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Key Determinants of Real Estate Service Quality
Among Renters and Buyers: A content analysis of
Virtual Servicescapes and Physical Service
Encounters in the Real Estate Industry
Abstract
Purpose: The purpose of this study is to compare quality perceptions of virtual
servicescapes and physical service encounters among buyers and renters of real estate.
Design/methodology/approach: Qualitative data from a sample of 27 professionals
engaged in higher education in the United States are gathered by recorded interview
before being transcribed and imported into MAXQDA 2007 software for analytical
coding.
Findings: Particular differences are found to exist between renters and buyers with
regard to specific service attributes; e.g. description of properties and type of visuals
during the pre-purchase stage, knowledge/experience and honest behaviour of realtors
during the service encounter stage and a continuous relationship with realtor in the post-
encounter stage.
Research limitations/implications: Generalisation of the results is limited because the
study utilises data from only one industry (real estate) and from only one demographic
segment (professionals in higher education).
Practical implications: Real-estate firms need to pay attention to both the training of
agents and the design and content of their websites.
Originality/value: This paper contributes to knowledge regarding virtual servicescapes
in professional services.
Keywords: service quality; virtual servicescape; tangibility; real estate; rental services
Paper type: Research paper
1. Introduction
The paradigm by which services have been defined and understood has traditionally posited a
service (as opposed to a physical good) as having four distinctive characteristics—
‘intangibility’, ‘heterogeneity’, ‘inseparability’, and ‘perishability’ (IHIP). Of these
characteristics, ‘intangibility’ is commonly held to represent a problem for the evaluation of
services by prospective consumers. As the level of intangibility increases, such prospective
customers face increasing uncertainty in evaluating quality, and they are therefore forced to rely
on experience and/or credence qualities in making their evaluations of service characteristics.
To decrease the information asymmetry that is inherently associated with the intangibility of
services, consumers are increasingly reliant on search qualities—that is, cues that serve as
‘surrogate quality indicators’ (Reimer and Kuehn, 2005). These search qualities become
particularly important before purchasing services with which customers have no prior
experience. Several scholars have referred to the ‘servicescape’ as being one such quality
indicator (Aubert-Gamet and Cova, 1999; Baker et al., 2002; Ward et al., 1992).
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In making their observations about ‘surrogate quality indicators’, Reimer and Kuehn
(2005) contended that the meaning of the ‘tangibles’ dimension of services has been
insufficiently explored and defined in the extant literature; in particular, they argued that
insufficient attention has been paid to the question of how a company’s servicescape (acting as a
surrogate quality indicator) affects the evaluation of service quality. This question of the
importance of tangibility in the service environment has also become an issue of interest in
electronic business-to-customer (e-B2C) services (Melián-Alzola & Padrón-Robaina, 2006); in
particular, the role of aesthetics in virtual servicescapes has been attracting increased research
interest (Vilnai-Yavetz & Rafaeli, 2006). Most of the research in this area has attempted to
apply traditional quality models to the online environment and its ‘virtual servicescapes’.
However, researchers have not explored the topic of service quality from an integrated
perspective that considers quality dimensions both from physical and a virtual servicescape.
Therefore, the present study seeks to investigate the notions of a firm’s virtual servicescape in
connection with it’s physical servicescape and service encounters in a holistic framework.
The key objective of this qualitative study is to synthesise four research streams—(i)
service quality in general; (ii) servicescapes as a surrogate quality indicator; (iii) the concept of
a virtual servicescape; and (iv) the idea of tangibility as a quality factor of e-services—in
proposing a new integrated research framework for the real-estate industry in particular and for
‘ownership/non-ownership’ services (Lovelock and Gummesson, 2004) in general. The
proposed model posits service quality as a sequence of components (Donabedian, 1966, 1980;
Steffen, 2006):
potential-based quality: which combines the quality of a virtual service environment
(before a service interaction is initiated) and the quality of the physical service
environment (before and/or during a service encounter);
process-based quality: which refers to the quality of the physical service encounter;
and
overall quality.
Main contributions of this research are primarily of conceptual nature. The paper intends
to close an existing research gap by providing a new framework to investigate service quality in
the real-estate industry. The theoretical model and the results of the qualitative study provide
insights both for academics who want to conduct empirical studies of service quality and for the
management of real-estate firms.
The remainder of this paper is arranged as follows. Following this introduction, the paper
presents a brief literature review of relevant studies of servicescape and service quality, virtual
servicescape, and the real-estate industry in general. The paper then presents the proposed
conceptual framework for the study. This is followed by a description of the methodology and
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results of a qualitative empirical study of customers of real-estate agencies in the United States.
The paper concludes with a presentation of the main findings, managerial implications,
limitations of the study, and suggestions for future research.
2. Literature review
2.1 Servicescape and service quality
The construct of service quality has become a fundamental feature of the literature on industrial
marketing (Håkansson and Snehota, 1995), consumer marketing (Kotler, 2000), services
marketing (Grönroos, 2000), and relationship marketing (Morgan and Hunt, 1994). As such,
numerous studies have investigated the conceptualisation of the construct and various multi-
dimensional methods of measuring it have been suggested (Le Blanc and Nguyen, 1988;
Parasuraman et al., 1988; Saleh and Ryan, 1992).
Most of these multi-dimensional measures have included reference to a ‘tangibles’
dimension in one form or another. However, as noted above, Reimer and Kuehn (2005) have
contended that extant conceptions of the service-quality construct have paid insufficient
attention to the important role of ‘tangibles’ in evaluations of service quality. In a similar vein,
Lovelock and Gummesson (2004) have noted that many services involve tangible factors that
have a significant influence on the experience of users during service delivery.
These views have been taken up by a number of researchers who have investigated
various aspects of ‘tangible’ quality dimensions. Some of these aspects have included:
* aesthetics (studied by Johnston, 1995; Johnston et al., 1990; Johnston and Silvestro,
1990);
* ambience (Armistead, 1990; Brady and Cronin, 2001);
* physical appearance (Johnston et al., 1990; Jun et al., 1998; Mehta et al., 2000; Siu
and Cheung, 2001);
* cleanliness/tidiness (Chang and Yeh, 2002; Johnston, 1995; Johnston et al., 1990; Jun
et al., 1998; Johnston and Silvestro, 1990)
* design (Brady and Cronin, 2001; Friman and Edvardsson, 2003);
* physical environment (Bell et al., 1997; Brady and Cronin, 2001; Chang and Yeh,
2002; Haywood-Farmer, 1988; Walker, 1990);
* physical quality (Dabholkar et al., 1996; Lehtinen and Lehtinen, 1991);
* social factors (Brady and Cronin, 2001); and
* tangibles/servicescape (Brady and Cronin, 2001; Jun et al., 1998; Parasuraman et al.,
1985, 1988; Reimer and Kuehn, 2005; Sureshchandar et al., 2003).
In arguing their case for a more refined understanding of the role of the tangible
dimension in services, Reimer and Kuehn (2005) contended that the term ‘servicescape’ (Bitner,
1992, 2000) is to be preferred to the term ‘tangibles’. According to Reimer and Kuehn (2005),
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‘servicescape’ is a more comprehensive concept that goes beyond the appearance of physical
facilities, equipment, personnel, and communication material (Zeithaml et al., 1990) to include
so-called ‘ambient conditions’. As such, Reimer and Kuehn (2005) found that ‘servicescape’ is
not only an indicator of expected service quality, but also influences the consumer’s evaluation
of intangible dimensions. Although their study was restricted to only two service industries
(retail banking and restaurants), the results do indicate a need to address the potential
significance of tangible cues as a surrogate quality factor before a customer relationship begins.
In this regard, Steffen (2006) has proposed the term ‘potential quality’. Although this
term has not been prominent in the extant literature, certain aspects of it are inherent in
commonly used terms—such as ‘store atmospherics’ (Donovan and Rossiter, 1982;
Spangenberg et al., 1996) and ‘servicescape’ (Bitner, 1992, 2000). Steffen (2006) proposed that
the construct of ‘potential quality’ has four dimensions: (i) interior decoration; (ii)
orientation/clarity; (iii) ambience; and (iv) transaction). His study, which was conducted in the
setting of a bookstore in Switzerland, indicated that these servicescape factors have a positive
effect on customer satisfaction.
2.2 Virtual servicescape studies
As a result of technological advances, especially the Internet, traditional sales and service
encounters in physical locations (so-called ‘bricks-and-mortar’ settings) are now changing
towards ‘bricks-and-clicks’ service settings (or even ‘clicks-only’ settings). This development
has led some scholars to emphasise the importance of understanding how the design of e-service
systems affects customer reactions (Cao and Zhao, 2004; Iqbal et al., 2003; Kim and Lee, 2002;
Mummalaneni, 2005; Rust and Kannan, 2002; Santos, 2003).
In this regard, Vilnai-Yavetz and Rafaeli (2006), who referred to websites as ‘virtual
servicescapes’, studied the influence of such virtual servicescapes on the perceptions and
reactions of customers. They found that feelings of pleasantness mediated the relationship
between aesthetics and satisfaction, as well as mediating the relationship between aesthetics and
the approach to the service interaction. Vilnai-Yavetz and Rafaeli (2006) concluded that
management should pay close attention to the design of the virtual service delivery, with a
special focus on aesthetics and symbolism in such designs.
Apart from the issue of aesthetics in online services, Melián-Alzola and Padrón-Robaina
(2006) have noted the importance of easy navigation (including uniform appearance and a clear
visual hierarchy), rapid page download, and ease of access to information of interest (via search
engines, menus, and so on). As a result of a study among 191 individuals who had made a
purchase on the Internet, Melián-Alzola and Padrón-Robaina (2006) generated a one-
dimensional, four-attribute scale to measure various aspects of design (including intuitive
navigation, signposting, navigation tools, and explanatory sections).
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2.3 Real estate services
Studies of service quality (and more recently of e-service quality) have been conducted in a
wide variety of industries—including finance, banking, retailing, hospitality, car services, and
health care; however, relatively few studies have addressed this topic in the real-estate industry.
One of these studies was conducted by Johnson et al. (1988), who investigated the determinants
and level of service quality in the real-estate industry. These authors identified similar service-
quality determinants to the generic determinants proposed by Parasuraman et al. (1985, 1988),
although the rank order differed somewhat. Nelson and Nelson (1995) also investigated service
quality in the real-estate industry and developed a version of SERVQUAL for specific use in
real-estate brokerage. The so-called ‘real estate service quality’ (RESERV) scale contained 31
items in seven dimensions and demonstrated high internal consistency and convergent validity.
The authors concluded that such a modified version of a generic service-quality measurement
scale is appropriate for use in the real-estate brokerage industry. Seiler et al. (2000) also
developed a specific survey instrument with two quality factors (agent characteristics and
tangibles). Their study showed that an agent’s characteristics affect overall service quality and
the future use of the firm, which led the authors to conclude that real-estate firms should recruit,
train, and monitor their agents with care.
3. Conceptual framework
Based on the work of Vilnai-Yavetz and Rafaeli (2006) and Steffen (2006), the present study
proposes a model that posits service quality as a sequence of several components: (i) potential-
based quality (which integrates the perceived quality of both the virtual and the physical
servicescape of a firm as a precursor of a service interaction); (ii) the perceived process-based
quality of an agent–client-interaction; and (iii) overall quality. The model is illustrated in Figure
1.
Please insert Figure 1 here
Figure 1: Research framework
As shown in Figure 1, it is assumed that the perceived quality of the virtual servicescape
leads to an emotional response (positive feelings of pleasantness), which, in turn, is a
determinant of a prospective customer’s decision to initiate a service interaction. Once a
relationship between provider and customer has been initiated, the quality of the physical
service encounter becomes more important in determining customer satisfaction and customer
loyalty.
Two particular characteristics of the proposed model should be noted. The first is that the
physical service environment ‘overlaps’ the pre-purchase stage and the service-encounter stage.
This reflects the fact that, in some cases, the consumer might not experience the firm’s physical
facilities before an interaction occurs; this might occur, for example, if the customer books a
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hotel room online or searches for real-estate online. In other cases, the customer experiences the
physical facilities before the interaction occurs; for example, sitting down in a restaurant. In
addition, it is important to note that some consumers might not experience the physical facility
of a particular service provider at all if services are accessed and concluded entirely online.
The second point to be noted is that a ‘time effect’ must be taken into consideration; that
is, the service evaluation at the time that a business relationship is initiated will influence
perceptions of quality during the consumption stage.
4. Research methodology
4.1 Research setting
Real-estate services which account for about 13 percent of the GDP in the U.S. (BEA, 2007)
represent intangible, high-contact services in which customers have to rely primarily on
experience and credence qualities, especially during the pre-purchase stage (Nelson and Nelson,
1995; Lovelock and Gummesson, 2004). Moreover, a characteristic feature of this industry is
that prospective customers usually have to travel some distance to the real-estate firm’s office
and/or to the properties offered. Prospective customers are therefore forced to rely on surrogate
quality signals (search qualities) before a customer–provider interaction is initiated. Real-estate
services are thus well suited to an analysis of the relationship between potential qualities (and
feelings of pleasantness) and the decision to initiate a service interaction, as well as to the more
traditional relationships among process quality, customer satisfaction, and customer intentions.
4.2 Sample and data collection
A qualitative research approach was chosen because of the exploratory character of the study.
The main purpose was to collect in-depth information about consumers’ reasons for choosing a
particular realtor. Data were collected by interview over a 5-week period beginning in late
January 2007. The duration of interviews varied from 10 minutes to 30 minutes. The variation
in duration was due to the different degrees of contact between respondents and real-estate
agencies. Some respondents had extensive contact with realtors, whereas others had little or no
contact at all.
Participants were selected from the academic faculty of an institution of higher education
in Kentucky (USA). The criteria for selection were that: (i) participants must have moved to the
institute within the six months preceding data collection; and (ii) they must not have known the
area or the real-estate market at the time they moved. These criteria were adopted to ensure that
participants had to search for housing through the services of real-estate agencies. Faculty
members (rather than students) were chosen for the study because these members, being
somewhat older than students, would be likely to have more experience in assessing the quality
of real-estate services.
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The present author personally contacted the 50 staff members who met the criteria noted
above; of these, 34 (67%) agreed to participate. This sample of individuals was later reduced to
27 for two reasons:
* The original sample of 34 included two married couples; it seemed reasonable to
aggregate the feedback of each of these couples.
* The interviews of respondents who moved a year earlier were excluded due to a
potential bias in responses. Although the real-estate market had been reasonably stable
over the preceding two years, these respondents were excluded because there might
have been minor changes in market conditions.
4.3 Data analysis
All interviews with the 27 respondents were recorded and transcribed. These documents were
then subsequently imported into MAXQDA 2007, which is a software package designed for
coding qualitative data (www.maxqda.de). The data coding was conducted by the author.
The reliability of the results was enhanced by documenting the empirical research process
thoroughly. The coding structure was developed in the context of critical discussion and
reflection with colleagues involved in marketing research. External validity was enhanced by
drawing analytical conclusions based on the literature review and the theoretical framework
(described above). To enhance construct validity, the same general structure was used for all
interviews.
5. Results
The 27 respondents were divided into three categories: (i) buyers (8 respondents); (ii) renters
(11 respondents); and (iii) ‘switchers’ (that is, those who initially intended to buy but decided to
rent) (8 respondents). Table 1 summarises the basic data of the sample.
Please insert Table 1 here
Table 1: Basic data of the sample
5.1 Virtual servicescape
5.1.1 ‘Visuals’
The responses revealed that pictures were considered the most important feature on the websites
of real-estate firms. Seven buyers mentioned the terms ‘picture’ (or ‘photograph’) 36 times and
eleven renters mentioned these terms 26 times. Both renters and buyers indicated a preference to
view both interior pictures and exterior pictures of properties.
I mean, it helped a lot. I think it kept us from wasting the realtors time. I’d say
something that is important is a nice sized backyard that could be fenced, when they
show a picture of the backyard, you look at it and go, that’s not going to be big enough.
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I have three dogs. That was something that was important to us. I get one, a lot of stairs
going down to the backyard, and when you see a picture, you are like “Ahh” maybe we
put that on our list but it’s not as high up. Let’s go and look at this one. [Buyer]
Rather than just having one or two pictures, that’s not sufficient, because you don’t
really know what you are looking at. [Buyer]
I think this was very helpful not only the exterior of the house but the interior of the
house. Especially since this was from a long distance. [Renter]
Respondents also mentioned floor plans or layout; however, this feature was more
important for renters, with two buyers mentioning these terms eight times, and 6 renters
mentioning them eight times. If provided, however, real estate firms need to consider also
design issues, such as size and clarity. Otherwise, prospective clients may not be able to view
the layouts which could lead to negative perceptions.
That would have been nice if they had it, because that was my biggest problems with
the pictures, they would show the bathroom, but I didn’t know where the bathroom was
in comparison to any of the rooms. [Renter]
I like floor maps, a lot of times they are very hard to read on the Internet. Because they
try to copy the blue print style and that doesn’t translate nicely on the Internet, and it’s
hard to see. [Renter]
Buyers were more interested than renters in virtual tours, with five buyers mentioning
this term (or ‘3D tours’ or ‘video tours’) 13 times, and two renters mentioning these terms 3
times. However, buyers reported both positive experiences and negative experiences with
virtual tours. The following comments from buyers are worthy of note:
I liked the ones that had video tours. These were very helpful because a picture of a
house from one particular angle can make a house look a lot better than it really is.
I think that a virtual tour should become standard. Not all of the properties had virtual
tours.
Although buyers and renters had somewhat different views with regard to ‘visuals’ (that
is, pictorial representations of a property), the overall finding of the present study is that both
types of consumers expect to find good-quality pictures of properties on a real-estate firm’s
website. Indeed, the availability and quality of the photographs was sometimes a determining
factor in individuals deciding not to contact a real-estate firm. The following comments reflect
the importance of ‘visuals’:
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Pictures helped a lot. I think they prevented us from wasting the realtor’s time. A large
backyard that could be fenced was important to me. If a website showed a picture of the
backyard, I was able to look at it and know that it was not going to be big enough for
my three dogs. [Buyer]
Sometimes you could tell that things were photographed from an unusual angle, or that
there were things that were obviously missing, which led us to be suspicious about some
properties. [Buyer]
If a website didn’t have photos, we just automatically said no. [Renter]
I used the pictures to deicide what I wanted to do. [Renter]
His pictures were not good, because I couldn’t get to figure out the layout of the actual
apartment. I couldn’t decide what it was going to look like. [Renter]
Yes, I believe that is very important for people who are looking to buy or rent, and I
don’t think I would rent a place until I’ve seen a picture of it. [Switcher]
5.2.2 Search tools and mapping functions
The second-most important feature of the website according to respondents were such ‘tools’ as
search functions. The terms ‘search’ and ‘range’ were mentioned by four buyers on 9 occasions
and by seven renters on 18 occasions. Such ‘tools’ enable prospective customers to customise
their searches on the basis of various criteria—such as type of property (house, duplex or
apartment), size (building and land size), number of rooms, and price (or price range).
Search functions were great. [Buyer]
I tended to search mostly for bedrooms, and bathrooms, square footage, acreage and
price. [Buyer]
There were some frustrations that we encountered in terms of limitations in terms of the
flexibility of what we could search. [Buyer]
When I searched it was like a general search you can do it, (…) price range, which was
nice, (…) but they only showed houses, so it would have been nice to find an option on
the website for duplexes or apartments, that would have been nice. [Renter]
Importance has to do with search ability. Being able to put in the criteria. [Renter]
More search ability I think is key. [Renter]
They allow filtering of homes, depending upon the criteria that we provide. Some sites
are more extensive than the others. For example, we are interest in 2 story homes, and if
there’s a way we can specify this, it will be very helpful. [Renter]
Other tools that influenced respondents’ perceptions of websites were mapping features.
This referred to the provision of a link to an online map. Respondents judged this feature
positively. However, one buyer suggested that realtor websites should link to satellite views
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(such as ‘Google Earth’) to provide a more accurate understanding of the neighbourhood or the
subdivision. This buyer made the following comment:
But I would go to Google Earth and actually see a picture of where it should be
compared to the school, compared to other houses, weather it’s in a subdivision type
area or was it more out in the county. And just trying to look, ok, how would I get to
school from here. (…) I used Google Earth to find out where a property was located
with respect to a school. This was very helpful.
5.2.3 Other factors
Other factors that were identified as important on websites were in accordance with the findings
of previous studies of e-service quality (Collier and Bienstock, 2006; Jun and Cai, 2001). These
included:
* timeliness of information: mentioned by three buyers on 4 occasions, and by three
renters on 6 occasions) and
* ease of use (mentioned by five buyers on 15 occasions, and by six renters on 9
occasions).
The following comments illustrate these findings:
The negatives would be sometimes the searches weren’t updated, you would call about
a property and they would say that’s been sold, or that’s on contract, when the website
wouldn’t represent that. [Buyer]
I was looking at pictures of homes, that weren’t available anymore. [Renter]
I really liked the website in terms of the way it navigated with the one problem that we
couldn’t always easily access other listings that were outside of theirs. (…) Other ones
were pretty frustrating to navigate. [Buyer]
Some websites, you can never get back to where you want to be, unless you go back all
over to the website and that’s frustrating. [Buyer]
An interesting finding of the present study is that the aesthetics of the website were of
only minor importance to the respondents. Moreover, with regard to the physical service
environment, it was interesting that only a few respondents visited the actual office of the
realtor. This suggests that the virtual servicescape was more important than the actual physical
environment for these consumers of real-estate services.
No, because I came up here for my interview and then I went back and I didn’t come
back again till I moved here. I did everything over the phone and email. [Renter]
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Figure 2 summarises the results for assessments of virtual servicescape among renters,
buyers, and ‘switchers’. The size of the dots in Figure 2 represents the quantity of answers: the
larger the dots, the more often this code was mentioned.
Please insert Figure 2 here
Figure 2: Code structure for responses on virtual servicescape quality
5.2 Physical service encounter
5.2.1 Responsiveness, access, communication, and reliability
The key factors in assessment of the process delivery of real-estate services were: (i) access
(mentioned by five buyers on 8 occasions, and by ten renters on 23 occasions); (ii)
responsiveness (mentioned by six buyers on 12 occasions, and by eleven renters on 36
occasions); (iii) communication (mentioned by four buyers on 7 occasions, and by five renters
on 7 occasions); and (iv) reliability (mentioned by five buyers on 10 occasions, and by five
renters on 7 occasions) were. These findings were in accordance with those of Nelson and
Nelson (1995). The following comments exemplify these findings.
Access: My real estate agent was primarily through email and I found out that to be
a little difficult. [Renter]; Having accessibility to by phone or email. [Renter]
Responsiveness: I have really appreciated it interacting with realtors, when they are
on the ball, especially with things like responding to things like emails and calls.
[Buyer]; We expect them to be responsive, to get back to you quickly, to answer
your questions. [Renter]
Communication: I want them to call me on a continual basis. I had one that never
called me. I found out that she had shown my house two or three times. I want to
know that stuff. I just got rid of her. She had to communicate to me and she wasn’t
doing that. [Buyer]
Reliability: She said she would be at out hotel and she was there and took us
around. [Buyer]; I was upset because the agent was not staying on top of things.
[Buyer]; I want a reliable individual most definitely. [Buyer]; She took down my
information. She said she would look up stuff and call me back, and she did.
[Renter]
With regard to access, the telephone was more important than e-mail among the
respondents. Although renters and buyers exhibited similar patterns, a comment by a renter
illustrated the particular needs of this group in terms of having future access to their potential
landlord:
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If this is where I will live, I want to be able to call the landlord whenever I need to. I did
feel that way with my landlord—that I can call him whenever I have a problem.
5.2.2 Competence, courtesy, and credibility
The findings of this study also show that perceptions of the quality of the physical service
encounter during interactions with realtors involved evaluations of the personal qualities of staff
members. These included: competence (experience, knowledge of the market), courtesy
(individual attention, friendliness), and credible personality (honesty, trustworthiness, ethical
behaviour). The following comments reflect the importance of these factors:
Competence: He was very knowledgeable, very good. He was good. [Buyer]; They
seemed competent to tell me what I needed to do. [Renter]; You expect the realtor
to know the community and be able to point you to areas that you would be
comfortable living in and also be able to say this particular area is a nice area,
however be aware that the property next to wherever you are living has these
restrictions on it, has this convenient with it, or it’s been sold for commercial
development that may change, so we do expect our realtor to be able to talk in an
informed manner about not only the area you are going into specifically, but the
general area around it, and it’s development also, if roads are going through or
schools are coming in this type of thing. [Switcher]
Courtesy: There’s always that personal rapport, to me makes a difference. Because
you are spending all day with him in the care, you feel like they care and you care.
There was some personal connection. [Buyer]; Even if they don’t make a huge
amount of money, because I’m not buying a million dollar home, I still want to feel
like they value me and my business, and they want to do the best they can for me.
[Buyer]; It seems like they went through quite a bit making phone calls and looking
to make sure I was happy with what I got, and that was important. [Renter]; They
took the time; they asked questions about preferences, costs, location whether in the
county or in the city whether we wanted to be on the lake. They wanted to get a feel
for how me and my wife lived, what price points we had, what melody we found as
minimal requirements to purchase a house, so there was a lot of discussion prior to
a real estate agent actually going back in and going through the available properties
and saying these might meet your desires. [Switcher]
Credible personality: Yes, we made a judgment about whether we could trust this
person. We felt we could trust her. It then became easier to look at the property.
[Buyer]; They were very honest and I appreciated that, some things I wanted and I
was told that’s not possible or that might be very difficult, and I appreciated that
honesty, so I didn’t have this false hope that I may get this and it didn’t come
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through. [Renter]; Probably honesty. We weren’t looking for someone to push the
house on us. One important thing is honesty and not being pushy. [Switcher]
It is apparent that respondents emphasised trust and honesty in a realtor. Making a
purchase of a house is the biggest investment that most individuals will make, and real-estate
agents should therefore avoid creating an image of selfishness and a desire to get a commission
by ‘closing the deal’. Unethical behaviour can lead to negative client perceptions, as the
following comment by a buyer demonstrates:
We looked at the second home and we put up a bid on that home, but then when we put
the bid on the home, she left the sign up, she didn’t stay on the contract, they were still
showing the house, even though it was under contract, and I think that’s unethical. My
husband was actually very upset and I don’t know if she thought that our loan wouldn’t
go through, or she didn’t know, so what she did was they left a sign up. When a house is
under a contract, it should say it’s under a contract and they should stop showing it from
what I know. They didn’t do that.
Honesty, trustworthiness, and ethical behaviour can be regarded as key quality drivers.
Mistreating the clients can have adverse effects on their future intentions to do business with the
firm. Figure 3 summarises the results for assessments of physical service encounters among
renters, buyers, and ‘switchers’.
Please insert Figure 3 here
Figure 3: Code structure of the physical service encounter quality
5.3 Customer satisfaction and customer loyalty
The answers of the respondents showed that quality influenced customer satisfaction and future
customer behaviour.
In terms of negative responses, such as frustration, buyers primarily complained about
websites; in contrast, renters mentioned interactions with realtors. The following comments
reflect these views:
With some websites, you can never get back to where you want to be, and that’s
frustrating. [Buyer]
It was frustrating to find houses that were interesting, but we couldn’t obtain
information about the size or other data. This made it difficult to compare. That was
very frustrating when we were looking. [Buyer]
It was frustrating because it was hard to get any online information about renting.
[Renter]
14
She was 15 minutes late, and I called her to see where she was. She said” ‘Oh, I have
already rented that house to someone else’. That was frustrating. [Renter]
Descriptions of pleasant experiences referred to both realtors and websites. The following
comments from buyers reflect the importance of the personality of the realtor and the
availability of maps on websites:
I liked her very much. She was just a lovely lady and she has been very easy to work
with … [Buyer]
Maps were very helpful to me. The pictures were great. [Buyer]
If individuals were satisfied with the real-estate service, they tended to recommend the
firm and/or choose the same realtor for future business (for example, for selling the property).
This might even outweigh higher commission fees.
She’s a lovely lady. In fact she is selling my house now. I went back to them.
I would use the same people to sell my house even if there are people who would do it
for a smaller commission for themselves.
The survey showed that buyers tended to mention loyal behaviour more often than did
renters. In most cases, renters indicated that they would simply move to an appropriate new
place, irrespective of whether it was leased by a different real-estate company. However, some
renters did refer to loyalty:
If I do buy a house, I’ll probably call her first—because she was really nice. And since
I’ve been here, I’ve heard good things about her. She really tried to help me out.
[Renter]
6. Conclusions, implications, and future research
6.1 Major conclusions
The findings from the present study suggest that real-estate quality is driven by two main
components: (i) the physical service encounter with the realtor; and (ii) the firm’s virtual
servicescape. Taking these two findings together, it is apparent that real-estate firms need to pay
close attention to both the recruitment and training of their agents and their websites (especially
the ease of navigation and the provision of valued features, such as search functions, pictures,
floor plans, and virtual tours).
15
The survey has also shown that buyers and renters exhibit certain similar patterns in the
pre-purchase stage; in particular, both groups value the availability of pictures and search
functions on websites and positive interactions with realtors. However, some differences were
also apparent. For buyers, the purchase of a property entails greater complexity and personal
involvement. Buyers are therefore very interested in receiving honest and ethical treatment. For
renters, ready access to the realtor in the post-encounter stage is of importance.
Table 2 summarises the similarities and differences among renters and buyers according
to the three stages of service consumption suggested by Lovelock and Wirtz (2007).
Please insert Table 2 here
Table 2: Similarities and differences among renters and buyers
6.2 Limitations and future research
Although this study contributes to the literature on virtual servicescapes and extends knowledge
about real-estate quality, certain limitations are acknowledged.
First, the results of this exploratory study cannot be readily generalised to other real-
estate services or other service industries. With regard to other real-estate services, the market
conditions vary according to location and time. The market in which the present study was
conducted appears to have been a ‘buyers’ market’, which might explain why fewer online
services were available for renters.
Secondly, all respondents were professionals engaged in higher education. Future studies
could utilise a larger and more heterogeneous sample and specifically take market conditions
into account when assessing differences among buyers and renters.
Finally, the coding was conducted by only one person. Although the coding structure was
the subject of critical discussion and reflection with several colleagues who were involved in
marketing research, the reliability of the results could be increased if other persons were
involved in the coding process.
Despite these acknowledged limitations, the research framework proposed here offers
potentially fruitful opportunities for future research and could be extended to other services. In
particular, the framework is suitable for use in the hospitality and tourism industries, in which
consumers gather information online in the pre-purchase stage and then experience both the
physical environment and service encounter upon arrival at the destination.
Acknowledgements
The author gratefully acknowledges the helpful feedback and comments from conference
attendees at the 21st Service Workshop of the Academy of Marketing (UK) in London in
November 2007. A previous draft of this paper received the Best Paper Award at the workshop.
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