As always, most industry observers state cautious optimism for the coming year, however there are two key agent stats from 2023 which will have an impact on you in the new year and beyond:
- For the first time in a dozen years NAR membership has declined; and
- 49% of surveyed agents sold only one or less homes last year
Point #1 – It’s probably not a big surprise that embattled NAR has seen a decline with an exodus of 26,367 members marking the first decrease since 2012. Face it, with 1.5 million agents competing for just over 4 million transactions in 2023, it’s been a challenge for most agents, especially those who are struggling.
NAR hasn’t helped itself by raising its dues mid-year and then adding an additional advertising fee. Plus, there’s the high-profile ongoing litigation that has rocked the industry and the NAR sexual harassment scandal which have all combined to take its toll on the organization’s membership.
While we all hate to see negative reflections on our industry, the reality is that the decline in the number of agents is actually a positive and most have been saying it’s long overdue. But… when it’s primarily the agents who aren’t productive that are departing; it leads directly to the second point.
Point #2 – I have written on the significance of agent Per Person Productivity (PPP) for years and it’s interesting how impactful it has become.
The Consumer Federation of America issued a brutal report entitled, “A Surfeit of Real Estate Agents” in which four geographic areas that are representative of the U.S. housing market were studied. Amazingly, almost half of the agents (49%) in the studied group sold one or less (meaning zero) homes last year. Click here to see the eye-opening study.
Brokers tend to hang onto their agents, even when they fail to produce. While countless brokers have said to me over the years, “well, the non-producers don’t cost me anything”; I still cringe every time someone makes that statement.
Unless your non-productive agents are paying fees for the privilege of hanging their licenses with you, they can become the single largest drain on a company’s profitability, growth and culture. The agent who does zero to 0ne transactions a year almost never has the skillset to negotiate and win the best listings, which in turn are lost to your competition. When they lose the war at the kitchen table to the “other agent” it is actual hard dollars out of your pocket. In turn, it hurts all of the other agents under your roof who desperately need access to more inventory. The non-productive agents waste leads, they reflect badly on your company and often clash with your culture.
By contrast, it is your producing agents who directly impact your brokerage’s recruiting and retention success. When your agent productivity exceeds the market’s average PPP, it becomes your best recruiting and retention tool. As your agents complete more sides and win more of the listings than the competition, the recruiting gets easier, and agents jump ship less often. It’s also where the agents and brokers want to call home. Agents are like professional athletes; the successful ones always want to be on the winning team.
As someone who ran his own brokerage for eighteen years, my suggestion is to make this year all about building your firm’s overall PPP. Your agents’ success truly becomes your success. As a reminder, in my brokerage office, I kept a small, framed placard on the wall that read, “The best way to get your needs met is to meet the needs of another.
Rick Ellis is a 30+ year veteran of real estate brokerage ownership, mergers & acquisitions, and franchising, As VP with The Corcoran Group, he directs real estate firms with their growth strategies and increasing their market share, profits, business value and exit strategies. Learn more on https://mergeracquisitions.us/.
