To say 2020 has been eye-opening would be an obvious understatement. One thing this pandemic brought to brokers this year is clarity. For some, it spotlighted agents on the team who had the grit and resilience to power through and prospect during months of shutdowns. For others, it brought to light the chinks in their armor and flaws in their systems.
If you had issues in your business prior to 2020, they most likely didn’t go away. In many cases, the pandemic may have accelerated those problems. Without the excuse that you could deal with them later, these issues may have been pushed front and center.
Agent retention and the critical lack of inventory placed some brokers in a choke hold and forced them to confront these problems sooner than they were prepared for. In many cases, the pandemic made them even worse. If you think you had recruiting or retention issues last year, 2020 amplified that problem. What I’m seeing is a trifecta of dangers for brokers who want to grow their numbers.
Lesson No. 1
First, in many parts of the country, the lack of listing inventory means less sales for the same herd of buyer’s agents trying to find their clients a home. Even in rural Pennsylvania (not typically a multiple-offer area), this summer, we saw buyers fighting to win bidding wars.
A decade ago, we had four times the number of houses for sale in our area. Escalation clauses made a return to the market, and desperate agents urged buyers to drop inspections or appraisal contingency clauses to win the house.
What follows next is natural: less houses to sell means a drop in sales numbers and more agents fighting for less deals. I ran numbers in my area, and some of the largest firms are down in closed sales by more than 25 percent. As the brokerages fight to claw back market share, they also need to pay attention to another metric — head count.
Lesson No. 2
In my own firm, I count dollar volume and sides closed as being more important than head count. I personally want an office of highly productive, full-time agents. Minimum production is 24 sides per year in my office, but I know this is not “normal.” Some firms count head count as their most important metric. An office with declining sales numbers can’t — and will not — be able to hold onto their prized head count.
Low producers will leave the business as they won’t be able to sustain the office and board or MLS fees. Middle producers may become dissatisfied with taking home less than last year. Even if they don’t drop their licenses completely, they may look to switch offices to try a new change of pace.
Top producers will be the ones left standing and may stay at their office as their status is even more cemented in the brokerage’s success. The broker’s top agents won’t be dropping their license because they lost a few deals this year, but they may recognize an opportunity to squeeze more out of the brokerage in order to be convinced to stay. If they don’t get it, another broker may make it worth their while to leave you.
Lesson No. 3
The final piece of the puzzle — the third leg of the triangle — is what I see as a race to the bottom for brokers. If the lack of inventory cuts the number of sales, which then leads to reduced income for the agents left in the business, who can provide the cheapest office for agents to hang their licenses?
I have a leadership role in our local board and sometimes field calls from our members looking for advice. An agent called me recently to complain that his broker was requiring him to upload documents online and produce a fully electronic file for compliance purposes.
He had switched to that office because they had extremely low fees. He wanted an admin or staff member to create his electronic files so he could get paid, but he didn’t understand that his flat fee model didn’t cover that service.
There will always be agents looking for cheaper and cheaper places to hang a license. Some agents want and need an office staffed with a marketing center and transaction coordinators. Others will do just fine with an online-only model or one with limited services offered. But agents can’t have it both ways.
Brokers of all brands — independents and franchises — face this challenge. You have to prove your value to your agents to keep them at your office, and you must convince recruits that you have more to offer than the guy down the street. This is extremely hard to do with agents who are focused only on the monthly fee or split.
This always was a challenge, but as we move from 2020 into 2021, it became magnified. Agents are looking now at what they have made so far this year and calculating what they may be taking home for 2020. Some will leave the business at the end of the year. Some are looking to make a brokerage switch.
Now is the time to take inventory of your team. Run each agent’s 2020 numbers year to date. Where are they in respect to their goals? (You do know each agent’s goals, right?) Whose numbers are off, and how much? What is going on in your team?
I urge you to touch base with each and every agent to see how they’re feeling right now and how you can help them finish up the year on a positive note. Do you even know what’s going on with your agents’ work-life balance or home situation? We’re in such unfamiliar territory right now.
For example, look at your agents who have school-age children. How are they handling back to school? I’m in the middle of trying to hire a new admin staffer and keep running into people who are unemployed yet can’t come into the office because of child care issues. I’m watching my agents juggle home-schooling and hybrid school arrangements and closings. Everyone is stressed.
Life is so complex right now. If you want to keep your team intact — let alone grow it in numbers — you need to keep your finger on the pulse of what’s going on. The fourth quarter is coming up quickly, and typically, brokers hit the recruitment circuit right about now.
Before you do that, take a long hard look at your own operation. Make sure your own house is in order and that you’re taking care of your staff and agents.