There’s plenty that happens in our industry which is based on gut feel. These days I’m more interested in hard facts and serious research - if you survey enough people you can draw conclusions that are meaningful. Once we really know what’s going on it’s easier to work out why and take concrete action, making a real impact toimprove the way in which real estate businesses operate.
Some interesting facts came out of a recent study we performed with Ray White Concierge which came as a bit of a surprise to me. One statistic in particular was particularly powerful; this research showed that around 70% of real estate agents who join our industry peak at year two, in terms of the number of sales they do. Actually they may well be making more money at this point - it’s common that the value of each transaction will increase as time goes by. But the reality is most agents at this stage are still skating on thin ice and the ice is getting thinner.
At this critical point, the agent’s business is actually in decline, although it may not yet be obvious to them that this is the case. There’s also of course a flow-on effect for the principal of the business in which they operate. In the study, we also found that the highest point of churn for staff is between two and four years into the agent’s career. It’s the danger period during which businesses most commonly lose staff and ironically, it’s also the common point at which businesses most successfully recruit agents who are coming across from other operators.
It’s clear from these results that most agents between two and four years into their career have declining businesses and are looking for a magical solution. In the trend towards moving agencies at that time, the agent is also clearly looking for someone else to blame other than their own actions (or lack of action).
The big question is why - why does the number of transactions drop off after year two for the vast majority of agents?
The answer is pretty straightforward in my opinion and it’ll be no surprise to anyone who knows me at all - it all comes back to prospecting and an effective database. When an agent first starts in our industry, they prospect hard. As soon as they start getting stock, the amount of prospecting starts dropping off until eventually, about 18 months to two years later, they reach the point where they’re barely prospecting at all. And despite what some people might think, this trend is not just about laziness.
As a new agent, the currency you use to prospect when you first start is time. Let’s face it, when you first start you have lots of it to spend. As time goes by and you pick up listings, stock robs you of the currency to prospect. At that point, if you’re going to continue to prospect, you have to use other currency - process, structure and investment in your business.
An new agent from the Gold Coast who today is one of the best real estate agents I’ve ever known, came to me seven months after he first started in real estate years ago and said “Mark, I’m getting so busy I don’t have time to prospect. I’m going to have to hire someone to do it for me.” He saw the problem and the solution straight away.
Unfortunately, his clear understanding what was happening is rare - when most agents start getting busier, they just focus on managing their stock and spend less and less time on prospecting. It’s almost like they think new business will take care of itself somehow.
To compound the problem, many of them don’t run an effective database, which as I continue to say underpins the whole process of prospecting. They just can’t see for themselves that prospecting is the key to being an effective salesperson and you can’t ever afford not to do it, no matter how good you are. Consequently, it’s also critical for a principal to make sure there’s an ongoing commitment to prospecting, otherwise there will be a constant churn of people coming and going from the business, all looking for that magical solution outside themselves which just doesn’t exist.
This need for effectively outsourcing prospecting was the whole reason behind us setting up Concierge which is a dedicated outbound call centre for real estate agents. You can read more about Concierge here.
Of course, Concierge is not the only possible solution and many agents have found effective solutions to prospect which suit their own needs. But however an agent chooses to prospect, it’s an absolutely clear message that prospecting is not an optional extra. Along with a solid database, it’s one of the two fundamentals to achieve success in real estate - unquestionably.
Mark Mcleod is one of the leading agents of change for Australia’s real estate industry. With an impressive track record spanning 25 years and a wide variety of roles, he has mentored some of Australia’s largest franchised and independent real estate businesses and is well known as a compelling industry speaker.
Today Mark is the Ray White Group’s Chief Executive of Growth, working with agents and businesses around Australasia to implement strategies for success.
