent Harvest pushing forward.
Ultimately, a consumer will want to see the price the agent is willing to work for and probably will want to see their final selection (3 agents) compete against each other to win their business. This would put a spanner in the works for the current model (To pay 25% to Bill) and then get hammered down on price but what the consumer demands someone will surely provide.
Duncan:
First of all, I'm Bill Petrey, from AgentHarvest.
The only fair choice is an informed choice. The more information available to the consumer both in form of agent data and knowledge about agents, agency and the selection process, the better the chance the consumer has of making the best choice. AgentHarvest attempts to accomplish this by using the data to select agents, by providing materials to inform the consumer about different subjects related to agents and selecting an agent, and most important, I, Bill Petrey make myself available to answer any question and to provide non-biased answers to help the consumer. We will work with the client until they find an agent they like. If they want to interview 3, 6, 9, etc. We just break it down into groups of three. Any more than that and they all run together in the consumer's mind.
Keep in mind that the 25% referral fee comes ONLY when the house sells. If the agent doesn't sell the house or get the listing, they owe nothing. Also, the fee is based off the final price. AgentHarvest doesn't get paid until the client sells the house and the agent gets paid. This way, it's in everybody's interest to sell that house.
Duncan:
First of all, I'm Bill Petrey, from AgentHarvest.
The only fair choice is an informed choice. The more information available to the consumer both in form of agent data and knowledge about agents, agency and the selection process, the better the chance the consumer has of making the best choice. AgentHarvest attempts to accomplish this by using the data to select agents, by providing materials to inform the consumer about different subjects related to agents and selecting an agent, and most important, I, Bill Petrey make myself available to answer any question and to provide non-biased answers to help the consumer. We will work with the client until they find an agent they like. If they want to interview 3, 6, 9, etc. We just break it down into groups of three. Any more than that and they all run together in the consumer's mind.
Keep in mind that the 25% referral fee comes ONLY when the house sells. If the agent doesn't sell the house or get the listing, they owe nothing. Also, the fee is based off the final price. AgentHarvest doesn't get paid until the client sells the house and the agent gets paid. This way, it's in everybody's interest to sell that house.
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