- Brokerages are going to have to come up with a system of transition for those agents retiring the industry.
SAN FRANCISCO — Brokerages do not have a plan to transition retiring agents, which is worrying when 40 percent of National Association of Realtor (NAR) members are currently 60-plus years old, said Joe Rand, managing partner and general counsel, Better Homes and Gardens Real Estate Rand Realty, at Inman Connect San Francisco today.
He stressed that the industry would be losing a generation of particularly good agents.
“Those agents are retiring who came of age in the 1970s were born in the 1950s. This was a great generation who were there at the birth of the modern real estate industry when franchises began springing up and we don’t have a plan for them when they retire.
“They just leave — ‘goodbye!’ — they are agents who built something that’s worth money, but we’ve never set up a system to sell that.”
The most common system for retiring agents involves receiving referral fees from an agent they have handed over their book of business to. According to Rand, this tactic is “horrible,” and “always ends up in dispute.”
Brokerages should be working out a better deal for outgoing agents, he argued.
“When we want to sell our business (as brokers) we have a system. We’ve got a brand, a database, website, email systems, physical assets — so does an agent, but of course there’s a big difference.
“For the real estate agent retiring, her best asset is her, and she is out. That makes a difference. Her business still has value, there is still stuff worth buying, but it’s just not the same valuation model.”
Rand suggested a deal wherein a retiring agent is given 20 percent of all the business that happens after she or he leaves, depending on the conversion and retention rate.
He said brokerages would find their own solutions to suit them, but they need to do it now.
“You guys have agents leaving the business; you need to sit down and find a way to transition their business to somebody who will be in the business longer.”
He urged brokers to transition agents well before they made their exit, “so it doesn’t go away.”
“Go find retiring agents and suggest that you will find someone to take over their business.”
If there is no one in your brokerage qualified to take over that book of business, recruit a good agent on the back of it, he suggested.
“It’s a great opportunity,” he said.
“Be aware this is happening. You need to do something to transition from the greatest generation of agents to the next.”