OpinionBrokerage

5 budget items brokers slash to meet modern demands

What low commission and high splits really mean
  • We shouldn't be surprised that it's becoming harder and harder to identify and cultivate branch-level leadership.
  • If money in is sacrificed, then money out must have a commensurate cut.
  • Adult learners are more successful when trainers are skilled instructors who grasp various learning styles and approaches.

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Wanted for real estate leadership positions: Talented and successful real estate agents who would like a far more restrictive schedule, a probable reduction in pay and increased responsibility.

Interested applicants should be eager to share all they’ve spent years figuring out, willing to give of themselves tirelessly to make other people better and be resilient enough to not take it personally when, every so often, recipients of this attention and goodwill leave to join a competitor. (Insert echo here.)

Should we be surprised that it’s becoming harder to identify and cultivate new branch-level leadership in real estate? Of course not.

This job description screams for mediocre bureaucrats who value predictable paychecks more than enthusiastic empire building.

Our profession is devolving into who can do our job and charge the least and who can take the commissions we generate and give agents the biggest piece.

It’s often a call to the base instinct in people that the more they get to keep, the better. Well, now we’ve begun to see who really pays. As we’ve known all along, nothing is free.

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If a company is undercutting commissions to grow volume and out-splitting its competitors to grow its agent count, the bills still need to be paid and the balance sheet balanced. If money in is sacrificed, then money out must have a commensurate cut.

Where, you ask? Let’s pull back the curtain to see the five likely targets where cuts are made:

1. Training

According to research from the Journal of Social Sciences, adult learners are most successful in certain conditions.

It’s critical that those teaching, training and coaching adults are well-prepared, skilled instructors who grasp various learning styles. These leaders should have different approaches for delivering instruction and maintain patience and empathy.

Adult students should be actively involved in their learning with healthy exchanges, small group discussion and a variety of teaching methodologies.

2. Support 

This category includes virtually all the behind-the-scenes services and assistance that often becomes invisible and taken for granted. Invisible, that is, until it’s taken away.

3. Physical setting

It’s true that real estate agents have become more mobile and less dependent on the traditional office setting. It’s also the case that a brokerage is often distinguished by its capacity to host a meeting, to provide a comfortable setting for group work and to professionally welcome clients. Location still matters.

4. Leadership 

One quote from Ken Blanchard’s research captures the impact of leadership: “As a company, we’ve been looking at the connection between leadership practices, employee work passion, customer devotion and an organization’s bottom line.

“What we’ve found is that there is a clear connection between the quality of an organization’s leadership practices — as perceived by employees — and subsequent intentions by employees to stay with an organization, perform at a high level and apply discretionary effort.”

5. Quality 

This is the collective measure of the first four bullets.

When a company or broker’s priorities become a contest of lowest commission and highest splits, the funds needed to pay the bills are funneled from these critical sources.

The impact of drawdowns in training, support, physical setting, leadership and ultimate quality isn’t felt at once. There is enthusiasm from potential agent earnings and roster-building that keep our senses engaged.

Over time, though, any one of these sources compromised causes a drop in quality that clients and eventually agents will find increasingly intolerable. A combination of multiple source depletion and the decline in quality, family atmosphere and professionalism will compound precipitously.

Real estate is a profession, and while it’s important that it remain flexible and change with the times, stripping it of its professionalism and quality will eventually affect us all.

Want to draw more leaders to the business and develop leaders from within?

First, determine what matters to your brokerage and to the profession for now and in the future, and then stay true to these values as your business matures.

Quality absolutely matters.

Brian McKenna manages two residential resale offices for Berkshire Hathaway HomeServices, Blake. You can follow him on Twitter and on Facebook.

Email Brian McKenna.