JD Power Once Again Finds No Difference In Real Estate Brokerage Satisfaction

I’m looking at the same JD Power real estate brokerage satisfaction survey data that everyone else is looking at and coming up with a totally different headline. JD Power does this survey every year and every year they tout their results and the leading real estate brokerage leverages the bragging rights for the next year. The only problem is that every year there is so little difference in the results between the major real estate brokerages that they can’t possibly be statistically significant. Given that JD Power is in the business of ranking businesses I guess they are going to rank businesses based on whatever miniscule differences they can find.
So check out the data for yourself. This is a classic case of lying with statistics. The highest ranking brokerage among first time home buyers only came out 1.8% above the average and the lowest ranking brokerage only came out 1.3% below the average. Of course JD Power doesn’t tell us what the statistical significance of this difference is but it sure doesn’t seem that big.
first time home buyer brokerage satisfaction
Notice in the graph above I used a full scale graph. That’s something I learned when I worked as a consultant for Booz & Company many years ago – never truncate a graph to artificially magnify the differences, which is exactly what JD Power did in their news release. They started their graphs at 700. That’s very misleading.
The other interesting tidbit is that Keller Williams, the lowest ranking brokerage this year, actually came out on top in the 2012 real estate brokerage satisfaction study. Do you really believe they dropped from first place to last place in one year? These rankings merely fluctuate every year based upon random variations in the survey data.
JD Power also provided rankings for repeat home buyers and the results are similarly uninteresting and the rankings stayed the same.
Here are the results for first time home sellers. Again, the highest ranking brokerage came out only 1.5% above the average and the lowest ranking brokerage came out only 2.1% lower. Much ado about nothing. And do you really think that Keller Williams is that much worse on the buy side than they are on the sell side? Yeah, right.
first time home seller brokerage satisfaction
JD Power also provided statistics for repeat home sellers and the rankings are totally different, with Keller Williams on the bottom. Sure.
The bottom line is that no one should expect there to be a difference between the brokerages, given the model under which the industry operates. As I have pointed out in previous posts:

  1. Real estate agents move around from one brokerage to another like college kids barhopping on a Friday night. So today’s Keller Williams’ agents are yesterday’s Prudential agents.
  2. Clients have little if any interaction with the brokerage. Each agent is basically running their own independent business under the umbrella of the brokerage.
  3. The major brokerages hire anyone who walks in the door and can fog a mirror. Each agent is a source of incremental income for the brokerage and doesn’t significantly add to their costs.
  4. There are few if any performance standards within a brokerage. All they care about is that the agents obey the law and don’t totally embarrass the brokerage.

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