Recruiting and Retention: The Competition is Fierce
More options mean more competition for brokers. How should brokerage leaders view these challenges?
The competition for top agents has never been as fierce as it is now, and it will continue through 2019 and likely beyond. There are more, lower-cost options available to top-producing agents than ever before. Large individual producers and teams have become more numerous and produce more sales volume than in years past. As we’ve noted previously, in calendar 2017, the top-producing agents and teams closed nearly 22 percent of all the sale volume in the country, yet they account for less than 2 percent of all real estate agents.
How Should Brokerage Leaders View These Challenges?
In 2006, REAL Trends did research into why top-producing agents affiliated with certain brokerage firms and why they stayed with them when there were lower-cost options available. For the study, we selected 16 top brokerage firms that led their competitors in growth in agents, productivity growth and other metrics. We interviewed 169 of them to ascertain why they affiliated with one of these firms. That work was outlined in a booklet called People Still Matter.
In the booklet, we reported that these agents named qualities such as vision, communication, trust and a sense of community as the most important reasons they associated with their brokerage. Little did they mention marketing, technology or facilities. They stated that they believed that such features of a brokerage were widely available and not defining reasons why they stayed where they were.
Have Agents Changed?
In our opinion, agents (and teams) have not changed that much in the last 12 years. Certainly, some have. They are older, and their financial needs might direct them to lower their costs by joining a low-cost brokerage or be tempted by upfront cash to join another firm. Secondly, as we said above, there are more significant numbers of very, high-performing agents whose need for the services provided by most brokerage firms are not as high as they were years ago.
But we also note in our rankings of nearly 14,000 top agents and teams that most of them are affiliated with nationally branded brokerage firms or well-known, local, independent firms. Additionally, in our 2017 study of teams, they named affiliation with a well-known brokerage as highly relevant. It seems apparent to us that the sky is not falling.
Relationships and Leadership Still Matter
While some agents are lured away by low costs or upfront incentives, most are not. The most aggressive brokerages, including eXp, Compass, HomeSmart and Realty One Group, together have less than 50,000 agents out of a total population of 1.4 million. Some of these firms have lower per-person productivity than the national average, so it’s not that they are capturing only top producers. Each of these firms, and others like them, tout their technology as a critical reason for joining them, but there is not yet proof that their technology is improving the productivity of those who join them. Are they new and exciting? Very much so. Are they telling a compelling story? Again, in many cases, yes.
Yet, most of the top-producing agents and teams remain with well-known, established brokerage firms. While most of these established firms have lost some people to these aggressive new competitors; they have survived the initial onslaught.
We think it has to do with relationships and leadership. Principal owners and leaders find a way to build relationships with their people that supersedes the monetary reasons for most agents. In the areas where firms like eXp and Compass are most aggressive, large, traditional brokerage firms not only appear to be surviving but prospering. In the cases we’ve scrutinized, the leadership is intimately involved with the business lives (sometimes personal as well) of their agents and teams. There are numerous ways this is expressed, but one indicator among the firms we’ve examined is, when agents have the owner-leaders personal cell numbers and firmly believe they can call or text them at any time—even though they don’t use this access routinely.
The Question to Ask
Leaders of all brokerage firms need to ask a simple question. How much of your time is spent in having meaningful dialogue with your top agents? What systematic approaches do you use to get close and stay close to your top people, or all of your people, for that matter? In our work doing onsite assessments of leading brokerage firms both privately and in our CEO groups, agents will without hesitation say that they wish they could interact more with their owner-leader.
Yes, you are likely to lose some of your people to these new competitors. But you can limit those losses by paying attention to how you lead your company and how strong your relationships are with your agents, managers, and staff.