House 1

Arik House

Ms. Amanda Tibbits

Language Arts 12

8 March 2019

A realtor is an individual who is an agent for selling and buying of real estate, usually land and

buildings. Their role is to connect a buyer to a seller and vice versa. They facilitate the

bargaining process and transaction between a buyer and seller of real estate at a fee. Realtors

have a responsibility to market properties and ensure that the properties are sold under the best

terms for both parties, the seller and buyer. In most countries, realtors are required to be licensed

to reduce the cases of buyer deception. The significance of realtors in the real estate industry is

great, as they form the connections through which transactions are conducted. In most cases,

realtors earn a commission on the properties they sell, and usually the rate of commission is

fairly homogenous, regardless of the size of the property or the price at which it is sold. Based on

this fact, the renumeration of realtors is controversial as it has implications on the real estate

industry. Often, it leads to a conflict of interest for the realtors and their clients. Given that

realtors are paid on commission basis, they strive to sell properties with high prices, and in turn,

they sell fewer houses in high-priced areas. This paper will discuss the role of team work and

competition in influencing the performance of a real estate agent, the importance of full

disclosure of information, the significance of flexibility of commissions and the marketing aspect

of real estate agency.

In most job settings, there are teams that are formed to work on similar projects together.
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Similarly, realtors are organized into teams. However, more often than not, the performance of

realtors is measured on an individual basis. The commission based renumeration makes it easy to

quantify individual performance. As a result, there is a lot of peer competition and individuals

strive to improve their performance. The individual performance is then reflected in the overall

team performance. However, the competition, if not controlled, could result in unhealthy

competition and eventually affect the group performance negatively. Unhealthy competition may

lead to lack of cooperation in a team. The negative effect of peer competition is especially

realized in groups that have a higher number of members (Lee 148). On the flip side, if team

performance is overly emphasized as opposed to individual performance, the performance might

reduce. The reason behind this argument is that individuals will be comparing their performance

to the overall group performance. In the case the that the group is performing dismally, the group

members will be comfortable, as long as their performance matches up to the performance of the

team. Therefore, the team members lose their motivation and drive to strive for better

performance. However, it is also argued that team compensation may eliminate the negative

effects of unhealthy team competition and consequently foster cooperation and better group

working dynamics, and eventually also lead to better performance.

Due to the fact that both emphasis on team performance and emphasis on individual performance

have advantages and disadvantages, it is necessary to find a balance that enables teams of

realtors to perform at an optimum level. One of the ways that a real estate company can achieve

this is by recruiting realtors who have previous job experience in real estate brokerage. Previous

job experience is linked to better individual performance of the real estate agents. On this

account, if individual performance is high, it is reflected in the performance of the team.

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Real estate agents play a major role in assisting consumers to make decisions regarding real

estate transactions. They guide consumers through the processes of identification of customers

and negotiation of terms. Therefore, the information that they provide their clients is critical in

the decision that the client decided to make. On numerous occasions, the clients perceive the

realtors as a source of authority and expertise as in most cases the clients do not have sufficient

information on the real estate market. That being so, it is then essential that realtors disclose any

information that may be important in decision making for a client (Virdi & Jaideep). In many

cases, realtors place their main focus on selling property and lose sight of the needs of the client,

as they get their income on a commission basis. As a result, they may not disclose information

that could lead to the client disengaging from the deal.

Realtors should be transparent in the details of the properties that they sell so that the clients can

make informed decisions in the sale or purchase of a property. It is important for the realtors to

conduct their transactions in good faith, which will help the clients to have trust in them.

Transparency will also help to sustain the flow of clients to realtors as clients will refer other

people if they know that the can trust the realtors. In contrast, if realtors refrain from disclosing

information that influences client decisions, they will develop a negative professional image for

themselves as well as the companies that they work for, and in the long term, clients will avoid

acquiring their services.

The real estate industry is an information-based industry. Therefore, marketing of the properties

to pass the information to potential clients is key. The role of marketing is usually undertaken by

realtors. The most well-known traditional marketing strategy used by realtors is planning of an

open house that presents an opportunity for the public to view the property (Allen et al. 352).
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The open house is then advertised on the multiple listing services of an area in other forms of

media. The public is then allowed to come and view the house. The strategy is done in an attempt

to attract potential buyers.

Although this traditional method has been used for a long time by realtors, changes in the current

world has presented other marketing strategies that can be used by real estate brokers. An

example of such a disruption is the development of technology. Improvements in technology

have led to an interruption is the widely use of social media by clients. The use of social media

has forced businesses to adopt the use of digital marketing a strategy. Likewise, the real estate

has also experienced the disruption as a result of technological advancement. Hence, realtors

cannot fully rely on the traditional marketing strategies. Instead, they have to adopt the use of

technology, such as listing available properties online. This way, they are able to access a much

bigger audience and therefore, they have higher chances of getting leads.

Compensation of realtors is usually rigid. The rate of commission is fairly the same for many

real estate agents. The implications that this situation has is poor performance of the real estate

agents. Thus, remedies have to be developed to alleviate the situation. One of the proposed

solutions is encouraging free entry of real estate agents into the market. The outcome that is

expected as a result of free entry is a change in the rate of commissions. Once the commissions

become more flexible, then real estate agents will be paid commissions based on their actual

performance and cost of selling the property. The flexible commission rates will help identify

excellent realtors from average ones (Barwick 121). Another effect of flexible commissions is

that it reduces transaction costs. The real estate industry is known for its high cost of making

transactions. Hence, it is generally a high cost industry, which often makes it difficult for a large
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part of the population to acquire property. The flexibility of realtor commissions will cause the

real estate market to be more liquid and therefore more people will be able to afford to purchase

property. Clients will also have a better opportunity to choose real estate agents who are suited

for their needs.

In conclusion realtors play a major role in the real estate industry. Therefore, their performance

should be maximized. Group and individual competition dynamics should be balanced to ensure

good performance. Real estate agents should disclose all pertinent information to clients as a sign

of utmost goodwill and also to build their professional reputation. Marketing strategies should

also be adopted to current industry changes to ensure their effectiveness. Commissions for

realtors should also be made flexible to create better market conditions. Once these factors are

considered, the role of a realtor will be made more efficient.

Works Cited
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Barwick, Panle Jia, and Parag A. Pathak. "The costs of free entry: an empirical study of real

estate agents in Greater Boston." The RAND Journal of Economics 46.1 (2015): 103-145.

Lee, Chung Chan. "Team characteristics, peer competition threats and individual performance

within a working team: An analysis of realtor agents." South African Journal of Economic and

Management Sciences 17.2 (2014): 140-156.

Virdi, Sandeep Singh, and Jaideep Singh. "Understanding the Role of Real Estate Agents in

Consumer Purchase Decisions: A Case Study of Amritsar District."

Allen, Marcus T., et al. "Effects of real estate brokers' marketing strategies: Public open houses,

broker open houses, MLS virtual tours, and MLS photographs." Journal of Real Estate Research

37.3 (2015): 343-369.