The National Association of REALTORS® hosted a Power Broker Roundtable and their recent topic was about agent recruiting and training. What I really like about the large broker roundtable is that you typically get some relatively pure information. I think that is the case here.
The roundtable members for this discussion included representatives from some of the finest brokerage operators in America – Nick D’Ambrosia, Broker of Record, The Long and Foster Companies; Lennox Scott, CEO of John L. Scott Real Estate Seattle; Chad Ochsner, Broker/Owner of RE/MAX Alliance Denver; and Linda Sherrer, President and CEO of BHHS Florida Network. By rough count, they represent well over 100 offices and over 10,000 sales associates. When it comes to recruiting, I think they have it down.
There were two data points that I extracted from the conversation. First, they have dedicated recruiters. In parlance, Chad Ochsner has three full time recruiters who delivered a net gain of 50 agents this year. That is the first data point. If you have a full time recruiter, you should expect that they deliver between 15 and 20 agents a year.
If you have a full time recruiter, you should expect that they deliver between 15 and 20 agents a year.
Many real estate brokerages put the responsibility of recruiting on the shoulders of the broker owner or the office manager. In many cases, that may work out just fine. But in other cases, you may need to recognize that recruiting may be a weakness of an individual in your firm. If that is the case, supplement that weakness by hiring someone who is an expert, or assign the responsibility to someone else.
The second data point is the cost of recruiting and training an agent. This is a very important matrix. I believe that brokers fail to truly calculate the cost of bringing an agent into the firm. I really like the software developed by Terradatum called Broker Matrix, which has a module called Proficiency Matrix. It is a way to quickly calculate the ROI on an agent based upon their performance. It is not only good for recruiting, but also for evaluating your agents for their ROI. Let’s face it, too many brokers have agents who are sitting around costing them money. If an agent is not selling, they are absorbing resources. Either put them on a track to become productive, or let them go drink the coffee somewhere else! According to Linda Sherrer, it costs around $5000 to $7500 to bring on an agent in Florida. For John L. Scott, the cost is closer to $10,000.
The average cost of recruiting an agent is $7500 – or $5000 on the low end, and $10,000 on the high end.
I would suspect that the cost variable is related to many things. Some firms charge desk fees, others do not. Some areas cost more to live in, so recruiters and office space for agents is more expensive. Many small to mid-sized brokers may hire agents and do little more than transfer their license and buy their first set of business cards – but that is not what I would consider a center of excellence at onboarding an agent to the company.
WAV Group has a lot of experience developing recruiting and on boarding programs for brokerage firms. The key time to use a consultant is usually when you are hitting that growth spurt between 100 and 300 agents. At 100 agents, you can be pretty loose with your process. You probably only have two to four offices. Once you start getting larger than that, you need a process. We can help with that.
[…] According to WAV Group, it costs between $5,000-10,000 to recruit an agent. That’s right, just because real estate agents are independent contractors, doesn’t mean turnover isn’t expensive. Not to mention the added value that strong office culture, agent referrals, investment in coaching and training, and positive brand perception that retention brings. It’s in the best interest of your bottom line to recruit agents who will be happy and successful at your brokerage so that they’ll be valuable contributors and stick with you for the foreseeable future. […]