As we begin a new year, what are the most pressing issues on the minds of the nation’s real estate brokers? What are they most looking forward to in the year ahead? What strategies do they have in place to address inventory issues, technology adoption, agent retention or to ensure their continued profitability? Better Homes & Gardens® Real Estate and RISMedia recently teamed up to find out the answers to these and more questions through a survey on “What Keeps Brokers Up at Night?” Their answers provide a detailed map into the best practices every company can follow to success.
The U.S. brokers we surveyed represented a wide swath of company structures, from companies with less than 3 offices and single digit agent counts to those with more than 400 offices and 13,000 agents. Respondents’ average age range was 51-70 and responded from all regions of the country. Annual sales volume listed by respondents ranged from approximately $ 650,000 to over $ 4.8 billion.
Check out this infographic based on part of the survey results. Full results to follow in article after the graphic.
Taking a look at brokers’ most pressing, high-level concerns, the top three ‘most disruptive to the current real estate model’ were: Direct-to-consumer, online, flat-fee and 100% commission models. The top three ‘most pressing issues facing the industry’ were lack of inventory, recruiting and non-traditional competition. Top obstacles to profitability were lack of inventory, increasing agent productivity and pressure on commissions. Some responses entered in the ‘Other’ category for this question included discount brokerages, Zillow, too many agents, lead generation and ‘declining market without increase in sales volume on top of rising labor costs.’
On the subject of budgeting, brokers listed online marketing and technology as some of their top investments; also included were administrative, office expenses, labor, rent occupancy, advertising, recruiting and training. ‘Client services’ was the clear winner in what sets their firms apart, showing per tradition that nothing can replace good, old-fashioned customer service. Agent tools, technology and commission structure were the runners up for budget dollars.
Brokers listed their top operational challenges as recruitment of agents, agent productivity and business model competitiveness. And to the question, “What keeps you up at night the most?” brokers listed recruiting more agents as the top answer, followed by new business models, uncertain economy, keeping up with technology, lack of inventory and housing legislation issues. ‘Other’ answers in this category included: relevance to agents, inspection repairs, Zillow, lack of agent experience, builders and owners reaching buyers directly and lead generation.
Is the key to success being organized? One respondent wrote, “I sleep like a baby because I am organized.” This can only help in business—and with sleep.
Deeper Dive on the Issues
With lack of inventory rising to the top of the most pressing issues, we asked how brokers believe this challenge should be addressed. The top response was ‘increase percentage of new home construction,’ followed by ‘better education of clients on rent vs buy and view of current inventory,’ ‘motivating agents to be more proactive with lead generation,’ ‘reevaluation of local zoning and permit laws,’ ‘changes to tax structure,’ ‘reevaluation of national housing regulations,’ and ‘creative solutions such as manufacture housing.’
Some ‘Other’ responses included: More affordable and entry-level housing and home-buying incentives. One broker stated, ‘Time will solve the problem.’
In an effort to garner some insight from brokers in their own words, our survey included several open-ended questions. On the question, “What best practices do you have in place to ensure your firm and agents remain relevant to today’s consumers?” some answers included: Continuing education, communication, staying on top of technology, training, brand awareness, quality service, integrity, strong online presence, easy-to-use tools, response time, being able to change with the trends, strong marketing and pricing and market knowledge.
We also asked for insight into brokers’ approaches to adopting technology in their firms. Responses primarily indicated this is a high priority, with some having to outsource IT help and other larger firms with dedicated in-house tech departments.
Here’s a sampling of broker responses:
“Technology is a primary focus and one we will continue to put a high priority on keeping up and implementing.”
“The highest priority is absorbing the skills and needs of our millennials.”
“I do not feel like we need to be on the cutting edge of technology because most agents won’t use it anyway. More important to invest in technology that makes agents more productive, happier, gives more free time and easy to learn/implement. Once you make the decision, thorough on-boarding and education is key.”
“Our founder has allocated over $ 40 million to improve technology for our associates.”
“We have a small brokerage It is a challenge to offer the technology that new agents expect.”
“I outsource all of it.”
“We do not have an IT staff. I handle the company’s technology needs as we are a small brokerage. The implementation of CRM or lead management, developing effective on-line marketing and advertising campaigns has become too great a task for the small broker who wants to grow their business. It appears we are entering a period that will greatly benefit national franchise brands.”
“We are continually looking at improving our technology and investing on upgrading our website design to attract customers. Growing our Facebook presence as well.”
“Not the highest priority. Too much industry emphasis on tech and not enough on high-quality, personalized service itself.”
“Moved to paperless system which has been working. This makes everyone more productive. Challenge is learning how to use the technology and staying on top of it. Like marching forward in a sandstorm – you just keep moving and try to pay attention only to those grains of sand that will help you succeed.”
Q. How do you ensure your agents are utilizing the technology systems you have in place?
Many respondents indicated that constant training and education is key to tech adoption by agents. One-on-one support, sales meetings, using technology that monitors agent tech use and providing incentives were also noted.
“Constantly educate them at weekly staff meetings, using case studies or real-world examples. Following up with agents at quarterly reviews to see what issues they’re having.”
“Education. We have literally hundreds of online videos for training on tech systems as well as a marketing company that assists our associates with their online presence and tech skills.”
“Talk about it; demonstrate it and show them personally how to use it. Those that still don’t adopt…they will either grow or go.”
“Offering lots of courses and one-on-one coaching. We track agents’ production based on workshop training attendance.
“My agents are all self-employed independent contractors so I can set company policies that insure legal and ethical practices but cannot require they complete their tasks in a specific manner. I recommend tech and marketing classes whenever available, show agents new and old tech opportunities, explain the advantages of using specific tech tools and make myself available when they feel they need help. I use sugar not a stick.”
Q. What recruiting efforts do you employ to make sure you’re securing the best and brightest?
On this topic, brokers stated they often rely on traditional face-to-face meetings with new recruits, personal relationships and peer recruiting. Some use personality tests. Here are more insights:
“Personal profile of each recruit to learn how they like to work. Tailoring their on-boarding to match their profile. Using our brands extensive recruiting training and tools to help.”
“I mostly do my own recruiting. I try and judge the people that I think would make good sales associates.”
“We are very visible in the local real estate community, interact with agents on a regular basis. Be at their level and not on the “broker pedestal.”
“Ongoing monitoring or local agent’s production. Setting up lunches/coffees to get to know them better and understand what their goals are.”
“Upfront sales personality testing. Create an avatar of our ideal agent, use that to interview and evaluate candidates.”
“Hired a full-time recruiting professional to work with and to hold managers accountable.”
Q. What are your best approaches to retaining agents and how does company culture play a role in that area?
Company culture is paramount to brokers and plays a vital role in agent retention and productivity, and is also key to profitability, many stated.
“We take great pride in the culture we’ve developed over the past 10 years since opening as an independent brokerage. We only recruit/offer to agents that we feel fit our culture…We try to ensure our agents know we expect everyone to act ethically and we ask each of them to know WHY they are in the business and what they want out of it. We make sure they’re in it for the right reasons and support them with their needs.”
“Company culture is essential to retaining agents, as the owner of the company you need to be accessible.”
“Frequently checking in with agents as to how their business and personal lives are going. Showing that you are interested and you care.”
“Maintain a culture of support and focus on agent growth and development. Foster integrity, honesty and sharing among agents. Build a cohesive group of independent contractors who depend on one another.”
“Recognition, incentives, goal setting, accountability – culture is HUGE.”
“Always looking at adding value to our agents’ business through leverage of time through staff, one-on-one coaching, social events, weekly training events, and our culture plays a huge part.”
“Goes to education again. Culture is paramount in our brokerage and we spend a lot of time and energy in bolstering a culture of support, ethics and camaraderie.”
“We offer coaching and focus strongly on building relationships. We have lots of workshops and office parties to have a healthy mix of work hard, play hard.”
“Company culture is critical. As we are small, retention is based upon being involved with each agent’s business.”
“Professional recognition is very important in a ‘sale environment,’ and equally important is being aware of the agent’s personal needs and recognition. Hand-written notes to agents are still effective in a world of impersonal technology.”
“Creating a cohesive and collaborative culture in the office. Offering brokers an attractive split threshold, marketing materials, great websites, attorney PMB and tons of educational opportunities free of charge.”
“Freedom, respect, recognition, mentoring/training, and proper compensation.”
We concluded our survey with a couple of questions about new opportunities and what brokers are most looking forward to heading into 2018. The groups in which brokers see the best opportunities in the year ahead include Millennials and first-time buyers, as well as retirees, move-up buyers, luxury buyers and past clients.
What are brokers most looking forward to in their business in the year ahead? Many said a continued stable economy, continued sustainable growth and sales, low interest rates, more inventory, agent growth and increased productivity, increased market share and new partnerships, and technology platforms. Some also said they were looking forward to retiring in 2018.
In their own words:
“We are going to be trying a new commission structure with our agents/clients with the ability of a flat-fee structure for certain clients. Also, we are going to be taking a more active role in upping the productivity of each of our agents.”
“Having new sales associates joining our firm and hoping an uptick in our local market.”
“Systems, more routine, following the blue print and checking the results.”
“The spring market when buyers are ready to move.”
“Understanding the next technologies that my company has committed to and putting them in motion.”
“Continuing to build successful agent careers. the market may change, but housing needs will always be there.”
And just because we love this…
“We are forming a Golden Girls network of successful women with decades of experience in real estate who are nearing retirement. Our goal is to make the next 5 years our most productive.”
In addition to looking forward to the opportunities to come in the new year, the majority of brokers expressed confidence in the future of the housing industry. Fifty-seven percent of brokers said they are ‘optimistic,’ followed by 20% have a high confidence level. Another 20% stated neutral and only 3% said they had a low confidence level in the housing industry.
Following the survey, John Featherston, CEO and Publisher of RISMedia said, “While real estate professionals are cognizant of the unique challenges facing individual localities or offices, this research overwhelmingly found most to be optimistic about opportunities for success in 2018. From company culture to new technologies to a high confidence level in the housing industry overall, the insights bode well for the industry as a whole and serve as a resource and road map to help others implement best practices and set a productive agenda for the year ahead.”
Sherry Chris, President and CEO of Better Homes and Gardens® Real Estate, had this to say: “I have been fortunate to be in the real estate industry for more than thirty years. Our industry has undergone far-reaching and important evolution in that time: from being broker centric, to agent driven, to consumer centric, and now to being consumer-data driven. Transformational change is a given in any dynamic industry. Our best advice to broker/owners has always been to stay focused on the aspects of their brokerages that contribute to a singular goal: creating a valuable asset. Strategies vary by company. Competitive pressure varies by market. But some things are universal: consumers will always seek exceptional service. Agents will thrive in values-driven, collaborative environments.”
Beth McGuire is RISMedia’s Online Managing Editor. Email her at email@example.com.
For the latest real estate news and trends, bookmark RISMedia.com.