We are all aware (or at least I hope we are) of the endless offers real estate agents receive these days. 100% split, with leads, with training, with coaching, with magic, with love, residual bonuses, vacations, an all inclusive heaven being offered to them, daily. If you think your agents will never leave your company, keep reading my friend!
As a broker owner's coach, I come across a lot of broker owners who believe their agents are loyal, right before they lose their top producers to another company and then a disastrous following (when a top producer makes a move, many agents follow them). One of my clients went from 1,100 agents down to 500 agents in 18 months. Can you imagine? Losing more than half of your agents to your competition? But how is this possible you ask yourself...Obviously it is possible since it happened! Actually many large brokerages (no name mentioning here) have experienced similar results in the past 3 years. The industry is changing and changing fast.
Will the industry be lead by technology companies who offer 100% split + benefits? Anything is possible! and when you have this mindset (that anything is possible) you take daily action to make sure that is not going to happen to you! not your agents! not your company.
Unfortunately, and fortunately, there are plenty of independent brokerages out there (and small office franchisees) who offer very little benefits to agents and most of their agents are starving for deals. After all, how can a broker owner who never closed more than 10 deals a year (in a consistent manner) by themselves, teach their agents to close 50+ deals a year?
Here are some challenges (ego related) and why a brokerage is losing many of their agents:
The broker/owner is too busy doing their own deals to pay attention to what is happening inside her/his company (culture issues, gossiping, competition, jealousy, rumors etc).
The broker/owner is assuming that agents will tell her/him when they're looking to make a move (in reality most agents don't tell their broker until after the fact) and they don't communicate with their agents enough.
The broker/owner assumes they offer the best deal and there is nothing better out there (there's ALWAYS a better deal out there).
The broker/owner is not providing enough attention and recognition to their agents or they pay too much attention to top producers and neglect the middle.
The broker/owner is not providing enough value (lower split, no admin support, no love, no attention, no technology, no ____________).
The broker owner is not providing the right education (or enough education) and keep chasing the wrong people.
The broker/owner is not holding people accountable for minimum standards/results/deals because they're afraid people will leave them. And guess what happens anyways?
The Broker/owner sticks to old ways of doing business while the competition is offering a MUCH better deal, and therefore agents who seek a better deal, go elsewhere.
Broker/owners who over promise (to recruit) and under deliver (they can't do it all by themselves).
Broker/owners who refuse to be held accountable (no coach = no growth). Business owners who think they "know-it-all" will soon enough end up with an empty office and a very low production.
I can go on and on with this list, but I believe you already know the challenges. So let's focus on what you should actually do to recruit more agents and retain your agents.
In reality there are 3 ways to grow your income as a broker owner:
Increase production, meaning more transactions (sides). You do this by increasing your per person productivity and you do that by holding agents accountable, training them on generating and converting more leads, mentoring, coaching, motivating, inspiring and recognizing success.
Provide "time saving" services. When you provide agents with admin support (mainly transaction coordinator and listing management) to remove administrative tasks from their schedule so they could focus on what makes them money (generating & converting leads).
Recruit more agents. You must focus on recruiting agents from all levels: new licensees, low producers, mid level and top producers. Recruiting is the # 1 activity to cause constant growth. Brokers who focus on recruit, even without the 2 points above, are better than companies who provide the 2 points above but don't recruit.
When someone asks me: Hey Ran what's the ONE THING I should do to grow my brokerage, the answer is: Recruit like a machine! But how can someone recruit agents if they don't have the skills, the systems, the tools, the support and everything else they need to provide these agents with? That's where many broker owners are stuck, especially those who are competing brokers (produce their own transactions). You can not build a strong brokerage without recruiting agents non stop! it just doesn't exist. What happens is, agents leave you, even if you provide them with everything they need. The grass is always greener on the other side, therefore people leave. So if you don't provide incentives for other people to recruit (residual bonuses) and you're the only person recruiting, you are doomed. If you stop recruiting, slowly slowly you will find yourself alone, a single broker with no agents, or worse, a broker with non producing agents who drive you nuts and raise your E&O.
If you seek to be successful, and more importantly profitable, there are some types of brokerages who tend to fail in the long run, you might want to avoid these scenarios:
A non producing agent (or low producer) deciding to get a broker license and open their own shop, they want to say to themselves (and others): "I own a brokerage!". They are interested in keeping 100% commissions and maybe hire a few friends to work with some of the leads (like a team does). It's better to choose a brokerage to work with who offers 100% split and other perks. You should be proud of being productive and profitable, not proud of owning a brokerage (ego).
A team leader who does a lot of transactions and is big enough (or pissed off enough about paying their broker) to open a brokerage. These broker owners tend to do a lot of transactions but they don't have enough time to recruit, let alone train, coach, mentor, providing admin support, supervising etc. These owners find themselves many times in a pickle (it's better to own a team under a brokerage that provides tools, systems and admin support instead of creating one that takes you away from producing). I saw many of these broker owners reduce production dramatically, sometime to the point of not being able to keep up with bills (biting more than they can chew). Many of them bring in a partner to take care of the stuff they can't do. Partnerships are very challenging and I've encountered more partnerships fail than succeed (long term). It's better to find a brokerage you're comfortable with, pay the fees/split/cap and focus on production!
A broker owner who wishes to help other people, teach, coach, mentor, someone with passion to help others instead of doing their own deals. These devoted brokers sometimes fail because they don't recruit enough and that is mainly because they have no recruiting skills or they spend too much time on training, coaching and babysitting the wrong agents. Btw, this type of broker should join with #2 above to create a successful alliance/partnerships.
An independent broker owner who buys a franchise thinking it will remove challenges. Unfortunately, many of these brokers end up with more bills and more financial obligations that choke them up (too much stress is not very helpful for most people). A franchise cannot resolve your # 1 challenge: Recruiting.
100% split brokerages who provide very little to their agents. They must keep overheads low, therefore they can't afford to offer much. Although these brokerages can potentially end up with a large number of agents, very few actually succeed (with very little money left for the owner). Remember, the bigger the brokerage gets, the more employees, systems, tools, time consuming and EXPENSES. With a very small margin of profit, these companies are not gonna make you a lot of money.
If you wish to be successful as a broker owner, you must focus on the # 1 cause for success which is RECRUITING, and you must do it non stop. Now, there are ways to recruit agents and there are ways to repel agents. Many broker owners who try to recruit by over promising and under deliver will shortly phaseout. Recruiting is a long term game, therefore you must follow a long term plan. I will talk about recruiting in the next article.
Feel free to comment below so we could open the discussion. All the best!