According to a study conducted by Real Estate Express, agents who focus on a specialty make significantly more money than general practitioners.
 
How much more?
 
Agents who report, “I don’t have a specialty,” have an average income of $64K/year.
 
Agents who report, “I have a specialty,” have an average income of $129K – $183K/year.
 
Some common specialties include:
 
Affordable Housing
Property Management/Rentals
Military
Condos
Multi-family Properties
Investment Properties
Second Homes
Foreign Investment
Relocation
 
Highlighting this information in the recruiting process can set you apart from your competitors. Here’s your script:
 
If you work for Company A, you’ll likely be a general-purpose agent.
 
If you work for us, we’ll teach you a specialty where you can earn two to three times what general purpose agents make.
 
Most savvy businesspeople (the type you want to hire) understand the concept of capturing higher profits by focusing on a niche.
 
Help them see you’re just as smart.

According to a recent study on real estate agent income, most new agents double their income soon after starting their businesses.

Those in their first year reported an average annual income of just under $15,000.

However, those who’ve been in business for three years saw their average earnings jump to $38,141

Most full-service brokers know this time period in an agent’s tenure is where the highest margins are realized from the recruiting process.

Once an agent is established, two things happen:

Income Growth Slows: It takes most agents until year 10 for income to double again (those in business from 4 to 10 years earn on average $63,595 per year).

Splits Favor Agents: With an established track-record, agents demand higher splits and brokers see diminished margins.

The research also revealed the early years of fast growth is when agents most value the support of their companies:

Agents that have the most [early success] are those that find a supportive brokerage and seek out a knowledgeable mentor for guidance.

Bottom line: If your company has a knack for finding new agents and helping them establish their careers, there’s still good profit margin in this business activity.

Recruiting prospects who eventually become hires generally possess these two characteristics:

Dissatisfaction: Their current situation is not meeting their expectations.

Hope: They’re optimistic that changing their situation would relieve their dissatisfaction and allow them to do their best work.

At the initial interview and nurturing stage of the recruiting process, a recruiter or hiring manager should spend most of their time focused on these two issues.

Asking questions that help a prospect verbalize their dissatisfaction brings their pain into focus.

Helping a prospect imagine how working in your group could solve their specific problems solidifies their hope.

If these issues are frequently addressed, you’ll move more quickly and reliably towards the finish line.

In research based on the working habits of more than 5000 managers, author Morten Hansen documented the productivity of individuals compared to the number of hours they worked each week.

Managers working between 30 and 50 hours experienced the highest productivity per hour.

After 50 hours, productivity per hour started to decline.

After 65 hours, it became counterproductive to work more.

To explain this phenomenon, Hansen uses the analogy of squeezing an orange.

The first squeeze produces the most juice with the least amount of effort, and each successive squeeze produces a diminishing amount of juice.

Managers in the real estate industry often work long hours.

Your first hours are your best hours, so make sure you’re using them for your most important work.

If you find yourself pushing recruiting to the end of the day and trying to make up for lost time at the end of your week, your results will suffer.

Recruiting deserves to be to part of your week’s first squeeze.

A couple of weeks ago, I highlighted a recruiting study done by the University of Calgary that ranked the six factors prospects consider when changing jobs or companies.
 
The number on the right of each factor is the weighted coefficient relating to what a prospect initially considers (attraction) when changing positions:
 
Perception of Fit (.45)
Perception of the Recruiting Process (.42)
Position Characteristics (.39)
Hiring Expectancy (.33)
Recruiter Characteristics (.29)
Perceived Alternatives (.16)
 
But what happens after a prospect gets further into the recruiting process?
 
Priorities change.
 
The researchers measured the same six factors when the prospect was in the process of making the final job-change decision (acceptance intentions).   Here’s how the decision criteria changed:
 
Position Characteristics (.57)
Perception of the Recruiting Process (.42)
Perception of Fit (.37)
Recruiter Characteristics (.32)
Hiring Expectancy (.30)
Perceived Alternatives (.06)
 
Notice that the Position Characteristics (in essence, the value proposition of the job) became the deciding factor on whether the prospect will make the final decision to change jobs.
 
Here are the takeaways from this research:
 
1.  Lead with Perception of Fit.   When marketing your opportunity, focus on messages like:  You’d be a great fit here.  People like you thrive on our team.  Do you feel like a misfit in your current position?
 
2. Pivot to Value Proposition.  Once a person has engaged in your recruiting process you must find various ways to answer the question:  What’s in it for me?
 
Like it or not, recruiting is a game of nuance.

Yesterday, I shared a simple model for keeping yourself and others accountable in business relationships.

A few months ago, a client reached out with a great example of this process in action.

Long ago I adopted a strategy for holding agents accountable to their goals by using this simple process.

First, I had them identify (or recommit to) their goals (which was usually already done in prior coaching meetings) and review the activities needed to achieve these goals.

Next, I’d ask them what short term activities they were willing to commit to (weekly or monthly) and have them track these activities.

If they would do the activities without results, then it was skill building they needed.

If they came to the next meeting without accomplishing the agreed upon tasks, then we would reset for the following time period, and I would say to them:

“So, we agree, that if you don’t do these things, then you’re telling me that this business isn’t for you. Is that right?”

If the agent chose not to do the tasks, they usually would exit themselves, and I would never have to say, “You’re fired!”

If they followed through on their commitments, we celebrated their progress and built on their success.

This manager used Ignition (setting goals/activities both parties agreed on), Trust (if you don’t follow through on your commitments, you’re making a decision about your future), and Feedback (skill-building or building on successes) to make accountability work in his company.

Give it a try in your office or team and let me know how it goes.

As we discussed last week, leaders rank holding people accountable as their #1 weakness and the thing they hate doing the most.
 
And yet according to research cited by business coach Bill Watkins,
 
91% of employees feel that accountability is one of the most important things they’d like to see.
 
What gives?
 
The disconnect may be in how accountability is being presented to the agents you’re managing.
 
Accountability and responsibility can’t be mandated—they must be activated.
 
How is it activated? Bill recommends following these three steps:
 
Ignition. This means igniting focus and performance by setting a clear course and aligning what you and your team members both want —through measurable, individual, and contributing goals.
 
Trust. This means trusting your people to meet objectives and control their outcomes in the ways they know best, based on their experience, skillsets, and talents.
 
Feedback. This means providing regular and helpful feedback and celebrating progress and initiative. Good feedback exposes growth and learning opportunities along the way and encourages those you’re managing to stretch into new responsibilities. 
 
This is important work, but it’s not easy. It takes proactive thought, focus, and attention to detail.
 
Maybe that’s why we resist it so much.

Author John Detrixhe once wrote:
 
There’s something fundamentally good about entrepreneurship: Starting a business can help people improve their livelihoods, and new ideas can improve standards of living.
 
Entrepreneurship isn’t perfectly fair (some people will always have more advantages than others), but it does provide a crucial avenue of economic mobility.
 
If you’re a real estate leader, some of the best work you can do is provide “normal people” a shot at becoming successful entrepreneurs.
 
This is hopeful work.
 
Hopeful for you. But more importantly, hopeful for the people you help realize their potential and do their best work inside your organization.
 
As you labor at the hard work of recruiting, don’t lose sight of the true purpose that undergirds your work.

I talked with a hiring manager yesterday who cold-called 25 prospects in her market last week and got a very high rate of negative responses.
 
Take me off your list.  Stop calling me. I’m not interested, don’t call me again.  And other similar responses.
 
Cold calling is difficult under any circumstances, but this level of negativity seems to be higher than normal.
 
What’s going on?
 
One explanation is there are several cold-calling services and aggressive brokers who use technology and systems to call every experienced agent in your marketplace—often multiple times.
 
This carpet-bombing approach attempts to find the few agents who are in such distress (at any snapshot in time), they will respond to a generic recruiting request from a telemarketer.
 
The 99%+ of agents who are not in this much distress, find these calls annoying.  
 
After getting three or four of these per week, it’s understandable why they show some aggression towards the next person who calls.
 
How do you avoid this dynamic?
 
Remember what we know to be true about human nature: 
 
Professionals want to connect with other professionals whom they trust and respect.
 
Without this baseline, most prospects will treat you with suspicion at best, and belligerence if they feel provoked.  
 
If you have built a strong professional reputation, connect via referral, and are known as someone who helps others, you’ll usually be welcomed into conversations.
 
If you’re not willing to lay this groundwork before making connections, it’s going to be rough ride.

Over the weekend, the WSJ did a good job of defining a workplace phenomenon that may be affecting your organization.
 
Quiet quitting is where workers do as little work as possible to not get fired.
 
Or in real estate, they create the appearance of having a career but have no intention of doing the work it takes to be successful.
 
Demographically, the quiet quitters are usually males 25 to 54 (prime working years), but this tendency shows up in other demographic groups too.
 
And it’s not just in the U.S.–Britain, Japan, and China are all struggling with quiet quitter movements too.
 
How you deal with quiet quitters in your organization?
 
Smoke them out by increasing accountability.
 
Release them if they cannot consistently meet reasonable standards.
 
Replace them with those willing and able to perform at a higher level.
 
As we discussed yesterday, these are some of the tasks leaders struggle with most.
 
But as the market tightens, it’s more important than ever to be hiring and retaining talented agents.
 
You can’t afford to be carrying around dead weight.

In PI’s CEO Benchmarking Report, CEOs were asked to identify their greatest weaknesses.
 
Here are the top 10 weaknesses CEOs reported from most to least common:
 
Holding people accountable
Getting rid of under-performers
Staying focused
Creating a great business strategy
Being analytical about the business
Communicating clearly
Empathy for employees
Motivating my employees
Hiring the best people
Identifying new opportunities
Empathy for customers
 
What’s interesting about this research is CEOs reported struggling with the top two issues
 
Holding people accountable
Getting rid of under-performers  

at 3 to 4 times the rate they struggle with issues lower on the list.
 
This research tells us two things:
 
1. If you’re struggling with these issues, you’re not alone–it’s the hardest part of being a leader.
 
2. Those who possess the courage to admit it’s a problem, face it as a weakness that needs to be addressed, and commit to making improvements will emerge as better leaders.
 
I often advise leaders to focus less on improving their weaknesses and more on optimizing their natural strengths.
 
But these two weaknesses are too critical to be ignored.

A while back, I heard a radio ad for a start-up business incubator.

The ad used an analogy to communicate the value of its service.

The narrator posed the question:

How successful would a world-class cyclist be, if he was required to compete using a tricycle while the other competitors are using state-of-the-art bicycles?

The point is obvious–without the right equipment, talent and level of effort become irrelevant.

Many of you are competing against companies who offer limited training and poor systems to agents in exchange for higher splits and lower fees.

These companies use an ego-engaging message to seduce the new agent: All you need is talent and hard work to build a successful real estate career.

You know better.

Talent and hard work combined with an effective system (the bicycle) will always beat talent and hard work applied to an inferior system (the tricycle) or no system at all (running).

Using this bicycle analogy is a great way to communicate the compelling value of working on your team.

If you’re starting to develop your recruiting strategy for 2023, here are 10 stats* you may want to keep in the back of your mind.

1. Only 15% of agents are below the age of 40 (most are between 40 and 60 years old).

2. Median agent sales volume is $1.8M. Median number of transactions is 10/year.

3. Only 31% of agents have sales volume above $5M.

4. Only 15% of agents get repeat business from previous customers (the rest depend on new leads).

5. Only 15% of agents are paid via 100% commission plans (74% are on some kind of split commission plan).

6. Most agents report spending between $2.5K and $5K on their businesses per year.

7. Most agents spend less than $1K/year in each of the following categories: marketing, self-development, and technology.

8. Most agents make less than $60K/year in personal income.

9. Over 40% of agents work in single office companies.

10. Over 20% of agents are on teams, and the median tenure of an agent on a team is two years.

This type of data helps inform you on who you should be pursuing, what you should be offering, and how to handle objections during negotiations.

The best recruiters and hiring managers are well-informed. They usually know the answers to questions before they’re asked.

*Source: NAR 2022 Member Profile

In an effort to appear competent and “put their best foot forward”, many recruiting prospects are reluctant to share their problems.
 
When being evaluated, we all have a natural and subconscious desire to become the person a hiring manager is looking to hire.
 
Expressing strengths, describing work experiences related to the new job, downplaying weaknesses, etc.  All positive.  All good.  All surfacy.
 
An effective hiring manager knows better than to play this game.
 
It doesn’t support the objective of building an emotional connection with the candidate.
 
An emotional connection is what’s necessary to sustain a candidate through a long hiring journey lined with competitors.
 
An emotional connection is built through sharing problems, frustrations, and difficulties–not all the surfacy good stuff.
 
Ask directly:  What problems are you trying to solve in your life right now?