In last week’s Wall Street Journal article, “The Rise of the Mercenary Real-Estate Agent,” Stefano Chen discusses the current “mercenary” migration of real estate professionals – from one brokerage to the next in search of better commissions, more deals, and other dangling carrots.
The forces driving these moves, according to the article, involve a decreased housing inventory and a trend towards lower overall earnings. Decreased inventory means agents are less busy, which in turn, prompts them to look for better, faster, smarter, prettier options elsewhere. And, over a period of years, the decline in commission offered on the MLS results in lower earnings leads many agents to seek 100% commission brokerages or offices with higher commission splits.
What are agents seeking in a brokerage?
In an interesting thread in the Raise the Bar in Real Estate group, Michael McClure poses the question, “Without naming the brand or otherwise promoting your brokerage or your brand, if you had to name ONE reason why you work at the brokerage where you work, what is that reason?”
The answers run the gamut from support and brand recognition to high splits, corporate culture, and free leads – some of which are more mercenary than others.
Below are the top five reasons that agents love where they work:
1. Broker support is vital
Support. It is absolutely vital that the brokerage and the broker provide a mechanism for support. Brokers and managers need to be available via telephone from dawn until dusk to help agents overcome obstacles and solve problems. Additionally, the brokerage needs to have strong training programs and regular meeting schedules. Even the savviest agent needs to be up to date on the latest trends, laws, policies, and procedures impacting how they conduct their business.
If agents forego support for a higher commission split, there is one important factor to consider: liability. An unsupervised or unsupported agent opens up the principal, the agent, and the brokerage to extreme issues of liability. So, finding a brokerage that can protect you (even when you don’t think you need protection) is vital to the health of your personal business.
2. Agents are drawn to culture
Culture. When used with respect to real estate brokerages, it seems to imply a specific climate, environment, or ambiance. Simply stated, a strong corporate culture is one where the brokerage and the agents align with respect to core values. When thinking about where you want to hang your license, think carefully about your own core values. Then, when exploring brokerages, ask for an explanation of the company’s core values.
If the two answers are not similar, then despite all the seemingly positive aspects of the brokerage, it just may not be a good fit for you. Many agents who consistently close want to surround themselves with high energy, motivated agents with positive attitudes instead of negative nellies that sit around and play bridge and hoard office Internet.
3. Everyone loves money
High commission splits. Everyone wants to make big bucks selling real estate. But, as an agent, it is important to evaluate what you get for your money. If you are seeking a spot in a 100% commission brokerage, what other charges are there? What is included in the fees? Do you have to pay for administration? transaction review? copies? desk fees? What is the cost of Errors & Omissions Insurance? Remember that everyone needs to make money.
So, if it sounds too good to be true, then it probably is. High commissions are great, but be sure that you understand what your true earnings will be prior to signing on the dotted line.
4. Leads, leads, leads
Leads. I’ve long been a believer that agents who seek a brokerage where the broker feeds them leads are agents that don’t know how to generate the leads on their own. Instead of becoming dependent upon the leads being fed to you by others, why not develop multiple channels and lead sources?
Look for a brokerage where you are taught to establish multiple lead sources. In this way, if one well dries up, you’ll still have a steady flow of buyer and seller prospects from the others. If you happen to be slow right now and thinking about making a move to a brokerage with more leads, maybe you need to look more deeply at your own business plan.
5. Does the name matter?
Brand Recognition. The phrase “brand recognition” came up several times in the Raise the Bar thread. Lots of agents feel that it is important to be affiliated with a large brand—that brand recognition leads to more deals and more business. The industry is a bit divided on this point as many agents state that it is they who the client seeks and not the brand.
The client couldn’t give a hoot whether they are with ERA, Sotheby’s or on their own, because they have developed a value that far exceeds that of the brand. Interestingly, Paul Habibi, a professor at the Ziman Center for Real Estate at the University of California, Los Angeles concurs. In the WSJ article, he states, “the brand used to belong to the agency—now it belongs to the agent.”
For those mercenary agents looking to migrate to a brokerage that will better suit their needs, you’ve got a lot of things to consider. Not only should you be looking to get value from the brokerage, but you may also want to consider that value that you will provide to the brokerage.
In a real estate climate that is forever changing – where you don’t know if your company is going to change names or get sold tomorrow – you need to be a self-sustaining entity that has value whatever the future holds.