The first, and arguably the most important, hire you should make as a real estate agent or entrepreneur is an assistant. It’s your first point of leverage. This hire allows you to start working in your strength zone and on the 20 percent of tasks that impact your business’s bottom line most.
Once you’ve gotten that hire down and start to see the return on the investment in your business, many agents begin to consider their next point of leverage. Often, this comes in the form of another admin or operational staff member. That’s great! It keeps the agent working on lead generation, building client relationships and closing deals.
However, there will come a time where real estate operations are handled, and the real estate agent wants to start leveraging the business’s sales side. Two main options emerge, and the question becomes: Should you grow your team and business with real estate agents or with inside sales agents (ISA)?
Well, on paper, ISAs look great. Many agents do back-of-the-envelope math and use the gross number to determine whether or not to hire an ISA. For example, the thought process goes: “If I pay an ISA 10 percent of each commission I make, along with a small base salary, all I need to do is close three or four deals a month to cover the expense of this hire and start seeing a profit.”
When you see those numbers, it looks like a no-brainer. Plus, hiring an ISA has a lot of pros that are hard to ignore.
Pros of hiring an ISA
- They are an employee, and therefore, as their employer, you can set their hours and daily and weekly structure.
- It’s easier to track their numbers, which provides more clarity.
- It’s easier to hold them accountable to concrete expectations and deliverables.
- It’s a value-add to other agents on your team and can be a great retention tool by providing warm leads to your agents.
- ISAs offer speed to lead because the ISAs one-thing is lead generating and capturing leads.
Hiring ISAs works. Many agents and teams have built empires on the ISA model and building out large ISA divisions. It can seem like the perfect solution, especially if you aren’t comfortable with or skilled at hiring high-performing, highly accountable agents. However, like with any decision, there is a flip side.
Cons of hiring an ISA
- Although the math at first glance looks great, many agents don’t account for the cost of hiring, recruiting, unemployment insurance, payroll taxes, office equipment, health benefits, etc. You can add 20-30 percent of their base salary in expenses.
- If the ISA does not hit his or her number of appointments set (and held), the hire can become very expensive — fast.
- It can take about six months before you start to see the return on investment for an ISA hire, so you have to be committed for the long term.
- Naturally, ISAs want you to compensate them for the lead’s procurement, and depending on the comp plan, agents don’t want to pay the ISA for the lead. If both agents and ISAs are calling leads and potentially talking to the same people, there can be some confusion and conflict between the ISAs and agents over who is the procuring cause.
- If not done correctly, the handoff between the ISA and agent can lead to client confusion and potentially even the loss of a client.
- If you choose to pay for the ISA’s licensing and real estate dues and fees, you could be out a decent amount of money if the ISA doesn’t work out.
The choice is yours
All of that said, should you hire an agent or an ISA? The choice is up to you based on your natural behavioral style, your team culture and the business model you want to follow.
In my opinion, the best place to spend your time and energy in the current marketplace is nailing your team’s culture and then hiring the right agents who want to be a part of your culture of accountability, models and execution (or whatever your culture is — that happens to be ours).
Then, as you start to generate profit from the business (this means income from the other agents on the team, not job income from the deals you do yourself), you can reinvest the profit into ISAs who can systematically manage and follow up with your leads and database.
Your ISA will work in conjunction with your operational and administrative staff (your first point of leverage) to ensure your team is servicing your database at the highest level.
In turn, this leverage will allow you to work with the clients you choose, or maybe just focus on listings, or leverage yourself entirely out of sales and work on leading the business. It also allows you to expand into additional markets or work on ancillary business opportunities such as property management, staging or coaching.
Real estate agents are still the heartbeat of a real estate business. When considering whether or not to add ISAs or agents first as your team grows, consider what type of business and culture you want to create. I think of ISAs as valuable staff members who can serve as significant leverage to my agents, but that means I have to have extraordinary, accountable agents first. It’s always agents first in my book.
Adam Hergenrother is the founder and CEO of Adam Hergenrother Companies