SURVEY FINDS A TRUST GAP BETWEEN BROKERS AND THEIR CLIENTS
Both Sides Agree on the Problem, But the Situation is Even Worse than Agents Think It Is
By Julie Satow
The New York Sun
December 16, 2004
While it may come as no surprise that some people are distrustful of their real estate brokers, a new study claims to confirm it.
Seventy-eight percent of real estate agents and 69% of the buyers and sellers agree that “most people don’t trust real estate agents or they don’t expect much from them,” according to a survey conducted by the market research company Penn, Schoen and Berland Associates.
The survey, which was drawn from interviews with 51 agents and 152 customers who bought or sold real estate in the past three years, was conducted by Braddock + Purcell, a firm started by the former Douglas Elliman executives Kathy Braddock and Paul Purcell.
The firm, which matches real estate agents with consumers looking to buy or sell real estate, makes its money by taking a 25% referral fee from the commission paid to the broker to whom Braddock + Purcell refers a deal.
Agents and their clients diverge on a number of points, including whether the problems facing the real estate market are “as pervasive as the corporate governance problems” on Wall Street. While 52% of consumers said they agreed with the statement, only 18% of agents concurred.
“For consumers, finding a real estate agent is not a random process, and more times than not, it isn’t a great experience,” a principal at Braddock + Purcell, Ms. Braddock said. The way to fix New York’s real estate system is to create profit-sharing companies where brokers are salaried and vested in the firms’ success, the former executive managing director of Douglas Elliman said.
She continued, “The brokers should also specialize in a quadrant of the city, so there are experts in certain areas who know how to market and price the properties.” Real estate agents now often work across Manhattan, are mostly independent contractors, and are paid by commission.
“Braddock + Purcell is supposed to be an advocate for the consumer, and what better way than to put down the brokers of this town,” said the head of the Real Estate Academy and an advocate for greater education of brokers, Esther Muller.
As a consultant to Douglas Elliman, Ms. Muller has helped institute a new policy at the firm to take effect in 2005 requiring agents to get their brokerage licenses if they have been at the firm for at least a year and have completed a certain number of deals.
And at least one real estate expert takes issue with the study’s methodology. “This study would be thrown out in any university class because the numbers are too small to be taken seriously,” said Benjamin Wieder, the former chairman of continuing education at the City University of New York. “Interviewing 51 agents out of the 18,000 that are in New York City, and only 150 buyers and sellers is totally absurd, it is not even a blip on the chart.”
Among other results from the study, 86% of the agents said they provide their clients with attorneys and financial suggestions, while only 40% of clients agreed they were given help selecting their attorneys. Only 36% said agents gave financial guidance.
While 57% of agents believe they provide renovation and moving advice and 35% say they provide decorating tips, a paltry 9% of clients say agents had helped with renovating, 7% said they received decorating help, and only 5% were given tips for moving.
As for help with getting cooperative board approvals, 100% of agents felt they “do an excellent or good job advising their clients on what is required to get board approval.” Only 57% of consumers agreed, with 32% claiming their agents did a fair or poor job.
Nearly 20% of the consumers asked said they were “not likely” to re-hire their agents, while most of agents, or 86%, said their customers “would be very likely to use their services again.”