What to do when agents are slumping By Eugene L. Meyer
If a high tide lifts all boats, a slack tide can leave many aground, and so it goes, too, in real estate. But how do you get the grounded boats off the shoals or, in homes sales, the non-producing agents back in the game?
In boom times, brokers agree, it’s a non-issue. But the question is more than academic in a slow market, when customers aren’t knocking down doors in a frenzied rush to buy before already inflated home prices soar even higher.
Back to the Beginning “Sometimes there is no answer for that,” suggests Kelli Todd-Amundson,
Manhattan Beach, California. Or, she adds, there is a one-word answer: “termination.” But just as often, Todd-Amundson and other brokers say, the answer is three words: “Back to basics. “The answer lies in consistency,” she says, “choosing whatever works for you and sticking with it. Back to basics. That’s really what’s working.”Ralph Roberts, a Detroit-based real estate coach and broker, also subscribes to the back-to-basics approach. Look back at everything that made you successful, he says.Give yourself an order to get out there and pound the drum harder.Steve Baird, CEO of Chicagos Baird and Warner, sounds the same theme. That’s absolutely what it’s about, said Baird, whose company has 1,850 agents in 31 offices.Our feeling is this [market] is an opportunity for agents finally to get back to and get trained in the fundamentals, Baird says. When the market is really good, they basically wouldnt listen to you. They didnt think they needed to prospect, because business came to them.
Now, they are actually coming to us, saying, We need the tools, the training. At Baird and Warner, he says, “We are doing more training than ever before. This kind of training is really basic, fundamental prospecting, cold calling, getting price reductions, all the things good agents do. This is something we’ve always done. But now agents are more receptive or willing to listen than before. For Many, a Brand New Market He finds that younger agents are most receptive, but all need help navigating this part of the cycle. What’s different now, he says, is that the sellers market lasted so long, few active agents have been through a down market.
If you’ve worked for the company less than 15 years, in our Chicago market, you haven’t been in a down market. Meanwhile, the process of letting agents go continues as before. All our agents are supposed to be on a business plan, Baird said. If they’re not doing things we think they need to do be successful, we’re asking them to find a new career. But that’s no different from what we do all the time.
That is a forever process. Still, the down market has created a new urgency for brokers with too many under-producers. Over the past 18 months, we’ve eliminated some who don’t belong in the real estate profession, says Todd-Amundson, whose sales force has shrunk from 700 to 580 agents.
This has been a signal to others to get serious. Meanwhile, Todd-Amundson has been holding lunches with top producers to highlight what makes them succeed, and then using that information to assist othersnot just new agents unaccustomed to todays challenging environment but also underperforming veterans, who may be going through a divorce or nearing retirement. For agents who in the past have been good performers and are in a slump, she says, All Cities offers a coaching and mentoring program. It’s the coach’s job to help the agent set goals and meet them.The agent then has two chances to make measurable progress.
The simple message is back to the basics. Specific Steps to Take Roberts, who coaches agents all over the globehe recently spoke inNairobi, Kenya, where, he said, the issues are not all that different says he is on a mission to help others sell real estate. Experience, he says, has helped him to succeed in all markets. For starters, he makes 100 phone calls a day. It takes a lot less time than you’d think, Roberts says.
Often you’ll get voice mail and leave a message. If the market is down 20 percent, it doesn’t mean you have to be down 20 percent. Roberts says he has 10,000 names on his Rolodex and advises all agents to do the same. Once a month, they get an e-mail; every third month, they get a handwritten note, he says. The key, he says, is to know 66 things about each customer the wife’s and kids names, their pets, where they vacation, so when you phone you’re not making a cold call, you’re making a warm call. He even makes a point of calling husbands a week before their anniversary to remind them of it, and we call our past clients and wish them happy birthday.
He asks underperforming agents, Did you quit sending out thank you notes, putting out Sold signs, putting out 10-10-20 notices,letting ten houses on each side and 20 across the street know about your listing.The more people know what you’re doing, the better. Candor also pays off, Roberts says, even if you are telling clients what they might not want to hear. I’ve told at least 50 families in the last six months that we’re going to have to wait 18-24 months to sell their property, and not one put their house on the market with someone else, he says.
Even agents who succeed in down markets have slumps, he confides. So I teach people to get out of your chair, he says. I have slumps three or four times a day. After all my calls, my e-mails, I kick myself in the butt, take a walk around the building or outside and come back and get refocused. I want to be working100 percent.
At Risk: Broker Profits The bottom line in all of this is profit for the broker. Industry consultant Kenneth L. Jenny estimates it costs a broker $18,000 to $20,000 a year in overhead (such as rent, insurance, phones, faxes) to carry each agent. If the agent isn’t producing and paying the broker at least his or her overhead cost, the broker’s balance sheet takes a hit. Traditionally, brokers shoulder the overhead costs but take a larger percentage of the agent’s sales commissions. RE/MAX uses a different rent-a-desk model, where the agent keeps a higher percentage but pays the broker a monthly maintenance fee. Either way, there’s not much difference in cost; it’s just how you pay it, says Todd-Amundson.
I think there’s a dilemma in the industry, says Jenny, who used to sell real estate but now advises others on marketing and media strategies. Lower-producing agents turn over a higher percentage of their commission to brokers, so there is a love-hate relationship with them. Higher-producing agents may keep 85 or 90% of the commission, with the brokerage keeping only 10 or 15%. If I’m a broker, do I keep a few who produce few deals and collect less, or keep higher producing agents and keep less he asks. You must reach break-even in the real estate brokerage environment. If you don’t, the desk is costing you money. At a minimum, every broker is trying to make every desk break even or make a profit.
New agents, he adds, must, must have constant coaching. If management is not doing it, they need to find a coach wholl work with the agent. The reason is twofold: to cover the desk cost and to assure the agent sufficient income. Agents who don’t do deals usually leave the industry, Jenny says, because they didn’t get the help they needed to produce a successful marketing and sales program for their business. In real estate, Jenny says, There’s no Hamburger U like McDonalds has to train their restaurant workers. Operations are customized market to market. No one size fits all. In the current market, it’s even more challenging, because the size of the pie has changed. Transactions are no longer flowing through the front door, so you have to work harder, or get agents with a foothold in the business. Fewer deals always go to more experienced agents because of their reputation and relationships.
The Ripple Effect of NegativityLeadership IQ, a management training and research firm inWashington, D.C., has its own take on what makes some people under-perform, and its largely tied to the attitudes of co-workers. The firm posed 45 questions last year to 70,305 executives, managers and employees in 116 organizations last year. According to CEO Mark Murphy, it all boiled down to this: What kind of impact are underperformers having on your workplace Eighty-seven percent said working with a slacker actually made them want to change jobs; 93% said it had hampered their development or decreased their productivity.
The slacker problem has a direct impact on people working with slackers, Murphy concludes. Executives were further asked, To what extent does you organization do a good job in dealing with these folks Only 14% said they did. In follow-up questions, 6,241 workers were asked the characteristics of low-performers. The biggest problem was attitude.? They were negative, territorial, complained a lot, Murphy says. Often, people with the most negative impact have some of the best skills, but their attitude is so difficult it has a toxic effect. And that could sink the boat, or beach a whole fleet. In all industries, there have been movie stars, says Todd-Amundson. In real estate, there are big egos.
We have to figure out a way to deal with those and see if they are a good fit. In an independent contractor environment, it’s important to have good camaraderie. The queen bees we let go, but it is a real tough decision to make.?