The Surprising Data on Recruiting You'll Want to See
I have some surprising, fascinating, and never-before-available data to share with you on recruiting productive agents.
As you might know, my company has a program where we make recruiting calls on behalf of brokerages all over the country.
And, over the last couple months, my team and I have been examining the original contact lists from clients who joined the calls program between December of 2016 and March of 2017.
A year had passed since we received those lists, and we wanted to know which agents on them had switched companies.
We researched nearly 8300 agents across 16 different markets.
The minimum sales volume of the agents was $1MM and the median sales volume was $3.05MM (so all the agents were productive).
Here’s what we learned from our research…
Learning #1 – The Turnover Rate for Productive Agents is Low
The average turnover rate across the 16 markets was 7.7% (the median was 7.2%). And, the range of turnover rates was narrow, with most markets falling between 5% and 10%.
What this means is you might not be able to recruit as many agents as you want if your prospect list is too small.
For example, let’s say you want to recruit two agents per month (a common goal).
Based on the average turnover rate, you’d need to have about 300 agents on your prospect list just to expect 24 of them to move.
But, you’re not going to recruit every agent who moves (our data indicates it’s rare for one company to recruit even most of the agents who move).
So, if you wanted a realistic shot at making your goal of recruiting 24 agents in a year, you’d want a list of at least 800 prospects.
The reverse of this example is also true.
If you only have 300 productive agents in your market, you’re unlikely to recruit 24 of them in a year.
Instead, a more realistic goal would be recruiting between five and ten agents.
Learning #2 – Lower Producing Agents are More Likely to Move
In every market but 2, the median production of the agents who moved was lower than the median production of all the agents (the median of moved was $2.82MM vs. $3.05MM for the full lists).
The difference isn’t huge, but it does support the common assumption that agents at the lower-end of the production range are more likely to move and, therefore, easier to recruit.
Learning #3 – Agents Didn’t Switch to the Companies You Might Expect
Brokerages with 100% commission models have received quite a bit of attention recently.
And several industry observers have gone on the record saying the discount model is the future of the real estate brokerage business.
So, we wouldn’t have been surprised to see those discount brokerages capture many, or even most, of the productive agents who switched.
But, that didn’t turn out to be the case.
In fact, one out of every three agents who moved went to independent brokerages that did not advertise discount/100% models.
And, one out of every five agents who moved went to brokerages known for traditional splits (i.e - Coldwell Banker, C21, Better Homes, Sotheby's).
Discount/100% companies captured just one out of every seven agents who moved.
Now, what the data does not show is why agents chose independent and traditional companies over discount companies.
It’s entirely possible some independent brokerages gave agents 100% commission even though the brokerages didn’t advertise a 100% model.
It’s also possible some traditional-split companies “bought” agents by writing big checks to get them to join.
So, we can’t know for sure how big of a role commission split played in the decisions of the agents who switched.
But, since it’s unlikely every traditional company wrote a check and every independent offered 100%, the data points to the fact there’s room in every market for a variety of commission models.
Now, you might be wondering at this point about the two biggest players out there: RE/MAX and Keller Williams.
Because of their size, we put them in categories by themselves.
RE/MAX brokerages recruited more productive agents than any other single brand and were just ahead of the discount brokerages in total number of recruits.
RE/MAX also out-recruited Keller Williams by two-to-one overall and in every individual market but three.
To be clear, we did not research every agent in the markets we examined (we could only research the names on the lists given to us).
And, because we wanted to let a year pass before we did our research, we couldn’t examine more than 16 markets.
So, the data above may or may not be representative of your market (or all markets).
But what it does indicate is every brokerage can recruit productive agents, regardless of brand, size, or commission model.
Over the coming months, we’ll be able to research more than twice as many agents and markets as we did in this initial phase.
Should that additional research change any of the learnings above, I’ll publish the updated results ASAP.