I was sitting in a boutique broker’s beautiful office listening to the owners vent about their frustration with recruiting. Attracting strong agents was a challenge for them, but equally frustrating was that after onboarding recruits, they often lost them to other brokers once they began producing. The managing broker said, “I feel like we are training the competition.”
I thought for a moment and finally said, “you don’t have a recruiting problem or even a retention problem; you have a value problem.”
Although the two business partners were well-known in their area, they had settled into comfortable roles as the firm’s top producers. While there were more than fifty agents on the roster, the owners along with half a dozen agents, represented more than 65% of the production. Worse, most of the agents completed less than two transactions a year with a large number actually doing zero, nada, zip — none.
They were struggling with the fact that as hard as it was to recruit agents, once they began producing, those agents were recruited away by other brokers. They felt it was because they could not match the commissions other firms offered. They also didn’t attract many experienced recruits, so they focused on brand new agents and their turnover was frustrating.
What is their value proposition? The website listed a number of benefits to agents for joining their firm including:
- Competitive commissions
- No required meetings
- No floor duty
- Beautiful offices
- Free coffee
Not exactly compelling stuff.
For selling brokers, there are unique challenges in balancing personal real estate clients, managing their agents and running the business of the brokerage. They were both exhausted and looking to make changes in how they run their business.
It was obvious that they weren’t communicating much in the way of value to prospective agents or even to their existing ones. There was very little discussion about how the brokerage enables their agents to provide better service and be more effective in better serving buyers and sellers. They spoke little of training and support for the agents or understanding what agents would need to be successful by joining their brokerage. With historical data from the National Association of REALTORS documenting one third of new agents dropping out within the first year and almost 90% within the first five years; training, support and coaching are critical to agent success.
The brokerage owners also spent a lot of time telling me about their recruiting “pitch”- why agents should join their firm. They spoke glowingly about their personal success, reputations, longevity in the market, etc. Their philosophy was to give their pitch to anyone who would listen and hope for the best. They were also not selective in terms of who they targeted to recruit. They were working on the old “throw enough out there” mentality.
Recruiting is a key component of success; it’s production insurance for the broker in today’s changing industry. However, recruiting is NOT selling your brokerage with a fancy presentation. It’s all about asking select candidates the right questions to find out an agent’s needs and wants as well as what problems they have with their current brokerage. Knowing this gives you the opportunity to make an agent’s problems go away by joining your firm.
“Knowing this gives you the opportunity
to make an agent’s problems go away”
It’s also about focusing on the candidates who make the most sense and qualifying them early on to focus on those specific needs. Most brokers also tend to forget to nurture their existing producers which is dangerous because those agents are their competition’s recruiting candidates, too.
For the two partners, recognizing it was time for a change in their brokerage was a crucial step. Today, because the market has been good for several years, there are too many brokers who are satisfied with the status quo. Many are certain that they won’t have to make major changes to the way they conduct their business. This strategy will become a dangerous proposition in terms of recruiting and retention as the market continues to shift.
For brokers who want to ramp up their recruiting and retention, here are key components for focus:
- Develop a strong value proposition – Companies providing more agent value stand out from the competition because a strong value proposition positions the brokerage as a competitive market driver. Just as with pro athletes, successful agents want to be part of the winning team. The broker that provides leadership, support, resources, tools, marketing, accountability and more that drives successful agent productivity is the winner in recruiting and retention.
- Recruit for culture – Cultural fit is one of the most important aspects of successful recruiting. How an agent blends with your company’s culture is critical to overall success for everyone. The most successful recruiting brokers will pass on adding an agent — even a top producer — if that agent doesn’t fit with the culture. Maintaining a winning culture is important for both the success of your brokerage and of your agents.
- Eliminate the non-producers – Unless they’re paying their own way for the privilege of hanging their license with you, bite the bullet and eliminate your unproductive agents. They stand in the way of recruiting and retention of stronger agents. Brokers often say, “but they aren’t costing me anything.” That’s not true. Non-producers rarely “win the listing” because they don’t have the skillsets to effectively compete. The business your unproductive agents lose to your competition represents serious dollars out of your pocket.
- Promote coaching and training – Ongoing coaching and training tailored to an agent’s needs as well as areas of focus, strengths and individual personalities is the key to success for many agents, from newbies to seasoned veterans. When coupled with experienced mentors, agents learn proven techniques, processes and tactics as well as accountability that keeps teams on path. It could be the difference between success or becoming another agent statistic.
- Highlight agent recognition – For most agents, bragging rights are just as important as the commissions (and possibly even more so). Local agent recognition within the market should be showcased both inside your brokerage and to the outside community. Effective use of marketing and social media tools helps tell your agents’ stories and promotes well-deserved recognition.
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Good recruiting and agent retention are the lifeblood of a brokerage and a key growth tactic. Recruiting based on your value proposition is much more effective and profitable than simply trying to match your competitors’ splits. Brokers need to enable their agents to get more listings, complete more transactions and be more effective in their roles as trusted advisors.
It’s a lot better than free coffee.”
Rick Ellis is a 30+ year veteran of real estate brokerage ownership, mergers & acquisitions, and franchising, As VP with The Corcoran Group, he directs real estate firms with their growth strategies and increasing their market share, profits, business value and exit strategies.