Should you raise the bar with your hiring techniques? This topic is explored in the following Power Broker Roundtable, moderated by J. Nicholas (Nick) D’Ambrosia, Liaison for Large Residential Firms Relations, NAR and Broker of Record, The Long & Foster Companies, Chantilly, Va.
Panelists: Richard (Rick) Haase, President, Latter & Blum REALTORS®, New Orleans, La.
Lori Arnold, President/Owner, Coldwell Banker Apex, Realtors, Dallas, Texas
Gary Scott, President of Brokerage, The Long & Foster Companies, Chantilly, Va.
Nick D’Ambrosia: Agents who close a lot of transactions make more money than those who don’t. Agents who close a lot of transactions are a boon to the broker’s bottom line. And here’s another fact to consider: it’s quite likely that experienced agents who close more transactions tend to make fewer mistakes. So, as a broker, when it comes to risk management, raising the bar on the agents you hire and the agents you retain may have a significant impact. Or does it? How important is it to set meaningful production standards for your agents—and does doing so lower your risk of lawsuits or complaints? For answers, we’re talking to a panel of brokers with nearly 100 years in the business, collectively. Rick, how does this issue work for you?
Rick Haase: I’ve heard it said that 80 percent of a company’s real estate business is done by 20 percent of the sales force. I’m not sure that’s entirely true. But even if it is, letting the less productive 80 percent of agents go would put any company in the red. For that reason, I think, even brokers who say they set strict production standards don’t routinely stick to them. It’s handled on an individual, case-by-case basis. For me, the real key to raising the bar is in training, education, and supervision. It’s the best-trained and best-supervised agents who tend to make the fewest mistakes.
Lori Arnold: I would agree with that. In our company, full-time commitment is important, and we set our minimum production goals for agents to something in the range of 10 or 12 transactions a year. We don’t hire part-timers, and we don’t want agents who are not career-minded. Productivity is woven into our company culture—and we know from experience that ongoing education and training is vital to the success of busy, active agents. Great coaching is the single most effective way to raise the bar for anyone, and especially for low performers.
Gary Scott: For us, it’s about what your company stands for—and that’s quality. Activity leads to more activity, success to more success—so while we have not traditionally set minimum production standards, we are very big on training and ongoing education to make sure our agents are among the most knowledgeable and most capable in the business. Our TRID training, for example, started six months before the original target date. Our agents were so well prepared that we almost hated to see the start date delayed—and I think that’s typical of our outlook. Well-trained agents do the best work and are less prone to errors or omissions.
ND’A: Which brings us to the issue of risk management. NAR provides plenty of material on establishing and maintaining core standards—as do many local associations. But if setting production standards doesn’t go hand in hand with mitigating risk, what does?
RH: Mistakes are costly, no doubt about that. But production isn’t always an indicator of good service or attention to detail. Again, supervision matters. Oversight matters. I’d rather have my agents out there doing what they do best and have other people charged with dotting the “i’s” and crossing the “t’s” if necessary.
GS: In our firm, we close some 90,000 transactions a year—and the number of complaints or potential lawsuits we face is negligible. I attribute that to our focus on continuing education and to outstanding leadership at the branch level. As long as we continue to operate in that mode, I don’t worry too much about risk.
LA: I don’t either. To begin with, we have people reviewing every document—every contract, every agreement—so mistakes are rarely overlooked. More important, though, is that our sales force is trained to mitigate risk in a very basic way; by communicating with their buyers and sellers so that there are no grounds for misunderstanding. What’s included, what’s not included, expectations of the buyer or seller, condition of the property at the time of sale—any area where a buyer or seller could possibly misinterpret.
ND’A: So visibility, communication, continuing education and oversight. No matter where you set the bar, that’s what minimizes risk. NAR has a number of risk management resources available at www.REALTOR.org/topics/risk-management.
LA: Quality in, quality out. It’s the thread that makes everything work.