From REAL Trends, the trusted source for real estate industry trends and news. This is REAL Trending, episode 71. We're analyzing some important trends affecting brokerage companies and their agents. I'm Steve Murray, president of REAL Trends.
Today we're discussing a new book by Patrick Lencioni called The Motivation. We'll look at a review of top performing brokerage companies, and a preview of the REAL Trends 500, and what does it mean for our industry. First, a quick message about an upcoming event.
This is Tracey Velt, REAL Trends, Editor of Content. Join me April 29 through May 1st, 2020 at the Grand Hyatt, Denver for the premier leadership event of the year. The REAL Trends Gathering of Eagles. Steve Murray and I will be interviewing brokers who accomplished the impossible, multiple years of growth no matter what the market.
Plus hear from author and leadership expert, Patrick Lencioni on how to build a healthy organization. After his keynote session, coaches from Lencioni's team will be on hand to lead small group workshops so you could put his practices into play.
For the first time ever, we're inviting brokerage leaders and up to three of their leadership team members. Go register at www.realtrends.com/events/. You won't want to miss this one of a kind. Event and spaces are filling up quickly. Go engage, go lead, go register www.realtrends.com/events/.
Patrick writes in his forward, he wishes he had written this book first before all the others, because the book, The Motivation, his newest, talks about and tries to get at the answer to the question, "Why did you want to be a CEO or a president? What drives you to be in that position?"
He breaks it down into two kinds of people, and then addresses their relative effectiveness. He asked the question, "Did you strive to become the president and CEO for the title, for the compensation, for the rewards, for the recognition and all of those kinds of attributes and rewards that a person gets being a president or a CEO or leader of an organization?
Or are you the kind of person that sought the position and had the desire for the position because in fact, you really enjoy the nitty gritty demands of a leader? The people, challenges, and developing those people, reviewing financials, guiding people and developing their careers, and digging into the strategies that will have a more productive and pleasing environment where people work, and strive, and succeed and are encouraged."
Lencioni says the outcome of any organization will be attributed back to what was that leader doing, and what were their motivations? All of us can think back and we've all known leaders in our industry and read about leaders in others.
When you sort it into those two categories, and then look at the outcome of the organization afterwards, there are some big correlations between someone who does it for the, if you will, the outward satisfaction of rewards, recognition, compensation, et cetera, and those whose rewards come from developing great people and long lasting organizations.
For myself, having read the book in one setting, on a recent trip, I admit that it causes a great deal of soul searching as to in my own world why I chose to be the head of a company like REAL Trends, and I would encourage every leader, whether you're a president and owner of a brokerage company, the head of a team, a person running a sales office or a person running a department within a brokerage company.
What are the reasons you have for having that leadership position? Is it for the former, the recognition outwardly? Or the recognition internally from the people who you come in contact with, and that you supervise, that you've done all you can do to make their lives more productive and their jobs more challenging and interesting?
It's a great read, only takes about two hours to really get through it. Fascinating book, highly recommended. Secondly, review of some key performance issues. We just got done looking at the performance of the top thousand or so brokers going back the last five years. It's interesting.
We had 903 companies that we have data ongoing back at least five years, number of agents, close transactions, sales volume, et cetera, et cetera. Interesting. Out of the 903, about 617 actually grew their closed transaction sides over the last five years, so two thirds.
That's a good thing. However, it's interesting to note also that 25 brokerage companies grew by more than 200%, and 85 of the 600 some odd companies grew by 50% or more. When we looked at each one of these companies, we found that by far and away these leading companies did so organically. We also found that these companies come from virtually every brand and independents.
In fact, most of them are companies that are well known brands, all of them. Berkshire Hathaway to Century 21, ERA, Coldwell Banker, Keller Williams, ERA, RE/MAX, they all had entries in that list. Sotheby's and others were there. All of them, in fact, were there. All the major brands were represented, as were a number of independence.
It wasn't brand new companies that were five years or more old. It wasn't names that you wouldn't recognize. They're all recognizable names. What can we derive from that knowledge?
It turns out that while brand name is important to agents, our surveys and research have proven that. There's something else going on with these companies because they come from all of them, and they come from all regions of the United States.
We've interviewed the 12 best for an upcoming of recognition at the Gathering of Eagles called Game Changers. And we're going to recognize the top growing firm in each of the brands, and some independents as well. In interviewing all of them, almost all of them grew organically.
They didn't do it through mergers and acquisitions. They did it organically. And you ask a broker owner, "well, how did you end up being among the top 30 fastest growing firms in the country? Or the top fast growing firm in your own brand?" And inevitably what we heard over and over again, "well we spend 30 or 40 or 50% of our time in activities related to recruiting and developing people."
Not only that, but these leaders, these owners of these brokerage companies, most often commented that it was a team effort. It wasn't just them, it was them plus their managers, plus input from agents, and all were encouraged be part of that team effort to recruit and attract great people to help the brokerage grow. In each and every case we heard this over and over again.
When you look at the fact that NAR's closed transaction sides over the same five years only grew 10.9%, and there were a couple of hundred firms that grew faster than that among the nation's largest companies, it doesn't come down to your model or necessarily your brand, or what part of the country you're in or which market you're in.
It comes down to having a mindset that knows and understands that recruiting and developing people is still at the heart of a residential brokerage company. This data proves it over and over again.
Speaking of that, preview of the REAL Trends 500, which will be released in a short time. Record numbers of firms qualified, you had to do 500 sides or more to qualify. We had a record number of firms who qualified and filed with us this year. A lot of new firms that we've not heard of before filed.
We noticed that however among newcomers, both compass and EXP had significant growth years in 2019 over 2018. Not likely a surprise to anybody listening to this, but I think the rate at which these two companies have grown is going to surprise a number of people.
We also note other newcomers continue to grow into the top 25. We won't go into all the names. We'll leave that for the surprise that you get when we announce the total rankings.
We noticed that productivity appears to have stalled among the REAL Trends 500 and Up and Comers, and we notice also a lot of shifting among, if you will, the incumbents, the firms who have been on the top 25 and the top 50 for years. There's a lot of shifting going on, and a lot of newcomers to the top 10 and top 25.
Some of them are Keller Williams for instance, which have been in the top 25, but not numerous firms. Well, this year there are. And there are a couple of large RE/MAX's that have climbed up as well. We expect to have a lot more details, and interesting insights from the data as we continue compiling it in the days and weeks ahead.
Learn more about industry trends and successful tactics for brokerage firms, agents and teams, as well as listen to past REAL Trending on Apple Podcast, Spotify, Google Play, and others. Visit www.realtrends.com/channels/. This has been Steve Murray, until next time.
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