Alt title: “Why Agents Drop Out – And What Brokerages Are Doing to Get Them To Stay”
The Appeal of Real Estate as a Profession
There are several features of a career in real estate that continue to appeal to many: the opportunity to be your own boss, make it a full or part-time career, as well as the potential of a relatively high income compared to many other lines of work, (as it’s not tied down to hourly rates or salary category). Becoming an agent usually takes a quicker process than many other careers too, which may be a key factor as to why so many agents join the field after having worked in other industries prior.
That being said, while real estate can be exciting and dynamic, it’s also competitive and demanding. The high turnover of agents is well-known but the reasons as to why are not always clear. What are some of the reasons agents are coming in fast but leaving so soon? How does that impact the brokerages or businesses they have previously committed to? Is there a way for agency leaders to avoid the high turnover rate and financial loss that entails?
The Issues Agents Face...
While many professionals enter the field interested in success, the percentage of agents who call it quits within the first five years ranges between 85-90% - an alarming statistic that many brokerages need to take a better look at, if they really want agents who are in it for the long haul. While there are multiple challenges agents face that ultimately make them throw in the towel, most fall roughly into a few main categories:
Lack of income
Many RE newcomers are happy to invest in themselves after switching careers and paying the necessary fees to get educated, get licensed, and get signed up with a brokerage - once they start working in the field, it’s not long before many actually run out of funds to keep going. This is one of the main reasons why many new agents quit after two years.
Lack of sufficient training
Many agents feel overwhelmed when thrown into the thick of things in the first few years on the job. While the actual house viewing with a potential client can take an hour out of a day, they may underestimate the amount of administrative and relationship-building work, not to mention self-motivation, that it takes to keep the engine running the rest of the time - research, lead generation, social marketing...the list is extensive.
Lack of management skills
Some agents may not have any business plan gearing towards their goals, or may have a plan that’s misaligned with those goals in the first place. Some may have a hard time organizing their schedule or tasks, their listings, identifying the needs of their customers, budgeting, advertising, etc; while some may have a hard time managing their stress.
...And How They Affect Brokerages
In 2017, over 10,000 agents quit their jobs in Australia. Prior to that, the number of active American Realtors who quit after the 2008 market crash dropped by 23%. Considering that the average cost in the US of recruiting an agent is $7500 – or $5000 on the low end, and $10,000 on the high end, it’s imperative for business leaders in real estate to re-strategize their methodology in recruiting and retaining agents. Here’s a short list of some of the techniques and approaches that have been gamechangers for best-performing businesses in the industry:
Clearly mapping out competitive commission structures – it’s not surprising that more competitive fee splits will be a big draw for potential recruits. Many companies get new recruits to sign a non-compete agreement, but conditions vary wildly, from the number of years the contract is binding, to the exact geographical space the agent is restricted from. Some regions enforce these agreements while some don’t - either way, many agents often take the risk and change ships at some point in their career if another company offers higher fee splits. It’s important then that brokerages are able to provide a clear roadmap of the commission structure the company has going on, clearly showing levels of progression and opportunities of greater success - something agents know they can keep aspiring towards.
That being said, money is no longer the highest motivating factor for professionals (which is good news for smaller companies who may not be able to offer competitive commission). Successful brokerages are ones that help agents develop and diversify their skill sets. Because agents have to wear many different hats (marketer, salesperson, researcher, analyst, negotiator, etc), potential recruits and current agents who know their education in the field and opportunities for development will be furthered as part of the company package will help solidify their loyalty and trust. This is a crucial component for new agents.
Helping agents build a strong referral system* – Real estate professionals in the first few years of their career will find lead generation to be one of the most frustrating and challenging parts of the trade, so companies would do well to invest in quality relationship-focused CRMs (and provide the relevant training) to help agents keep in close contact with former, existing and potential clients simultaneously, monitor drip campaigns and develop marketing plans for listings.
Many brokerages don’t have a structured recruiting system which may be another reason why they lose agents further down the road. Now, there are a number of real estate agent recruiting CRMs like IXACT and Brokerkit that are geared towards removing pain-points by digitizing the recruiting process. Coincidentally, another recruiting CRM software company, Ontask Recruiter has reported that:
• 44% of brokers say they don’t have the time to recruit
• 36% say they struggle finding top quality agents
•Half of all agents have changed brokerages at least three times in their career.
Going one step further, brokerages need to identify and be able to express their brand culture. Being able to explain to newcomers what mix of leadership, innovation, values, transparency and communication the brokerage has, will give agents a more immediate understanding of what they can expect, and whether or not they could truly see themselves aligning their own personal goals with the ethos of the company. This is imperative because agents frequently leave on account of their brokerage being ‘a bad fit’ for them.
Helping agents set and manage expectations – Agents tend to stick around when they have a clear understanding what to expect and how to prepare. Brokerages that show they are able to help them set realistic, agent-specified, metric-backed goals win over agent loyalty even more than the financial incentive. This includes finance. Offering templates or guidance on budget setting, funding plans, identification of potential investment points, supplying information about business cycles especially in times of recession, offering digital platforms to set quarter/monthly/annual budgets - all these will greatly offset a situation that could otherwise spiral out of control for many agents soon in the game.
Helping agents become tech-enabled* – brokerages who invest in real estate technology do incredibly well in proving to agents that they are striving to help them win. Providing digital platforms that offer services from electronic legal documents, to e-signatures, to helping them establish a strong social media and online presence, giving them tools to market themselves with features such as 3D video marketing, providing them with robust reporting dashboards to stay on-trend etc. It’s important to remember that more millennials are joining the workforce - professionals who are looking for mobile-first technology that lets them work remotely and with flexibility. At the same time, 45% of brokers report that “keeping up with technology” is the biggest challenge their agents face. Getting agents clued-up on ways to analyze big data using AI or next-gen customer solutions, for example, can offer real-time insights, greatly enhancing the service offering they can provide to their clients. Agents understand that their brokerages are helping propel them further in their careers.
Mentorship – According to Forbes, 67% of agents who were asked what they were least satisfied with at their current brokerages cited lack of one-on-one mentorship and coaching. Apart from helping agents be accountable, the benefits of offering new and current agents a strong mentorship program are multifold: mentors can help them identify weak spots in their current business regimen, provide tips on what not to do from their own experiences, open new opportunities by exposing them to a wider network, and, importantly, helps agents establish themselves as experts and thought leaders in the field.
Monitor stress – Adjacent to but slightly different from mentorship, brokerages who go beyond the minimum are ones who keep tabs on the mental wellbeing of their agents. The industry is one of the most stressful, (with real estate having the second-highest rates of depression in 2019). Not only will this affect their performance in the company, it may induce them to leave altogether. Again, offering transparent, open space for agents to get the necessary support they need will be key to helping them manage stress, (support could look like anything from helping them practice mindfulness, identify what the picture of success looks like to them and how to approach it step by step, giving room to fail forward etc.
Celebrating their success* – This means sharing agent success stories in-house and across departments, sharing client testimonials on the company website or socials. This is such a simple practice with multiple benefits - it encourages and motivates agents, making them feel connected to company leadership and culture. They are able to recycle such ‘mentions’ in their own business marketing where it becomes evergreen, valuable content. It’s helping agents with their marketing...by marketing agents themselves. Agents who know they are celebrated and valued where they are, are much less likely to go job-hunting elsewhere
* Discover how the Adfenix marketing automation platform supports you on many of these issues including:
- Reducing time spent on desk-based administrative tasks
- Generating and nurturing leads to increase referrals
- Sharing agent successes
- Empowering agents with market-leading tech
Visit our Solutions for Office Owners and Agents section to learn more.