Real Estate’s Top Producer Myth

There are a lot of real estate buyers and sellers in Chicago who erroneously believe that there is some kind of advantage to be gained by working with a “Top Producer”. The industry certainly encourages this belief with numerous rankings across the city or in specific Chicago neighborhoods or within specific offices or brokerages. Thus many, many real estate agents get the opportunity to claim the title of “Top Producer”.

But, aside from the fact that there are a lot of realtors who can claim to be a top producer out there, the whole notion that these realtors possess some kind of special powers is totally absurd on so many levels that it’s going to be really hard to keep this post to a reasonable length.

First, let’s consider exactly how someone gets to be a top producer. A realtor becomes a top producer by closing more real estate deals than everyone else. And they close more deals not necessarily by being better at selling real estate (although that helps) but by being better at getting clients. And a sure fire way to get more clients is to be a top producer since everyone wants to work with a top producer. In other words, it’s a self fulfilling prophecy – a vicious circle. And once you break into this vicious circle there is no way you are going to discount your commission.

Second, many of the top producers in Chicago are celebrity realtors who head up a “group” at a brokerage. They have several other realtors that work for them and they are all part of the “Joe Realtor Group”. What this allows them to do is to aggregate the business of all these realtors under the group head’s name, thus giving this realtor top producer status.

But is there a real difference between the top producer and a realtor who is not? Well, I do think it’s safe to say that you can’t become a top producer if you are a Bozo. So the moniker does serve as a crude filter. But are there any more substantive differences?

So that I don’t make a career out of writing this post let me focus on the sell side for the time being. When picking a listing agent you have to ask yourself “What can these people possibly do that is better than other agents?” Better yet, ask them that question and demand specifics. Here are some of the ridiculous answers you might get – if they are even willing to get specific:

Periodically I get letters from one of the neighborhood top producers citing his accomplishments but without providing any specifics of what he will actually DO for sellers. Here are a few examples:

• “I sold __________ in only 26 days after it sat on the market with another agent for almost a year” Well, he cut the price and increased the size of the home by 100 square feet (not sure how he did that last part).
• “I sold __________ in 56 days in a multiple offer situation. That means I have buyers…” No, he doesn’t have the buyers. Some other agent does and those same buyers are available to whoever lists your property.
• “Average property market time 47 days” There are several tricks at play here. After his properties sit for a while he cancels the listing and re-lists it. I wonder how he keeps track of his market time. Besides, you can achieve really great market times if you price low. Furthermore, it’s standard industry practice to measure the market time based only upon properties that actually sold – which totally skews the results.
• “Industry high list-to-sell ratio” Think that’s based upon the last list price or the original list price?

The fact of the matter is that all realtors have access to the same toolset today. Technology has totally leveled the playing field and the top producer really has no advantage over any other realtor in selling your home. In fact, you may even be disadvantaged in working with him. Here are a few examples how:

• Let’s say that you have one of several fairly identical condos on the market in your development and only one or two are going to get sold this selling season. Do you want your condo represented by the same guy representing all the other condos or someone focused on selling yours before the other ones?
• Suppose your home is competing head to head with another home in the area/ your building and the other home has some serious flaw. If both homes are being represented by the same agent will that agent point out the other home’s flaws to buyers looking at both places? Is the agent even ethically permitted to discuss such issues?
• If you are dealing with a celebrity realtor chances are you are going to be relegated to working with one of his minions.

Here’s the bottom line. In this day and age the most important thing is finding an agent that is smart, hard working, and responsive. Don’t get hung up on statistics that are largely meaningless and easily manipulated.