Real Estate Blog - Should agents recruit other agents?

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Should agents recruit other agents?

Should a real estate agent be involved in recruiting other agents?

Some company models encourage or even expect agents to recruit. Why? First, it saves the company money and marketing expense if existing agents are enlisted to help grow a company. Even if a company offers a profit-sharing scheme to agents who recruit, the net result is a winning one for large companies.

RECRUITING OTHER AGENTS IS A LARGELY UNREGULATED ACTIVITY UNDER MOST STATES' LICENSE LAW.

A lack of regulation regarding recruitment may have helped to contribute to licensee overcrowding in recent years.

How much of any state's licensing course is devoted to recruitment?

How much license law is aimed at preventing recruiters from making false or misleading statements in order to recruit new agents?

How many agents were lured by recruiter promises of easy commission earnings and the potential of a lavish lifestyle during the past decade?

NAR has been relatively quiet on the subject of recruiting. Since NAR is a trade association that benefits when membership increases, they're unlikely to have much incentive to get involved.

Company recruiters have been given the freedom to do pretty much whatever they wish in order to recruit new agents. This includes misleading advertising ("we're a 100% commission company") and other inducements designed to fill desks, build new offices and collect desk fees.

Maybe recruiters should recruit and agents should stick to listing & selling. Recruiting creates conflicts of interest. And it also tends to divert the agent's attention from the practice of real estate. We're not licensed to be recruiters.

Not all real estate answers can be found on Google.

Let us help you gather the information you need to achieve your real estate goals. Contact Wayzata Lakes Realty today at 612.670.2539.

Eric Kodner is a luxury property specialist and real estate educator in the Minneapolis & Saint Paul area with a unique perspective on the Twin Cities real estate market. Wayzata Lakes Realty LLC is a member of the LuxuryRealEstate.com broker network.

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Posted by Eric Kodner, Lake Minnetonka Homes & Madeline Island Real Estate on 06/11/2008 05:09 PM

Comments (12)

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12 Comments on Should agents recruit other agents?

JUN

2008

I think it should be regulated to a certain degree. I know lots of people lured by big bucks and end up in debt six months later and disappointed in real estate.

JUN

2008

Gene,

That would be one of my concerns also. Some companies ran amok recruiting people because they were engaged in company-building. They had rapid growth goals that could only be met by taking on a large number of agents in a relatively short time frame.

The public isn't served by this conduct, because the marketplace is flooded with inexperienced, inadequately-trained people who are there to meet a quota. And the new agents lured by "big bucks" are being deceived as well.

Whether NAR cares about this or not, individual states should be taking a closer look at what went on and how it should best be regulated.

I left a 'recruiting' company as it wasn't a good fit for me. When you have a big company, why in the heck would you let those not very qualified recruit for you (aside from the $$ aspect)?

Susie -- Here's your answer. It's all about money.

You own and operate a mega-franchise brokerage company, or a regional territory (maybe 5 to 12 states) for that company. The company wants to do battle with the "big five" nationwide. And the company's goal is to open say 100 to 200 (or more) new offices per calendar quarter over the next two years.

Recruitment marketing will cost you tens of thousands of dollars, maybe more. Besides, you need bodies to fill desks and cubicles. You're not looking for super sales agents. At ten grand or more per agent, per desk, an eighty-agent office could potentiall bring in as much as $800,000 annually in desk fees, without cashing a single commission check. The $800K is cash flow. The cash can be leveraged to buy new office buildings, to renovate an existing office, pay for a national ad campaign or to rent a Class A building in a prestige location. It also pays for a few very nice salaries (to regional managers, in-house trainers and so forth).

The fast-track growth allows the company to advertise themselves as the "fastest-growing new nationwide company in the United States". If the company is contemplating going public with a stock offering, they can leverage the buildings, desks and bodies (desk fees) to show a huge cash flow on their books. Follow this formula for three to five years and you may be able to sell the company for perhaps a hundred million dollars or more.

There is one company that started to show up all of a sudden around here abput a year and a half ago...It seemed like all of a sudden they were everywhere! It was annoying to usbecause the names were similar.

We were INUNDATED wtth phone calls from a recruiter..it was infuriating! eventually we complained to my Broker enough he called them.

If I meet anagent ireally enjoy..I may mention in passing that if they think they might like a small office beter...they should call my Broker!

JUN

2008

I work with one of those companies that is experiencing rapid growth and encourages agents recruiting other agents. The agents come over for 2 main reasons:

1) The Personal Relationship which is the core of all Sales.

2) The Excellent Training and genuine concern colleagues have for your success.

No sink or swim business models here, Here is the system, Here are people that are doing it, learn from them and they will support you.

I do not rely on recruiting as part of my income source but when I see a struggling Agent who needs help I encourage them to check us out to see if they can get what they need to succeed. I dont see much need to bother old war horses set in their ways, with all their signs already paid for but the new young talent you bet, they could do a lot worse.

Joan, I've been pestered by recruiters every so often. And I've had them try to raid my office as well.

With the broad slowdown in real estate nationwide, the ardor for recruiting has cooled a bit. It will be back when real estate rebounds.

What concerns me is that it is largely an unregulated activity in our industry. Everything else we do is regulated and part of license law and CE. Why is recruiting uniquely exempt? Who is it that wants this to be exempt and what is their agenda? There is an ethics issue here that deserves to be discussed.

Scott, let me begin by saying that my comments are not directed at Keller or any other company in particular.

Here is what troubles me with recruiting-type business models. If, as you say, the lure and the main reason agents sign up is because of superior mentoring, then why bother to sweeten the deal with recruitment bonuses or profit-sharing? If it's meaningless, why is it used as a lure?

"Personal relationships" aren't unique to ANY particular brand. Sorry, but they're not. There's no objective proof that ANY company will offer a personal relationship experience to new agents which would be superior to that at another company.

As far as excellent or superior training is concerned, a couple years ago, I taught a series of classes at a nationally-known company which is based upon a recruiting model. I was invited to teach at several of their offices and they even approached me to become a company trainer. I met their trainer staff. Not one of their trainers had any experience teaching outside the company. I don't know how they were selected, but they did not have any monopoly on skilled trainers.

I've met trainers with big companies who were, shall we say, not experienced educators. For the most part, these were not people who possessed a teaching certificate or who had any post-secondary (adult education or college) teaching experience.

I meet a lot of men and women in real estate training who are nice-looking, well-dressed "male & female model", "Barbie & Ken" types who look great in front of a class. Some of them have even joined Toastmasters and some have taken a community education class on public speaking. But they're not great instructors or trainers. Instead, most of them are motivational speakers. There's a difference. And the failure of real estate companies to recognize that difference is one reason why the industry is suffering today.

JUN

2008

This is something I think about as well from time to time. I know that this definitely makes it easier for my company when we reel in a great agent from another company, and they do give us an incentive, but still my job is to list and sell houses not recruiting other agents.

I have dropped a hint with acouple of agents from other brokerages that I enjoed working with, and even invited them to a sit down, but if they don't want to hear it, I won't push them. I certainly know I don't especially like getting calls from other recruiters, and there are some companies in my market that employ professional recruiters.

Andrew, if agents knew how much companies are making off each recruit, they'd be astonished.

The referral "incentives" paid are, of course, a small fraction of the value received by the parent company.

I meet a lot of men and women in real estate training who are nice-looking, well-dressed "male & female model", "Barbie & Ken" types who look great in front of a class. Some of them have even joined Toastmasters and some have taken a community education class on public speaking. But they're not great instructors or trainers. Instead, most of them are motivational speakers. There's a difference. And the failure of real estate companies to recognize that difference is one reason why the industry is suffering today.

Eric the beauty of Keller Williams is Top Agents who are succeeding will mentor you with little or no expectations in return. The classroom model works for some, I spent the entire day, yesterday in Mandatory Professional Development classes, there were quite a few heads on the desks by noon. Courses hosted by trained teachers with experience in the Industry organized by the Greater Vancouver Real Estate Board. I got more out of lunch with a couple of Realtors discussing marketing ideas casually and real life experiences they had had with respect to the topic of the Course.

Everyone learns differently I suppose, Im not much for classroom lectures, I'd rather simply ask the person that is knowledgable in what I seek or shadow them and my office thrives on this atmosphere, but there are courses if you like :)

JUN

2008

Scott, there are always differences in learning styles among agents. If being mentored is what works for you, I'd say stick with it.

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