The pros and cons of brand new agents
By Desiree French
Since the real estate market has softened and the glory days of yesteryear have rapidly dissipated in many markets across the country, more brokers are looking for ways to jumpstart the careers of brand new agents who can contribute to their bottom line.
“It’s critical to recruit now,” says Bill Kessler, president of Century 21 Affiliated in Madison, Wisconsin. “Most of the agents in the industry got in five to eight years ago. They don’t have the skill sets needed for this disastrous market. The new agents come in with a fresh slate and many times can serve the needs of the market better.”
The newcomers are unaccustomed to the old ways of a booming market. So they can be acclimated and indoctrinated more easily into a company’s corporate culture and the new market mindset needed to stay afloat in today’s fickle marketplace.
“They don’t come with that terrible stench that this is a bad marketplace,” says Cliff Baird, a coach, consultant, and creator of the online agent recruiting system RealStar. “If you can get great experienced people keep them, but this market pushes you for brand new people primarily because it has gone down so suddenly and rapidly.”
But recruiting, as does all parts of the business, comes with a price tag. While it’s difficult to pinpoint the average dollar investment needed to recruit new agents in the face of a slowing market, Kessler says the cost is huge-about $10,000 per agent.
This includes the “soft cost” of people’s time to train, manage, and help new associates get on their feet, basically overhead that may already exist.
The Keyes Company in Florida, for example, maintains a trainer and two training centers, where its two-week Sudden Success training program is taught. It costs several hundred thousand dollars to maintain both, but the more people the company can bring in, the lower its cost and, ultimately, the greater its return on investment.
All of this makes screening potential candidates more imperative. In many cases, this may mean using online assessments for recruitment, such as Real Estate Simulator, as well as cognitive and personality assessments to weed out incompetent, unmotivated, or inconsequential candidates.
“At least when they make these investments,” says Kessler, “brokers have a better chance of finding someone with success.”
Mike Pappas, president of The Keyes Company, agrees. His new sales associates are identified using the Real Estate Simulator. The company also has recruiters who call past and current applicants listed with the real estate licensee office. But in the end, he says, “If you don’t have the right environment, you won’t attract the right people. You need to create the environment for success through training and technology. Then the abilities of associates will determine their success.”
How brokers measure success varies as widely as the listings on the MLS. Most brokers, however, set minimum goals and expectations for agents based on the objectives the brokerage firms themselves hope to meet to maintain or obtain profitability.
So while one real estate firm may give agents 90 days to drum up business, another may allow as few as 30 days or as many as 180 days. And while one may insist on $2 million a year in volume, another may push for $3 million or more.
Pappas says agents at his company are expected to produce $2 million in volume after 18 months and have one listing per month. And they should have five, six, or seven ways to make contacts, using everything from their sphere of influence to prospecting.
“The number one issue for success or failure for all associates is the contact,” he says. “If you make contacts, you will be successful. If you don’t, you won’t.”
Baird believes goals and expectations should never be tied to the number of listings and buyers that an agent produces. Setting preconditions or metrics for measuring an agent’s success, he contends, only generates “built in failure patterns” and creates undue anxiety and stress for new sales associates who are otherwise self-motivated, success-oriented, and hardworking.
Instead, he favors a system that recognizes the number of people agents contact.
“What’s important is the time invested in prospecting, the behaviors that create results – not the results themselves,” he says. “In the end, that’s all you can hold people accountable for. Babies don’t walk before they crawl, they don’t crawl before they turn over. You can’t expect people to run before they walk; they need time to turn over.
“What I would say to someone in the beginning is ‘I’m going to make you a promise. I’m going to make you successful beyond your wildest dreams – if you’re willing to make it happen.’ If you tell them they have 30 days, they’re thinking about that, and then their failure becomes a self-fulfilling prophecy.”
Ultimately, Baird concedes, it’s about whether the agent has put forth the extra effort to get the results. “If it’s not working out and they were trained properly, then it’s time to cut your losses. In 60 days if there’s absolutely no activity, let them go. In 30 days, if they’re not putting their good foot forward, let them go.”
Kessler gives new agents at least six months to show results before cutting his losses, although some agents will quit on their own before then. According to Pappas, market conditions eventually determine an agent’s longevity. “In this market, you shift the wheat from the chaff. The stronger, more productive associates are gaining market. Those less focused are falling by the wayside. Slackers at one time could find a deal in the past, but not now because people want action and success.”
Many new agents, who are critical to a company’s plan to deliver profitability, are now required by brokers to take Brian Buffini’s 100 Days to Greatness curriculum. The new agent training program teaches the fundamentals of lead-generation by referral and is used by brokers to determine who can make it in this business and who cannot.
Agents are assigned specific action steps every day over the course of the 14-week program. The expectation is that they will have one sale and two pending transactions in 100 days.
Dermot Buffini, executive director of corporate relations for Buffini & Company, says the company has even seen agents round up an average of five transactions in 100 days. “For someone who’s new, that’s tremendous,” he says.
Meanwhile, existing agents also play a tremendous role in helping to jumpstart the careers of newcomers. A mentor can instill confidence, teach new agents how to keep a dream alive, and show them, for example, how to handle FSBOs and rejection.
Not just any agent mentor, however, will do. “Brokers have to be very careful in their criteria and the selection process,” says Buffini. “It has to be a stellar agent who truly wants to help someone and knows the [corporate] culture.”
Otherwise, it can be a two-edged sword having veteran agents train newcomers; they can teach them good tricks and bad tricks. The Keyes Company guards against such mishaps through its efficient field network. Under its mentor program, about 100 agents are assigned to help new sales associates get off to a good start.
In fact, many brokerage firms, such as Keller Williams, Exit Realty, and Realty World, are growing exponentially because of the financial rewards they offer veteran agents who mentor or support new blood. This can be particularly helpful in a sluggish market when more agents are less willing to share leads and information.
“We’re really not in this business to become a social clinic for the emotionally obsessed. We’re in this business because it can be beneficial for us; there’s financial gain,” says Baird. “Veteran agents who mentor can get from 10-30% of what a new agent brings in. Sooner or later, an individual who’s new learns a little how to do the math and can figure out when to jump out of the nest and begin to do this himself.”