I’ve worked with a lot of independent real estate agents and real estate agents under brokerages and have observed firsthand how some brokerages do not care about their real estate agents. Sure, from time to time, they may give their agents websites with a generic real estate web design, maybe a couple of leads here and there but in a competitive market, that may not be enough.
You see, an average broker has about 42% of churn with their real estate agents. The term trend or turnover in businesses measures the amount of churn or turnover of customers and employees.
I remember a story back in high school, and remember the dean during our orientation, he said, look to the left of you, look to the right of you, look in front of you, look behind you. And he said by the time you become a senior and graduate, chances are maybe two or three of the people that you’re looking at will not be here anymore.
I think the 42% churn rate of brokerages, resembles the exact same thing. Meaning if you’ve joined a brokerage, chances are two or three of the people that you’ve met at the point of you joining the brokerage and maybe a month or a quarter or a year from that particular point in time, they’re probably not going to be there now. This can be caused by a number of different reasons. Some of these agents that jump on board into these brokers, they’re really bad at time management or they’re looking for mentorship and they’re not getting the right support, or they’re leaving because of bad splits.
The list can go on and on, but really the point here is that the brokerage, they’re very well aware of this number. I’m using 42% as a generalization, but quite honestly the number is quite high. In order for me to really help you understand why your brokerage doesn’t care about you.
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Comparing Brokerage Business Model vs. Agent Business Model
We unpack and peel the onion to look at the brokerage model and compare that to the agent model. The analogy I would like to use is gas versus electric. Gas, being the brokerage model, and electric vehicles, being the agent model. Remember all businesses are modeled after a very simple principle that they need to generate revenue in order for them to progress in order for them to move forward.
Now the big difference between the agent model versus the brokerage model is really the fuel, right? The fuel for the brokerages is the real estate agents. The agents are fed into the brokerage machine with the expectation that they’re going to close deals and generate revenue. The brokerage is going to make money and it’s going to continue to produce. It’s going to grow. It’s going to provide.
But here’s the kicker, the exhaust of this gas machine is the agents. At the end of the day, the point of this machine is to generate revenue, to make money. And if an agent doesn’t actually do any transaction, they’re pretty much kicked to the curb. They’re the exhaust.
Conversely, we have the agent model, the electric vehicle model, where there really isn’t any exhaust because the idea here is that we want to feed the fuel into the machine, which is clients. And really your job as a real estate agent is to get your client to their goal.
Whether it be, purchasing a home or selling a home, selling a home to purchase a home, or maybe finding a lease or any derivative of that. The idea here is that you need to work your magic within your machine, to get the outcome, the result. In this particular case, I wouldn’t even go as far as to say that the outcome of your machine is actually not only money in your pocket, but the result.
Growing Your Business
For any successful agent, the growth of your business, you would want to try to maintain as many client relationships as possible. That’s why you have this electric vehicle model, where your clients are going to be the fuel for your model and it’s going to be reciprocated over time.
Brokerages grow, but here’s the harsh reality, most brokerages suck at this. I say most because there are a few brokerages that actually care. I’ve crossed quite a few brokerages that really care about the development and the growth of their agents. There are also smaller brokerages that have the time and the capacity to really tailor a strategy toward teaching and mentoring. This reduces the churn and over time, they’re able to capture more agents and really grow that brokerage exponentially.
For the most part, most brokerages out there, don’t care about the agent. They entice agents with low-hanging fruits like a CRM, or they handle marketing, ads, or some special assigned budget assigned to you to do whatever you need to do, or splits. I’ve actually talked to a couple of agents that got really great splits, but they didn’t hit their numbers, but just ended backfiring on them.
At the end of the day, if you’re really trying to figure out if a brokerage cares about you as an agent, then you really should look at the mannerisms of its leadership more specifically, what are the people doing that are in charge? Are they really focused more on recruiting or more on cultivating? Is the leadership the ones leading the charge to help cultivate and develop, their roster of agents
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You have to understand that you should not be reliant on your brokerage and you should be focusing on your self-development and the development of you and your business. It boils down to having talked to a lot of successful agents, they spend a lot of time investing in themselves and learning what they need to learn.
You are not “real estate agents”. You’re actually entrepreneurs and you have a business to run. Brokerages are no more than an ancillary piece of an ancillary component to the overall machine. That is your real estate business. But inevitably you have to look out for your interest and your business. This essentially means investing in yourself and your education.
I would highly recommend taking the time to invest in learning some of these lead generation lead, nurturing sales, fulfillment, and retention strategies, and systems first before going out and having to hire someone. This way, when you’re hiring someone, you know exactly what they’re doing versus giving someone some money with the expectation and the hope that they’re going to deliver on some farfetched scheme.
That said, if you want more awesome strategies and tactics like this one, then please join our free Facebook Group. However, if you think you’re ready to start executing marketing strategies that will help your business grow consistently, then schedule a strategy session with us today.