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Question – How many of you would like a buyer or seller client that will
provide you with $100,000+ in commissions over the next five years?
Observation
Some brokers open their own office for independence and so they no longer have to pay a commission split to a broker. Some brokers also believe having agents work for them is a side benefit or sometimes even a distraction that is of no value.
Why is this session called Recruiting AND Retention?
1.When agents are joining your office, current associates tend not to leave (the grass is greener on your side of the fence!)
2.The same value and services required to recruit agents are also required to retain agents.
Who should you recruit?Four types of recruits ….
• New Agents – not yet licensed or newly licensed but not yet at first brokerage
• Newer Agents – Newly licensed and just started at competing brokerage
•Experienced Agents – Producers
•Other Owners / Managers
Recruiting The NEW Agent
Utilize the recruiting advertisements on UnitedRealEstate.com
• Over 20 predesigned advertisements• Easily downloadable• Run them in the local newspaper• Place them on CareerBuilder.com, hotjobs.yahoo.com, Monster.com, SalesGravy.com, JobThread.com• Have them running online continuously!
Prior to interviewing the new agent, ask them to take the assessment simulator at www.RealEstateSimulator.com (Cost is $69). They can take it from home and the results will be emailed to you.
• Explain that it will give them insight into the sales process and the industry.
• It will also tell them their strengths and weaknesses which they will want to know no matter which real estate company they work for.
• It will provide YOU with their strengths and weaknesses and a final assessment of their likelihood of success in the real estate industry.
Prior To Interviewing The NEW Agent
Interviewing The NEW Agent• Prior to the interview, analyze the simulator results to determine if their weaknesses (if any) can be overcome with some minimal training.
• If the new agent did poorly on the simulator, ask them a few probing questions to see if the simulator missed something (typically it is fairly accurate). Then simply go over the results with them, do a brief interview and then politely end the interview.
• If they did well on the simulator, spend the first 30 minutes of the interview getting to know them. Ask probing questions – job history, community history, time available, etc. Take the time to get to know them. Find commonalities.
• After getting to know them, the typical new agent will want to know two things:- What type of training you provide to new agents- How much can they expect to earn at your officeTypically, they are not familiar enough with the industry to ask much more.
Getting To Know The NEWER AgentsOther companies in town will hire brand new agents that you did not have the opportunity to interview. An “interview” with this agent may be the easiest one to get. Simply call them within a few weeks of them joining the other office and ask them if they would like to have lunch. The conversation is:
“Hello xxxx, this is UC BROKER and I noticed you joined ABC Realty last week. I’m sure our paths will cross on a transaction some time soon so I was hoping I could take you out for lunch to get to know you. I’ve always found that it helps agents get transactions together when we know each other. Do you have time in the next week for lunch?”
At this lunch, ask probing questions to get to know them. Ask what they like about the business so far. Ask what they like about their broker. Ask what their broker provides. Drop subtle information about the services and opportunities you provide throughout the conversation. DO NOT DO A HARD SELL OF YOUR OFFICE OR THIS MAY BACKFIRE ON YOU! At the end of the conversation, casually let them know that if they would ever like to interview with you, you would love to speak with them (if you would like to work with them).
A Side Note … Price vs ValueWhen recruiting, you are “selling” the services of your company. There are two ways to sell anything … price and value. As a broker, if you do not have any “value”, you will need to offer very high splits to the agents you are recruiting. Conversely, if you provide a lot of “value”, you can derive a better split.
Is the price you are asking (ie splits) equal to the value (ie services, leads, education, etc) you are providing? The agent you are interviewing is weighing the price you are offering and the value that you are providing against the price and value that their current broker is offering. Before starting the recruiting process, take an honest look at your company compared to your competition. Are your commission splits in balance with the tools and services you provide? Are there any tools / services that you need to add? Do you need to adjust your commission splits up or down? Does your office need updating? Is your equipment (computers, copiers, etc) up to date?
Having a thorough understanding of this concept is very important before moving forward.
The EXPERIENCED AgentThe first step in recruiting experienced agents is determining your minimum standards and creating your target list. Just as important as production is office cohesiveness. However, do not limit your list to people who do business just like you. As long as an agent meets your production standards, is ethical and able to get along well with others, include them on your list. Stretch your comfort zone! It will be worth it! Conversely, if any agent is missing any one of these three qualities, leave them off of your list (they will cost you more than they make you!).
Unless your MLS is able to provide you with a production report, you will probably have to go agent by agent through the MLS in order to determine production. It may be a long process but it will be worth it.
** Don’t be afraid to recruit the managers of other companies! ** They may just bring all of the other agents with them!!
The EXPERIENCED Agent, Cont.You will want to have both passive and active forms of recruiting.
Passive includes:• A monthly email campaign (1st of the month)
•A monthly snail mail campaign (15th of the month)
• Visiting the Public Open House of recruits (on the weekends)- Leave them a bottle of water, newspaper, etc. - Let them know you are visiting your own agent’s open house as well
• Visiting the Realtor Open House of recruits (during the week)
•Attending all local Realtor Assoc, etc functions
Active includes:Calling the agents on your recruiting list every 1-2 months.
The EXPERIENCED AgentWhat to say when you call the recruit:
“Hello xxx, this is UC Broker with United Country XXX. How are you today? Good! The reason for my call is I’d like to see if you have time to have lunch with me next week to talk a little bit about United Country XXX and the benefits it may bring to your career?”
If they say yes, Great! Schedule the lunch. If they say they are happy where they are at, you can say:
“I understand and this is by no means a high pressure lunch. What I would like to suggest is that we have lunch now, understanding you are happy where you are at and not wanting to move. The reason being, it is always better to get information about another office while you are happy. Then if there ever is a point in the future you are wanting to make a move, you have received the information while your head is clear rather than later on when you may be upset and under a little more pressure. The worst case scenario is you get a free lunch and we get to know each other a little better! Do you have time next week?”
If they say yes, Great! If they say no, say “Good enough. Maybe we’ll be able to get together in the future.” and move on.
Agents leave in Threes
Analogy – If you went to buy a car and the salesman listed every single feature of the car, would he keep your interest?
Even worse – If you went to buy a car and the salesman kept trying to sell you a minivan when you were only interested in a truck, would you be interested?
LISTEN FOR WHAT THEY WANT AND PRESENT IT BACK TO THEM!
Spend the first 30 minutes asking subtle probing questions and letting the agent speak. The purpose of this approach is to find out what the agent likes about their current situation and what the agent doesn’t like about their current situation. Try not to speak about your company at all. Ask such questions as:
- How long have you been in the business?- Do you enjoy real estate? (listening for their commitment level)- Where does most of your business come from? Do you generate most of your own
business? (this will tell you if their broker, floor time, etc gives them leads)- Are the agents in your office supportive? (listening for the cohesiveness of the
office)- Do you attend many educational sessions? (listening to see if the broker provides
education)
This is similar to a listing presentation. Spend the first 30 minutes getting to know the agent’s needs and wants.
** THE BIGGEST MISTAKE YOU CAN MAKE IS NOT ASKING QUESTIONS AND **GOING RIGHT INTO LISTING ALL OF THE REASONS YOUR OFFICE IS SO GREAT!
The EXPERIENCED Agent Interview, Cont
Once you have spent the time getting to know the agent’s needs and wants, you now know what to present to them. DO NOT present to them everything about your office. Only present to the agent the following:
1.The services and tools you offer that they like at their current office.2.The tools and services you offer that they would like to have but do not currently have. (you will know this after listening to them)3.A few of the quality services you offer that will make a difference in their career. (again, you will know this after listening to them)
The EXPERIENCED Agent Interview, ContWhen you are presenting items to the agent, casually ask them if they think they would benefit from that item if they had it available to them (you should already know the answer). If their answer is “yes”, reply “lets assume this would generate one more sale for you” and mark a “1” down next to it. Go through each item you are presenting and ask the same question. When you are done with the presentation, go back and tally all of the “additional deals” the agent will receive if they joined your company. Then, put a dollar value on those additional transactions based on an average sales price / commission.
Ex. – 5 additional transactions, $100,000 average sales price, 3% average commission - $15,000 additional GCI!
After calculating the amount, don’t say anything for a little while ... Let the number sink in and read the expression on their face!
The EXPERIENCED Agent Interview, Cont
At this point in the conversation, you should have a good idea whether or not the agent is interested. You have:
1.Listened to them and gotten to know them.2.An understanding of their likes and dislikes.3.Presented to them the tools and services they are interested in.4.Shown them the value of the tools and services you provide.5.Read their expressions and body language throughout these four steps.
At this point, it is time to ask for the sale / go for the close.
Good luck!
Another Side Note …Agents leave in Threes
• If you (or a different office) recruits an agent from a competitor, call all of the agents in that office that you are recruiting immediately. Two more will follow!
If an agent stays only 5 years - $100,000 + to the company!
Example Commission Split StructureBased on a rolling 12 months of production
Gross Commission Income Split Approx Company Dollar
$0 - $30,000 GCI 50/50 $15,000
$30,000 - $45,000 GCI 55/45 $20,250
$45,000 - $60,000 GCI 60/40 $24,000
$60,000 - $75,000 GCI 65/35 $26,250
$75,000 - $90,000 GCI 70/30 $27,000
$90,000 - $105,000 GCI 75/25 $26,250
$105,000 + GCI 80/20 $21,000 ++
Mergers and AcquisitionsOften, brokers miss the most efficient way to add agents to their company – mergers and acquisitions. This process starts off similarly to recruiting an experienced agent… with a phone call inviting the other broker to lunch. Once at the lunch, again, the first 30 minutes is spent listening to what possible opportunities are out there.
Keys to making the merger / acquisition attractive:• Call it a merger throughout the conversation. It is much less threatening.• Let the other broker know you are impressed by their organization and that you think that the two groups would work well together.• Emphasis the benefits of the larger group.• Explain the benefits to the other broker of more free time, less stress, responsibility, etc.
Inevitably, the other broker will ask you “how the merger would look”. This is when you can explain the “acquisition” while still calling it a merger.
Mergers and Acquisitions – Valuing A CompanyThe sales price of a real estate company is typically determined using an EARNINGS MULTIPLE. In other words, a real estate company is typically valued at 2 - 5 times the average earnings of the company over the last 12 - 24 months. If a company is highly systematized and the owner can walk away without the business suffering, the company is worth more (ie a higher multiple). If the owner can’t leave the company without a large disruption, the company is worth less (ie a lower multiple).
Earnings are referred to as EBITDA – Earnings before interest, taxes, depreciation and amortization. An accountant can help you derive this number.
Example:If the EBITDA for a company is $100,000 and the owner has the company highly systematized, it may be worth $500,000.
If the EBITDA for a company is $100,000 and the owner manages every aspect of the company, it may only be worth $200,000.
Typically, real estate offices transfer with little to no money paid up front and the purchase price paid to the seller over time (up to 5 years)
Please feel free to call or email me:
1.If you need help preparing for an interview
2.If you have ANY questions
3.With your success stories (I love to hear them!)
Ted Laatz – [email protected]
