Service Delivery Quality Standards: A Comparative Survey between Estate Agents and Clients

Transcription

1 Service Delivery Quality Standards: A Comparative Survey between Estate Agents and Clients L.S. PHENG 1, A.I. CHE-ANI 2, N.M. TAWIL 2, H. YULING 1 1 School of Design and Environment, National University of Singapore, SINGAPORE 2 Faculty of Engineering and Built Environment, Universiti Kebangsaan Malaysia, MALAYSIA bdglowsp@nus.edu.sg, adiirfan@gmail.com, nmtawil@gmail.com Abstract: - Most clients leave the buying and selling of their homes to the hands of real estate agents. However, through the mass media, issues pertaining to the existence of errant real estate agents surfaced, leaving a poor impression on the professionalism and service quality of the real estate industry in Singapore. Realizing that the ability to provide superior customer service plays a significant role in maintaining a competitive advantage over others, there is a need to assess the performance of real estate agents pertaining to service quality. Survey questionnaire is conducted for the investigation into the service quality of real estate agents. The survey findings showed that while clients held high regard for real estate agents to be accredited, the agents themselves did not. A majority of the clients also felt that the agents were dishonest, unprofessional and unreliable. Hence, through this assessment, real estate agents can assess their own performance, seek improvements in areas they did not fare well in and bring service delivery standards up another notch. Key-Words: - agency, customer satisfaction, ethics, service quality, professionalism, real estate, Singapore 1 Introduction The real estate industry in Singapore has been plagued with numerous negative media reports in terms of poor professionalism and conduct, shedding the industry in bad light. The marred reputation has caused the public to develop a negative image towards the industry and put at stake genuine, honest real estate agents their livelihood. (Note: real estate agents will be referred to as agents hereafter.) Many mid-career professionals who switched their jobs to become agents in response to the improving property market early this year (Ng, 2009) raised concerns over the low entry barriers set in becoming a real estate practitioner since one of the major reasons for being an agent is the higher commission one can make from private property sales as property prices continue to rise. Understanding that the real estate market is very much service-oriented, clients do expect a certain level of customer service from the agents, especially when buying or selling homes are one of the largest investments in life (Tuzovic, 2008). Significantly, the real estate industry in Singapore which currently comprises of approximately 30,000 agents is highly competitive. While agents can choose to satisfy the basic needs of their customers, superior service that exceeds the customers expectations would inevitably earn them loyal customers. Recognizing the service-oriented nature of the real estate industry, this study aims to determine the critical factors influencing customer satisfaction. This is achieved using the Customer Pyramid model to measure the current customer satisfaction level in the real estate industry. 2 Real estate agency services According to Larsen (2003), an agency relationship is established when a person enters into a contract with an agent. That person, be it a buyer or a seller, is regarded to as the principal or client, while the latter is referred to as the agent. While the seller s agency represents the seller and works on listings, the buyer s agency represents the buyer and negotiates for the buyer the best price and terms (Long, 2007). Given that the relationship is usually created between a seller and the agent (Larsen, 2003), the seller gives the agent the exclusive rights to sell his or her property (RealEstate ABC, 2002). As such, Larsen (2003) highlighted various responsibilities undertaken by a selling agent. After a purchase or sale transaction is completed, the respective buyer s or seller s agent would then receive a commission fee which is variable. The commission fee, normally ranging from 1% to 2% of the purchase or sale price, relies on both the service level provided by the agent as well as the market conditions (Chia, 2004). In cases where two agents are involved within a transaction, part of that commission will go to the seller agent s listing company while the other part will go to the buyer agent s company (DWG, 2006). ISBN:

2 3 The Customer Pyramid In 1954, Abraham Maslow established the Maslow s Hierarchy of Needs Pyramid (Figure 1) which stated that human beings are motivated by unsatisfied needs and that the needs at the lower levels must first be satisfied before moving up the pyramid to fulfil those at the higher levels (Envision, 2007). As shown in Figure 1, five basic needs were identified. As the levels progress up the pyramid, tangible needs at the bottom form intangible needs at the top. Figure 1 Maslow s Hierarchy of Needs Pyramid. Based on Maslow s theory, Conley (2007) recognized that the five levels of the pyramid can be divided into three states of being which Conley (2007) coined as the Transformation Pyramid. Figure 2 Translation of the Maslow s Pyramid to the Transformation Pyramid. Figure 2 shows the relationship drawn by Conley (2007) between the Maslow s Pyramid and the Transformation Pyramid. Given the versatile characteristics of the Transformation Pyramid, Conley (2007) identified three stakeholders whom the model can be applied to. They are the employees, customers and investors. However, this study focuses solely on the customers and hence would not cover issues pertaining to employees and investors. In general, Conley (2007) viewed the physiological and safety needs of the Maslow s Pyramid as Survival of the Transformation Pyramid which depicts an organization concentrating on the basic requirements in order to survive in the industry. Next, social/belonging and esteem needs of the Maslow s Pyramid represent the wants of people or an organization, and therefore, is depicted as Success under the Transformation Pyramid. Lastly, Conley (2007) interpreted Selfactualization as the Transformation level of the Transformation Pyramid which underlined the importance of maintaining good relationships with the employees, customers and investors. The Transformation Pyramid concluded that one cannot achieve success and move towards the best potential if he concentrates on solely fulfilling the survival needs of his target audience. 4 Research methodology A survey is conducted for the purpose of this study. Survey questionnaires are adopted for both the agents as well as the clients. One survey questionnaire was developed for each respective targeted population, agents or clients. Random sampling technique was applied in this study from the targeted population. The surveys were conducted during the period of July to October ISBN:

3 2009. A total of 120 responses were obtained with each group contributing 60 responses. (a) Survey questionnaire for clients The survey questionnaire consists of six sections. The first section covered the demographics of the respondents. Section II evaluated the level of service received through their most recent past experience with the agents and examined if they have or are willing to recommend their agents to others. In Section III, general perceptions of clients towards the agents were explored. These included their views of today s housing agents and the reasons relating to the problems facing the industry. Feedback on the probable improvements clients would like to see in the agents was also included. Section IV tapped on the clients knowledge of the current measures and practices in the real estate industry while Section V looked at what a client expects from an agent. In this section, the Customer Pyramid attributes identified qualities of an agent that are desirable to the client, followed by an overall assessment of the last engaged agent using the same attributes to establish any gaps between expectations and reality of the level of customer service received. In addition, clients expectations of the types of services offered by the agents were investigated and ranked according to their importance on a five-point Likert scale of 1 (least important) to 5 (most important). Lastly, Section VI assessed the overall service delivery standards of the agents to determine the acceptability of the current standards, similarly on a five-point Likert scale of 1 (highly unacceptable) to 5 (highly acceptable). (b) Survey questionnaire for agents The survey questionnaire consists of five sections. In general, the questions asked were identical to that of the clients survey questionnaire, except that Section IV looked at continuous improvement activities such as attending trainings and/or other skill-upgrading programs. Questions in this section appraised these programs in terms of effectiveness for the agents who attended them on a five-point Likert scale of 1 (not useful at all) to 5 (very useful). (c) Pilot test A pilot test was conducted in late June 2009 with both groups of respondents. This was to ensure that no ambiguities and biasness were present in the questions before both survey questionnaires were formally used. 15 participants from each group were sought for each respective survey questionnaire in the pilot test. (d) Response rate Out of the 67 client questionnaires collected during the random surveys, seven of these were void because the respondents had either not answered some compulsory questions or have not experienced any buying or selling transactions at that point in time. Thus, this produced a response rate of 89.6%. On the other hand, 60 replies were received from a total of 320 agent questionnaires sent out, resulting in a response rate of 18.8%. The vast difference in the response rates between these two groups was attributed to the proactive approach of face-to-face surveys in the former as compared to the passive approach used in the latter. A summary of the response rate for both groups of respondents is shown in Table 1. Selected key findings from the questionnaire survey are presented below. Table 1 Response rates No. of questionnaires No. of usable Usable response rate Respondents conducted/sent responses received (%) Clients Agents Total Findings and discussion (a) Opinions on service provisions A paired samples t-test analysis was conducted between the two groups of respondents. Both groups were asked to express their opinions on the importance of the different types of service expected of an agent, using a five-point Likert scale of 1 being Least important to 5 being the Most important. The results generated are shown in Appendix 1 where the pairs are ranked according to the mean difference in descending order. The difference between the means compares the importance rated for each service attribute by each group of respondents and establishes the gaps between the agents perceived service quality and the clients expected service quality. ISBN:

4 Pairs 7, 10 and 23 have the highest positive mean differences while pairs 22, 12 and 14 have the highest negative mean differences. Given the highest positive value, the agents felt that keeping clients updated on the status of their marketing efforts as very important in which the mean returned a value of 4.33, representing between Very important and Most important. In comparison, clients rated this attribute with a mean value of Ranked second, the agents stated that it was of utmost importance for an agent to act in the interests of his principal. Next, the agents felt that an agent should look presentable and project a professional image at all times. However, these top three attributes highlighted that the agents have overstated their importance. Since their p-values fall below 0.05, was rejected. On the contrary, the clients considered the accreditation of agents with IEA and/or SAEA to be of much importance (Pair 22) which carried a relatively high mean difference of Secondly, the clients also expected the agents to not only disclose which party they are working for but also to disclose all information regarding the property being transacted (Pairs 12 and 14). These two pairs each had a mean difference of The findings of these top three negative attributes showed the low level of trust clients appear to have towards the agents in terms of integrity and professionalism. Nevertheless, given that their p-values were below 0.05, was rejected as well in all three cases. There were, however, other service attributes in Appendix 1 which have p-values greater than 0.05 with insufficient evidence to reject. (b) Overall satisfaction levels This section sums up the opinions of both the clients and the agents on the current service delivery quality standards in the real estate industry. From the findings presented in Table 2, a majority of the means of the different aspects of the real estate industry fell below 3.00 which signified that the perceived performance of the real estate industry was close to below average. As stated by the agents, the attribute with the highest mean (3.08) was Competency. In comparison, clients have also rated this attribute highly with a mean value of The attributes with the lowest means were Accountability with a mean score of 2.87 rated by the agents and Public responsibility with a mean score of 2.88 rated by the clients. While the agents were given the choice to indicate their acceptability of the current service delivery quality standards in the real estate industry using a five-point Likert scale of 1 being Highly unacceptable to 5 being Highly acceptable, the clients were asked to state their level of satisfaction of the current service delivery quality standards in the real estate industry using a similar five-point Likert scale of 1 being Very dissatisfied to 5 being Very satisfied. The results are presented in Table 3. On the agents perception, the mean value of 3.32 suggested that they felt the current real estate industry was doing slightly better than average but still fell short in the service delivery quality standards. However, the clients who rated a mean score of 2.88 showed their unhappiness with the industry for not performing well in terms of customer service. The dissatisfaction levels appear to be attributed to the problems highlighted below: 71.7% of the clients believed that the root problem lies with the agents. 65% of them felt that there was a lack of control by the professional bodies in the industry. Only 30% felt that there was a lack of control by the housing agencies. Similarly, 83.1% of the agents felt that malpractice of some errant agents was the major problem facing the industry. 54.2% stated that the lack of control by professional bodies was another major problem. This was followed by Lack of control by housing agencies (44.1%). Other reasons brought up included: lack of training; lack of professional standards regulating the performance of agents; no proper selection or recruitment criteria which implied easy entry into becoming a real estate practitioner; no standardized commission rates; confusion caused by two professional bodies with conflicting opinions; and presence of unscrupulous clients who exploit the services of the agents. ISBN:

5 Table 2 Overall opinions of the respondents Overall, what are your views of the real Housing agents Clients estate industry in terms of Mean Std. Deviation Mean Std. Deviation Accountability Competency Objectivity Public responsibility Table 3 Acceptability and satisfaction levels Mean Being a housing agent yourself, how do you view the current overall service delivery standards provided by housing agents? Overall, how satisfied are you with the current service delivery standards provided by housing agents? Std. Deviation 6 Conclusion It appears that changing from a one-size-fits-all service culture to one-size-fits-one service culture is what is being seen today. The Customer Pyramid model was used to measure the performance of the agents, as well as the expectations of clients. Judging from the survey results, integrity, working attitude, attentive listening and mutual trust were found to be the most critical qualities an agent must possess. However, the performance of the agents, rated by them based on past experience, seems to fall short of their expectations. Integrity fell under the lowest level of the pyramid. This suggests that the agents would need to work much harder in this direction in order to survive in the industry; otherwise, they would be forced out of the market due to the competitive nature of the industry. The attributes that have been highlighted should be what the agents should strive for, so as to build up the professionalism among the agents and regain the trust of the general public towards the industry. The Customer Pyramid model provides a clear and simple interface that most people can understand and make use of. The flexibility of the model also allows it to be used in multiple industries as a work performance or target measurement tool. Furthermore, one can easily evaluate the performance of a measured attribute and draw conclusions from it. In this case, the pair-wise comparisons made between the clients expectations and the agents performance was helpful in this research as it enabled the research team to identify the areas where the agents have to pay more attention. Hence, this tool can be implemented by the agents or the housing agencies to assess their performance and to assist in bridging the gaps between their perceived service delivery quality standards and the clients expectations. On the other hand, the attributes in the Customer Pyramid model were derived from the literature review and may not represent the views of all people. Different people may place the same set of attributes under different levels or they may or may not even use these attributes. For example, while some clients value the building of social relationships with the agents, others may not. Therefore, emplacing the relevant attributes in the model can be difficult. References: [1] Chia, K. C. (2004). Singapore Real Estate Agents Commission. Retrieved July 22, 2009, from uideline.htm. [2] Citi Relocation (2010). General terms. Retrieved January 18, 2010, from [3] Conley, C. (2007). Peak: How Great Companies Get Their Mojo from Maslow. San Francisco: Jossey-Bass. [4] Conley, C. (2008). Is there a hierarchy of needs in home development? Retrieved July 11, 2009, from ISBN:

6 [5] DWG. (2006). Commission Guidelines. Retrieved July 22, 2009, from &style=2. [6] Envision Software. (2007). Maslow s Theory of Motivation Hierarchy of Needs. Retrieved July 09, 2009, from ows_needs_hierarchy.html. [7] Global Property Guide. (2009). Singapore Real Estate Prices Surging. Retrieved December 07, 2009, from ore-real-estate-prices-surging aspx. [8] Larsen, E. J. (2003). Core Concepts of Real Estate Principles and Practice. USA: John Wiley & Sons. [9] Long, D. H. (2007). Ethics for the Real Estate Professional. Mason: Thomson Higher Education. [10] Low, S. P. and Tan, P. L. (1995). Ethical expectations in the Singapore real estate industry. Property Management, 13 (4), [11] Ng, B. (2009). More professionals becoming property agents as market sentiment improves. Retrieved August 06, 2009, from porebusinessnews/view/445200/1/.html. [12] RealEstate ABC. (2002). Types of Listings: Exclusive Right to Sell. Retrieved July 09, 2009, from ngtypes3.htm [13] Tuccillo, J. (1999). The Eight New Rules of Real Estate: Doing Business in a Client- Centric, Techno-savvy World. USA: Real Estate Education. [14] Tuzovic, S. (2008). Investing the concept of potential quality: An exploratory study in the real estate industry. Managing Service Quality, 18 (3), [15] Wong, W. (2004). Billion Dollar Challenge: Achieving Peak Performance in Real Estate Sales. Singapore: Billion Dollar Challenge Training Academy ISBN:

7 Appendix 1 Pair-wise comparisons of service provision by clients and agents Code Service attribute Housing agents Pair 7 SD6 An agent should keep clients updated on the status of their marketing. Pair 10 SD9 An agent should always act in the interests of the client (i.e. the person who hires the agent). Pair 23 PQ2 An agent should project a neat and professional image at all times. Pair 24 PQ3 An agent should be constantly pleasing and courteous. Pair 6 SD5 An agent should be able to provide innovative marketing strategies. Pair 3 SD2 An agent should provide services as promised. Pair 11 SD10 An agent should encourage feedback/suggestions and use them to improve the service standards. Pair 21 PS7 An agent should seek continuous improvement in order to serve current/future clients better. Pair 8 SD7 An agent s commission fee charges should be in line with the services provided. Pair 19 PS5 An agent should be effective in addressing and managing any complaints. Pair 13 CAD2 An agent should not disclose confidential information about his/her client to another agent within a transaction. Pair 1 AR1 An agent should be easily contactable. Pair 9 SD8 An agent should provide good service at a reasonable cost, but not at the expense of quality. Pair 18 PS4 An agent should put in effort to resolve a complaint. Pair 16 PS2 An agent should listen to his/her client s needs/wants. Pair 5 SD4 An agent should provide reliable information about the current property market conditions. Pair 4 SD3 An agent should perform service right the first time. Pair 20 PS6 An agent should give clients a say in the outcome of a complaint. Pair 2 SD1 An agent should be able to provide a wide range of services (e.g. bank loans, mortgage, insurance) to meet clients needs in a transaction. Means Clients Mean difference t p-value (2-tailed) Reject/Do not reject Reject Reject Reject Do not reject Do not reject Do not reject Do not reject Do not reject Do not reject Do not reject Do not reject Do not reject Do not reject Do not reject Do not reject Do not reject Do not reject Reject Do not reject ISBN:

8 Code Service attribute Housing agents Pair 7 SD6 An agent should keep clients updated on the status of their marketing. Pair 10 SD9 An agent should always act in the interests of the client (i.e. the person who hires the agent). Pair 23 PQ2 An agent should project a neat and professional image at all times. Pair 17 PS3 An agent should take the initiative to offer substitutes if the clients wants/needs are unavailable. Pair 15 PS1 An agent should have the knowledge and competence to answer clients specific queries and requests. Pair 14 CAD3 An agent should disclose all information of the property in transaction. Pair 12 CAD1 An agent should disclose which party he/she works for. Pair 22 PQ1 An agent should be accredited by IEA and/or SAEA. Means Clients Mean difference t p-value (2-tailed) Reject/Do not reject Reject Reject Reject Reject Reject Reject Reject Reject ISBN: