4 Steps To Ensure You Hire The Best Listing Realtor

Posted by Joe Manausa on Monday, June 5, 2017 at 8:59 AM By Joe Manausa / June 5, 2017 Comment

The real estate brokerage industry is not very efficient and you might be surprised to find that most Realtors do not sell many homes.

But have you ever considered what the impact to you might be if you end up working with one who does not do much business?

Does The Pareto Principle Apply To Realtors Selling Homes?

You might not know the Pareto Principle by its formal name, but perhaps you've heard about the 80/20 rule? Somebody might say something like "80% of the work is done by 20% of the people." Basically, it is the law of the "vital few," which suggests the majority of outcomes are the result of a minority of causes.

The funny thing is we hear "statistics" like this used all the time, but I suspect they are more of a gut feel than an actual measurement. In fact, I've heard that 87.3% of all statistics are just made up on the spot :).

Realtor Sales In Tallahassee

The following graph shows the relationship between the total number of Realtors in Tallahassee with the total number of homes sold over the past 12 months.

It is important to note that while this graph is derived from information provided by the Tallahassee Board of Realtors MLS and thus is "local" to Tallahassee only.

However, I have always found the national publicized Realtor production statistics to be consistent with what we find here, thus I would surmise that this graph could very well represent what you would find in the majority of US housing markets.

Realtor home sales in Tallahassee, Florida

In the graph above, we plot the percentage of all homes sold over the past year in red and compare it with the percentage of all Realtors in Tallahassee (in blue).

Here is what the Realtor graph tells us:

10% of the agents do 47% of the business
30% of the agents do 83% of the business
50% of the agents do 95% of the business

So the Pareto Principle does apply, just not to the extent that many have reported for Realtors.

Realtor Home Sales - Average Distorts Truth

Both our local and national average number of homes sold per Realtor right now is just above 6 homes per years. But like many statistics, "average" can be very misleading.

The following graph shows the number of homes sold per Realtor over the past year in red and compares it with the percentage of all Realtors in Tallahassee (in blue).

Realtor Home Sales - The average number of home sales per person

Here is what the Realtor graph tells us:

10% of the Realtors sold 20 or more homes in a year
30% of the Realtors sold 6 or more homes in a year
54% of the Realtors sold 2 or more homes in a year (representing 97.5% of all homes sold)
46% of the Realtors sold 1 home or (none) in a year (representing 2.5% of all homes sold)

So look at the right half of the graph above, it clearly shows that "average" is misleading and the majority of Realtors sell very few homes, if any!

If you hire a Realtor to sell your home without doing research and you just select based upon current relationship of one simple interview, here is what the numbers from listing agents:

You have an 92% chance of hiring a listing Realtor who sells fewer than one home per month
You have a 82% chance of hiring a listing Realtor who sells six homes per year or fewer
You have a 65% chance of hiring a listing Realtor who sells six homes per year or fewer
You have a 52% chance of hiring a listing Realtor who failed to sell a home in the past year

Clearly, the odds of winning at a blind draw for listing agents is not good.