Real estate franchise Keller Williams has been growth-obsessed over the past decade, but according to multiple sources, its 190,000-plus associates ranks are filled with former agents and, in at least one instance, even deceased agents.
Multiple sources told Inman that it’s been an unspoken company policy at Keller Williams to keep agents on the roster — long after they are no longer associated with the company.
Keller Williams President Josh Team confirmed to Inman Monday that the rosters of market centers — what Keller Williams calls franchises — across the country are partially populated by agents no longer with the company.
“In January, our leadership became aware of agent count inconsistencies resulting from departures that were not immediately updated in our rosters,” Team told Inman in a spoken statement. “This is contrary to our policy of reporting and our commitment to transparency as a company. As soon as Gary became aware, he took immediate action to reconcile our roster and ensure that this never happens again starting in early January.”
Multiple sources cited that they believe as many as 30 percent of Keller Williams’ current agents — roughly 55,000 agents — are what is known as “ghost agents,” meaning they’re on the roster but no longer licensed Keller Williams agents.
“It’s been rumored by many, and known by some, that most of the rosters have what everyone refers to as ‘ghost agents’ on them,” a source with direct knowledge of some of the inner-workings of Keller Williams told Inman. “It was something that nobody was allowed to talk to, and people were encouraged not to remove them, or if they were going to remove them, just remove a few a month so it doesn’t look like you’re not growing.”
“I wouldn’t be surprised if after January and February when they remove them, there are at least 30 percent fewer agents,” the source told Inman in a later phone call.
Team told Inman he estimates the numbers will be much lower, but not insignificant. He said the audit is still taking place, and they estimate somewhere between 10,000 and 15,000 agents will be removed from rosters.
Keller Williams is the top residential real estate franchisor in the country on agent count, with more than 160,000 agents in the United States and 190,000 agents worldwide, according to its recent third-quarter earnings.
It’s a significant edge over RE/MAX, which has roughly 85,000 affiliated agents in the United States and 123,000 worldwide, according to its third-quarter earnings report. The two routinely compete on transaction volume, but on agent count, it’s not even close.
Keller Williams has a smaller edge over the Realogy Franchise Group, which has roughly 145,000 agents in the United States — and more than 300,000 worldwide. It’s possible that, after the purge, Keller Williams could slip to No. 2, behind Realogy Franchise Group in terms of U.S. agent count. If you factor in NRT, Realogy’s own-side brokerage, Realogy Holdings Corporation has more than 190,000 agents in the United States.
Multiple sources who spoke with Inman also said they heard Keller made the directive at a meeting of regional directors run by CEO and co-founder Gary Keller in January last month.
“I don’t think he understands to what extent the issue is,” the first source said.
The source cited specific numbers, saying a region encompassing the Carolinas has 2,700 agents on its roster when the actual agent count is “just a tad over 1,300.” In California, the region has 6,300 agents and the actual number is 3,800.
Mark Brenneman, the regional director of the Carolinas region at Keller Williams reached out to Inman after the initial publication of the story to provide concrete numbers for the agent purge in his region.
“On December 31, 2018 agent count on our rosters was 8,568,” Brenneman said. “We are completing our month end processing for January and it appears we will end the month with just north of 8,400 agents.”
“In February I am again expecting another decline and we should bottom out at approximately 8,250 associates,” Brenneman added.
A former franchise owner at Keller Williams told Inman the practice of inflating agent count by leaving “ghost agents” on the rolls was rampant and persistent.
“It’s the unwritten rule that everybody knows about and nobody talks about,” the former franchise owner told Inman.
The former franchise owner said the directive didn’t come down from anyone specifically, it was more just part of the growth-obsessed culture at Keller Williams. He said he did believe, however, Keller knew about the practice and allowed it.
“The entire push from the company had been around agent count, obviously everybody knows that,” the former franchise owner said. “What that [obsession] ended up ultimate creating was people would not get market centers renewed, or they would be in trouble and be fined and have problems when they renewed when they weren’t following the rules.”
Team denied that this practice was something that came from the top down and said Keller “100 percent” didn’t know it was taking place.
“Keller Williams international absolutely has never had a policy or endorsed a policy to have agents on the roster that were not accurate, which is why as soon as Gary Keller became aware of the situation he made an immediate mandate to the regions and the market centers to fix this immediately,” Team said.
The former franchise owner told Inman that, when they purchased a Keller Williams market center, roughly 16 percent of the agents on the roster were no longer affiliated with Keller Williams.
“Two of them were dead,” they said. “Literally.”
Former Keller Williams CEO John Davis ran the company’s growth initiative — the company’s recruiting and agent accountability program — since its inception in 2011. Since that growth initiative launched, Keller Williams has added more than 100,000 agents, growing to more than 190,000 agents worldwide, according to the company’s third-quarter earnings.
Davis denied there was a directive under him, to keep “ghost agents” on the rolls to make growth look continuous. He did note, however, that Keller Williams chose early on, to compete on agent count.
“They focused and said, ‘This is where we’re going to win; we’re going to win the agent count,’” Davis said. “A focus on agent count has inherently always been there since Keller Williams started their march towards becoming the No. 1 real estate company.”
Davis did, however, confirm that the practice of leaving ghost agents on the roster was in place at one time, in one specific region. In 2010, the active agent count for Keller Williams was 74,616.
“In 2011, it was discovered one region had a huge issue with these ghost agents,” Davis said.
After purging the ghost agents in the one region that Davis did not address by name, Keller Williams agent count dropped to 69,951.
This specific purge took place before the growth initiative was started, according to Davis, who then said he addressed all the franchise owners in a recorded call — of which he claims to still have a copy. He said he told the franchise owners that their power as an owner is to have an accurate agent count. Inman requested a copy of the recording from Davis but has not yet received it.
“In 2011 … the powers that be, they did the agent count correction,” Davis added, not specifying who exactly he was referencing. “What I did was, I started talking about it on our calls and getting it into meetings and getting into the culture of the organization. Talking about agent count and being accurate with our agent count had never been done before in the history of Keller Williams.”
That directive was given to franchise owners and subsequently passed down to team leaders, according to Davis. He said he doesn’t know if the calls put a stop to the practice, after 2011.
Davis, who is no longer with the company after resigning last month, could not speak to any announcement from Keller that took place in January. He did, however, vehemently deny that there was ever any punishment for market centers that did not abide by the unwritten rule of keeping ghost agents on the rolls.
“While I was there, up until Jan. 7, that did not happen,” Davis said. “Keller Williams International did not do that in any way shape or form … that was not policy, that was not unwritten, that was not any of those types of things.”
Update: Story updated with comment from Mark Brenneman, Keller Williams’ regional director in the Carolinas.