BACK TO THE BASICS –

Quality vs. Quantity

Don’t make the mistake that more agents is better than fewer, more qualified agents.

By Kristen MacDonald

We see it more often than we would like—a new broker opens up her first real estate brokerage and immediately her mind goes to recruiting as many sales associates as possible. You may think, well, more agents, more deals, more money, right? But, there is more to the equation. And, it means going back to the basics.

Did you ever get upset as a child because Billy down the road had more people at his birthday party and half of your soccer team couldn’t make it to yours? Chances are you went moping to your parents about it, and they replied with some line about how it doesn’t matter how many people come to your party, or that Billy had 20 guests. What matters is that you have 10 friends coming who really care about you, and you can still have a great time with them.

Sound familiar? It’s a simple principle that many of us were taught from an early age, and one that is reflective of the sustainability of your real estate brokerage – quality vs. quantity.

The reality is that there is no benefit to recruiting 50 agents to your brokerage over five agents if those agents aren’t quality real estate professionals. And as a real estate broker, it’s your job to ensure you have a handle on which agents are contributing to the success of your brokerage and which agents aren’t.

At a first glance, you may be inclined to say that all of your agents contribute to your success and that you are set up for a record year. After all, each agent has closed more deals than last year and you have more listings than ever before. But, identifying quality agents means taking a deeper dive into their true value to your brokerage.

Commission Cutting
A great place to start when evaluating the true value of an agent is with their commission cutting habits. You may think that your highest producing agent is the greatest contributor to your bottom line, but a deeper dive into the metrics reveals that he is actually reducing his commission on multiple deals, meaning money lost for your brokerage.
Agent Net Worth
There is a base cost for each agent on your team. Training, paper, photocopies, websites, software—they all cost money. So, while your agents may be closing deals, you need to ensure their activity is enough to cover their expenses. Then, you will truly understand which agents are making you money and which agents cost you money.
Agent Performance
Understanding how your agents do business will allow you to understand better where your brokerage stands financially. A more in-depth look at agent performance may reveal that your agent who closed the most deals last year had a lower average selling price and, that, in reality, another agent who closed fewer deals did so at a higher price—making you more money.

When it comes to the success of your brokerage, there is more than meets the eye; determining the value of your agents and ultimately the sustainability of your real estate brokerage starts with the data. An investment in the tools to help you collect and understand this data is worthwhile and allows you to plan for your future success. Any business can get complicated. It’s important to remember the basics: quality vs. quantity. After all, I am sure you walked away from that birthday party with memories of a great time with friends, not of Billy’s guest list.

This article originally appeared in the September 2016 issue of the REAL Trends Newsletter is reprinted with permission of REAL Trends, Inc. Copyright 2016.

The Minnesota REALTORS® is the largest professional trade association in the state with more than 17,000 members who are active in all aspects of the real estate industry. 

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