To help with the 2011 NAR Strategic Plan, focus groups were conducted with both REALTORS® and with consumers. The focus groups were conducted in Jacksonville, FL; Chicago, IL; Salt Lake City, UT; Memphis, TN; and Pittsburgh, PA. The groups were led by a professional facilitator with an observer from NAR behind the one-way mirror. Here are the reports:
2011 NAR Strategic Planning Committee
Comments of Focus Group Observers
Jacksonville – November 30
REALTOR® Focus Group
The dominant theme of the discussion in the REALTOR® focus group was the uncertainty and frustration with every aspect of the real estate business. Although varying from one REALTOR® to the next, many indicated that their business, compared with the peak year of 2006 was down by at least one-third as measured in number of transactions and in all cases the transaction values were substantially lower. The feeling among at least one focus group participant was that the current environment is far worse than market conditions when mortgage rates were in the high teens 25 years ago.
There was also considerable frustration, bordering on despair, about the role that banks have in the sales process for short-sales. The problems are familiar – lost paperwork, extremely slow decision making, etc. Most did not expect any change in the situation or that the process would become any more manageable in the foreseeable future. One participant indicated that REALTORS® had “lost total control of the transaction” and that “the banks have too much control.”
Several REALTORS® noted that they were supplementing their business with other activities such as property management and providing BPOs.
The REALTORS® were unanimous in their opinion that the local market had not bottomed out given the level of economic distress, the rising number of foreclosures and distressed properties coming on the market and consumers’ willingness to stay on the sidelines until there is some clarity.
Several REALTORS® saw one of their responsibilities as “re-educating” consumers about the market, especially since there is so much readily accessible information available, but not all of it either relevant or accurate. This included market conditions (e.g. sellers too optimistic about the value of their home and buyers thinking that any lowball offer will result in a sale) and the buying and selling process.
NAR was generally viewed positively by the group. They valued the information and advocacy efforts of the association, although they wanted NAR to do more to see that a uniform short-sale process was implemented (enforceable timelines for decision making, representatives of the bank assigned to teams so that there would be a consistent point of contact, streamlined decision making, etc). One REALTOR® suggested that a “czar” be empowered to “fix the mess” – someone like Ken Feinberg who is currently managing the payout of claims resulting from the BP Gulf oil spill.
When asked where they thought most REALTORS® (generally as a group) fell short when working with clients, most indicated that it was in communication. In the consumer focus group, communication was also a big problem in that consumers did not feel that their REALTOR® listened to them. When asked about professionalism and competence of REALTORS® as a group, several agreed that many REALTORS® they know did not see themselves as independent business people and consequently did not display the level of professionalism they thought necessary or appropriate for someone in that role.
Consumer Focus Group
The consumer focus group consisted of three first-time buyers, one who sold a home and then rented as a result of a divorce, and three others with a mix of both buying and selling experience.
When asked why they wanted to be homeowners, they referred to factors such as “stability”, “good for the kids”, “like to know my neighbors”, and described their emotions as being “at home”, “comfortable”, and “settled”.
As to what prompted those who purchased a home to do so when they did, the $8,000 tax credit was a factor for several.
In terms of the concerns they felt about purchasing a home many described several “what ifs” regarding their ability to make mortgage payments on time if something happened to cause their income to drop, or their ability to cover major unexpected expenses, or whether they were ready for the overall responsibility of homeownership.
A few participants expressed some regret that they didn’t bargain harder or ask for more concessions from sellers. They questioned whether they got the best deal possible on the home they purchased.
With one exception, REALTORS® were generally viewed in a negative light. The term “pushy” was used several times along with unflattering descriptions of REALTORS® motives such as “out to make a buck” or “salesmen”. Several felt that REALTORS® had every incentive to show them properties at the very top of their price range (and sometimes above) in the hopes of earning a larger commission.
Several members of the focus group commented on communication with their REALTOR®. Many felt that their REALTOR® did not listen to them, one participant indicating that communication with their REALTOR® was “worse than the paperwork”. For the most part focus group participants thought that their REALTOR® was knowledgeable, knew the local market and understood the process. Much of the disconnect seems to be associated with the lack of successful communication at critical points in the process.
When asked about the best part of the buying or selling process, many indicated a sense of empowerment and achieving a milestone in their lives.
When asked about the major hurdles they faced as buyers or sellers, there were comments about understanding the process and knowing the “right” values for homes (from both the buyers and sellers perspective). All agreed that the process was very stressful.
With one exception (and his description was only partially correct), none of the focus group participants knew the difference between a real estate agent and an agent who is a REALTOR®.
Chicago – November 30
Lisa Herceg, NAR Staff
Words Used to Describe REALTORS®
Many of the words that REALTORS® used to describe themselves were the same words that consumers used to describe REALTORS® in general – although REALTOR® tended to attribute more warmth and personality to themselves than consumers did. Consumers also used the word “pushy,” which REALTORS® did not use to describe themselves.
Consumer Group Make-up
We had three First-Time Home Buyers. Interestingly, we also had two people who had purchased only – they had been renting after selling their homes at the height of the market – and two who only sold so that they could rent instead. Those who both bought and sold were actually in the minority, which I think is an interesting commentary on how people here in Chicago might look at homeownership now. All of the First-Time Home Buyers said they were spurred to buy for the first time only because of the tax incentive this past year.
Consumer Perceptions of REALTORS®
The consumers were not completely warm about REALTORS®, but they weren’t terribly negative, either. They seemed to understand that there are good, professional REALTORS® and not-so-good ones. Most of them had used multiple REALTORS® in the past, even for their latest transaction. And these consumers seemed pretty quick to “fire” a REALTOR® they weren’t happy with and find one that worked better for them. All but one consumer were ultimately very satisfied with the ones they used. All but two consumers were mostly satisfied with the process, and they all actually seemed extremely savvy about the home buying process. Several of them found the properties they bought themselves. None of them, however, knew there was a difference between REALTORS® and real estate agents. When told REALTORS® had to follow a strict Code of Ethics, consumers found this a definite selling point and wished that would be clarified more to the public.
The REALTORS® in this group are very picky about who they work with – half of them said they regularly turned down listings because they didn’t think the seller would be reasonable about what their home was worth. There is concern, particularly among the veterans, that REALTORS® are seen as “useless” by consumers with the advent of online listings; this jived somewhat with the fact that so many consumers in this group located the homes they bought on their own. These REALTORS® really felt the need to revert to the days where you “owned” your listings and nobody had access to them but you. And they blame “the associations” for making that go away with allowing listings online.
They also had some strong words about NAR. Chicago REALTORS® apparently are “forced” (their word) to join CAR (and any other local association in the area) if they want access to the MLS. This is a huge point of resentment. The moderator asked them if any of them would have joined NAR if they didn’t “have” to, and to a member, not one of them would have. They do not see at all the need for NAR, or the local associations, either, and they have no idea what NAR does for them. The best they could come up with was, “They do those commercials” and “they push for pro-REALTOR® legislation.” They say they hear from us “only when they get the annual bill.” They generally agreed that it “used to be an important designation. Now it has no standing, no strictures on who can be one, so it doesn’t mean anything.” When (at my suggestion) the moderator brought up the Code of Ethics, they didn’t know what she was talking about until she reminded them of the every-two-years test. Then they said, “Oh, that’s required for licensing. Or by the boards. Or something.” So they definitely were not clear on the connection between being a REALTOR®, NAR, and the Code of Ethics.
Salt Lake City – December 1
Consumer Focus Group
How they found their REALTOR® –
Surprisingly (or should I say sadly) most of them didn’t put a whole lot of thought into how they found their REALTOR®. Many went with the first person they interviewed or with a friend’s recommendation. One consumer used their best friend, and thankfully had a great experience with them, otherwise they might have lost a friend! It was interesting that during this discussion they didn’t realize they had gone with the first person they met, but later they commented on this and said maybe they should have interviewed more people. One consumer just used the listing agent to represent them and thankfully they had a wonderful experience with that REALTOR®. I cringed when she first said she went with the listing agent, because so often dual agency doesn’t work, even though I believe it is and can be good. Lessons learned from this question – better be first, or you better have your SOI recommending you to their friends.
How they found their home –
This wasn’t surprising, but it was still educational and informative for me. ALL of these consumers found the homes they were interested in online and by themselves, before they ever called a REALTOR®. In fact, the group went so far as to say that REALTORS® do not help in the process of finding homes…
So what do REALTORS® do –
According to these consumers, REALTORS® are there for the process (paperwork, scheduling, coordinating etc.) and for their professional advice. The consumers all admitted for the most part their REALTORS® handled the process well (with some exceptions), but what they really wanted in addition was to have their decisions backed up with professional input.
Speaking of the process, what was lacking from their REALTORS® –
Overwhelmingly the group discussed communication. Unfortunately it was the lack of communication! This is clearly hurting REALTORS® on two fronts. First, the consumer doesn’t know the process like we do, so we need to educate and communicate with our clients to help them understand. This will automatically help with the second front – commission and value. Because of this lack of communication they seem to think that REALTORS® don’t do a lot of work and make way too much money for what they perceive their REALTORS® do for them… ouch! COMMUNICATE!!!
How has REALTORS® roles changed in the last 10 years –
The consumer’s felt they were more educated with access to internet etc. They felt that this is forcing the REALTOR® to be better and to be more service oriented. I can only see this trend increasing as agent ratings and use of social media continues to grow and develop more in our industry. Again, they use the REALTOR® to guide them through the process and for their professional advice.
Talking about vs. rating their REALTOR® –
This was interesting for both the facilitator and myself. When asked questions and allowed to verbally explain their thoughts, the consumers tended to be a little tougher on their REALTOR®. However, when the facilitator moved to a number rating system of 1-10 with 10 being best, the scores were mostly 8-10 range. The facilitator mentioned that in a focus group the day before in Florida, the consumers were even tougher verbally, but again gave higher number scores ranging 6-8.
Differentiating a real estate agent from a REALTOR® –
Sadly the group of consumers couldn’t do this. They all admitted to seeing the ads, but they couldn’t put their finger quite on what it really means. They had the overall idea or impression it was better for them, but didn’t really know. Some said, “Doesn’t that mean they are licensed?”. In fact, speaking of differentiating, one consumer mentioned they thought their REALTOR® had won an award or something, but had no idea what it was! I think this goes back to communicating…
Lessons I learned from observing this group –
As REALTORS® we often times approach the process from a very transactional point of view. There’s this deadline and that appraisal, this form and that inspection, etc… This is a big thing for our clients. They are buying and selling a home! According to these consumers I observed, it is a very stressful experience for them. They want us to hold their hand and walk them through this process with compassion and understanding. Granted we are the third party professional in this process, but they want us to be their friend and understand their needs.
Memphis – December 2
REALTOR® Focus Group:
- Hopeful attitude
- Down market
- Concerned about public perception of market and the media coverage of bad numbers
- Thought that they are most useful after a buyer has found a home
- Thought their board could help with legislative issues and pr campaigns
- Very different experience levels and had different needs
- Thought that it is easier for the public to get information about properties
Consumer Focus Group:
- All loved their REALTOR®, but some did not like REALTORS®.
- Asked the questions of when was a REALTOR® necessary – 1) all during the transaction 2) after they had found properties online 3) negotiating
- Thought that a real estate agent sounded more professional than REALTOR® – they liked the word agent
- Did not understand what the Code of Ethics was or that it actually did anything
- Did not have any confidence in the discipline process
- Thought that their REALTOR® was professional and helpful and would recommend to others
- Thought that their REALTOR® did a lot for them
Pittsburgh – December 7
The group had 6 members who had bought or sold more than 1 house, all were homeowners now, and 2 very young first time buyers.
Why did you buy:
- Didn’t want to rent, dealing with landlords, rents can increase, etc.
- Build equity
- Homebuyers tax credit, right time to buy
- Save on taxes
- More space for the same money
- Ownership feels great, “this is my home”
Not 1 person thought financial gain was a reason to buy a home.
Those who had sold a house found this process stressful. Home had to look good all the time, you would have to leave on short notice for a showing, waiting to buy different home until 1st home sells.
Most buyers, but not all, enjoyed the buying process. The biggest hurdles to buying a house were:
- Need to give up some things you wanted
- Government regulations have made buying more complex.
If you want to buy a house:
- Pre-qualify yourself
- Decide what you need in a house
- Stay under what you can afford
- Find a good REALTOR®
Not one person would think of buying a home without an agent:
- Worth every cent of commission
- Good agent “got your back”
- Provide extra help—contractors, services, etc.
- Gave up part of her commission to closed
Members were asked to rate their agents on a scale of 1 to 10, with 10 being wonderful, of the 6 who gave a rating, 4 rated their agent a 10, the 2 first time home buyers rated their agent at 6 (one had to use his cousin who was brand new in the business).
How will the transaction change in the next 5 to 7 years?
- Will get more complex
- More paperwork
- More mandatory inspections
How will real estate agents change in the next 5 to 7 years?
- Will need more education, need to be more knowledgeable
- Buyers will find properties, agents will negotiate for them
- Agents will be more like lawyers
Only 2 knew what a REALTOR® was, they remember seeing add on TV. None thought that an agent being a REALTOR® was at all important!!!
REALTOR® Focus Group
The group was 4 experienced and 1 new residential REALTORS®, and 3 commercial brokers.
Most were satisfied with the local market, the area didn’t have a huge run up in prices so the market has been stable. This quarter sales are really slowing.
What are the most important attributes in selling real estate?
- Right pricing (this is an art)
- Marketing plan
Biggest opportunity for you: most agents are incompetent, so good agents can do very well.
- It is lacking, need to raise the bar
- Too easy to get into the business
- Drop people who don’t make a certain number of transactions per year
- Need more education, 2 classes and pass a test are not enough
- Too many incompetent agents
- There are no professional standards
How does the public view REALTORS®?
- Poorly, public doesn’t take them seriously
- REALTORS® are less valuable because information is readily available
What comes to mind when you hear the National Association of REALTORS®?
- Lots of bureaucracy
- Too political
- Don’t feel I can reach out to them
- Want RIN back, realtor.com is a mess (NAR owns 49% of realtor.com)
- Uses NAR for research
- New agents uses web site often
- Lots of business benefits
- Lowe’s coupons
If NAR went away, something else would take it’s place, maybe the franchises.
What should NAR do for you?
- Higher standards to become a member
- Legal action committee to protect REALTORS®
- More meaningful designations
- More connections to state and local boards
How will the transaction change in the next 5 to 7 years?
- Entire transaction online
- Buyers go directly to sellers
- No great changes.
My observation: the consumers were much more impressed with real estate agents than the REALTOR® panel was with their fellow REALTORS®.
Pittsburgh – December 7
The facility and staff in Pittsburgh, PA were exceptional. The diversity amongst panel members in both the REALTOR® Group as well Consumer Group was also excellent. The REALTORS® involved were representing both residential as well as commercial, and the experience level and demographics were also well represented across the board. The diversity amongst the Consumer Group covered such categories as to whether the panel member had purchased or sold (or both) over the last 12 months; whether or not the purchase was a first time home ownership experience; whether a REALTOR® was used or not; age and gender.
The guide for discussion provided an excellent framework for both groups, and, surprisingly in this market place, the consumers were happier with the REALTORS® than the REALTORS® were with their peers and over all industry.
Consumer Focus Group
The main reasons that the consumers stated for purchasing a home were as follows: Tax deduction; low payments; equity building; Homebuyer’s Tax Credit; More space for the money; independence; downsizing and owning a home free and clear; investment; location; pride of ownership; convenience; cost vs. benefits; freedom of choices; children considerations.
Most consumers felt that the experience of buying a home was made exciting and fun. However, some felt that using an inexperienced REALTOR® did add to the stress of the transaction itself. Half of the purchasers “found” the home that they eventually purchased. The biggest challenges in purchasing a home were prioritizing amenities when making a decision on what to purchase; lowering expectations; and fear/intimidation of the process. Many consumers expressed their amazement on the amount of work done by the REALTOR®. The most important initial steps in purchasing a home: Call a good REALTOR® (Referral); Pre-qualification for financing as well as understand your own personal comfort level; and decide upon your “wish list”.
Those who sold a home felt that the experience was stressful or inconvenient while showing/merchandising their home.
Additionally, there was a question directed to the panel concerning consumers working with more than one REALTOR®…Of the eight, the two who did, were not informed that this was not common practice, nor, was a Buyer’s Broker Agreement presented to them. Additionally, the five that worked with only one REALTOR® had signed a Buyer’s Broker Agreement. And the one consumer who did not want to work with a REALTOR® initially changed their mind and eventually worked with only one agent. Comments from the group concerning their agent, were, “their REALTOR® was worth every penny they earned”; “My agent gave up some of their compensation to make the deal work”; “Our agent was looking out for our interests besides looking out for their paycheck”; “Our agent has knowledge, contacts, and paid attention to detail”.
When hearing the word “REALTOR®” this is what came to mind: “Wish they were not necessary”; “We need them to facilitate paperwork, etc.” “Federal and state government requirements make them necessary”.
The five most common words that describe REALTORS® as a group (stereotype):
1) Energetic; 2) Responsive; 3) Professional; 4) Knowledgeable, and 5) Reliable.
REALTOR® Focus Group
Of the residential agents on the panel, it was found that the average sales price of a home was approximately $100,000; and the average transactions were approximately seven per year. There was one commercial agent that was not a member of the REALTOR® family at the time of the focus meeting.
“What words best describe real estate agents as a group?”
“How would you rate your peers in this profession?”
Many said professional, however, two were emphatic, and replied that they were horrible. The follow up question on how to cure the horrible rating were to add a Mentor Program where competency could be improved, and also remove part timers from the industry, so that more professionals are apt to put time/effort into the profession. Raising the bar through education would also lead to increased professionalism according to the panel. When asked how the panelists felt that the members of the general public viewed our profession, and how valuable they felt we were as a group; the following responses were noted: “We are losing ground”; “We have a diminished capacity”; “There is too much paperwork in our profession”.
“What does NAR mean to the group?”
Some felt that NAR was an enormous political nightmare. Others felt that the personal help was questionable, and that the PAC was very important. Some stated that they paid their dues, and that the reading/research could be overwhelming, and that NAR was no longer the only source of information. Additionally, the newer agents used the tools provided by NAR, finding them useful.
“What are the most important things that NAR does for the members?”
- Code Of Ethics and Standards Of Practice
- Political Action/Governance
“What if NAR went away?”
There would be more pressure and expense on individual franchises.
“What are some of the challenges to consumers in purchasing homes?”
- Relationships and communication, consumer notice, etc.
- Well intentioned relatives who interfere with the process without the knowledge.
- Trust between the consumer and the professionals.
“What are some of the challenges consumers to consumers in selling homes?”
“What are some of the challenges we face in our industry?”
- Capitalization Rate (Commercial Sector)
- User/Investment Strategies (Residential and Commercial)
- Financing (especially in the Commercial Sector)
“What are laws/regulations that create problems within the industry?”
- Fire Sprinklers (Residential)
- Lead Paint/Hazard Disclosures (High Risk for Agents)
- Overkill on onerous laws
- Differences in laws/tort reform from town to town creating liability and increased expenses.
“What are the biggest obstacles personally, now and in the coming five years?”
- Competency and lack of enforcement of the laws
- “94/6” Rule: 6% of the agents make 94% of the money.
- New business models, and how they address industry needs vs. risk.
“What is the satisfaction level with the business?”
Those REALTORS® who have been in the business for several years are very satisfied. In this market there are not too many wild swings in values. The perception of a market bubble is that one does not exist, but rather a slow diffusion of a balloon was described. This is described as a conservative marketplace with a slight increase in average sales price during the last twelve months. The media has actually helped this market due to the proximity to other higher priced markets including New York, Chicago, Boston, etc. Customer service has been attributed to referral business for many of these agents, as well as signage, networking, team members (accountants, attorneys, etc.) helping to attract new clients.
And finally, “What could/should NAR do for you?”
Some of the ideas include:
- National contract
- Additional designations (Revamp education)
- Political contributions (Governance and influence)
- Leadership training.
“What things would you like to see from NAR?”
- Mentor Hotline
- Homebuyer Tax Credited renewed.
- More PAC influence
- Raise the bar for members according to production levels.
- Create higher standards for membership
“How do you envision our industry transitioning over the next 5-7 years?”
- Different, and hybrid business models/practices
- Consumers doing more of the work themselves
- One agent does not feel that this is a long enough period of time in which to see such dramatic changes.
- Another agent feels that technology will continue to make our industry better.