Brokers value work ethic in agents more than other skills — RISMedia

Real estate operators appear to be placing an increased emphasis on agents who are willing to work hard, focusing on so-called “business-minded” entrepreneurs, and relying on company culture as a recruiting tool in the wake of changes brought about by the National Association of REALTORS® (NAR) settlement.

According to RISMeda’s latest Broker Confidence Index (BCI), many brokers are investing in company culture to attract passively motivated agents, while also highlighting work ethic as the most important quality in an agent – an indication of what skills and character traits company leaders believe are most valuable in a new real estate environment.

“I want someone who understands that and has an entrepreneurial mindset,” said Elizabeth Mendenhall, CEO of RE/MAX Boone Realty in Missouri and 2018 NAR president. “Someone who understands they’re building a business and can sell that asset one day. When someone understands that, they value customer service, knowledge, systems and relationships – and that serves the client better and benefits the industry and my brokerage.”

With over a month to go until the changes to the arrangements are due to be implemented, many regions are already seeing changes to compensation offers and a lot of pressure from consumers due to media coverage. Overall confidence has fallen slightly this month from 6.8 to 6.6, more a result of brokers facing high mortgage rates and low inventory levels, as most regions have not yet seen any major changes from the proposed arrangements.

But the medium-term question of brokers’ skills and knowledge is obviously still relevant and pressing for many real estate companies. Brokers previously told RISMedia that they expect the NAR’s changes to reduce the total number of practicing brokers, and even Support measures that would weed out unmotivated or less committed real estate professionals.

“I think from now on we need to evaluate what skills (agents) have when they are contracting. That is the only way we can control the commission we earn on a transaction,” said Scott Myers, broker/owner of CENTURY 21 Scott Myers REALTORS® in Texas.

What type of agent, skills, philosophy or approach to real estate is best suited to be successful after the changes is an open question. Many in the industry argue that the abolition of the MLS fee and the obligation to sign buyer contracts do not fundamentally change the practice, while Others have pointed to possible long-term ripple effects of the changes.

Looking more closely at the more qualitative responses, agents surveyed last month seem to lean more towards the first view: that these are the things that have always made agents successful and will continue to do so.

“(I value) market knowledge and consistency. (Agents who) respond to client inquiries in a timely manner. Communication and follow-up,” said Hadi Atri, president and CEO of RE/MAX Executive in North Carolina.

However, it was not clear whether brokers significantly changed their recruiting philosophy to find these agents. There was a relatively even split between brokers who said they specifically targeted certain top agents in their area and those who focused on passive recruiting through culture.

Overall, real estate business owners seemed more inclined to have agents come to them and were particularly reluctant to recruit entirely new agents or to explicitly market their business for recruitment purposes.

Nearly a third (32%) of respondents said they invest in company culture to attract motivated agents. In comparison, less than a quarter (24%) have specific goals in mind. The assumption that agents are becoming more aggressive in competing for qualified agents may be overstated.

Atri specifically rejected the idea that agents would be enticed to join a new company by higher commissions or new software, saying that leadership is the best way to attract motivated agents.

“Good agents don’t leave their existing companies for better divisions or technology. It’s about leadership and culture. Successful agents look for leadership that looks out for them and provides them with ongoing coaching and mentoring,” he said.

A market in transition

In addition to the issue of skills and agent recruitment, agents also pointed to more fundamental market issues that are weighing on their overall confidence. An increasing number of agents said that legal issues are now a major factor dampening their optimism for the near future.

Nearly a quarter (24%) said the Justice Department or other legal issues would make them less optimistic about the market this year, and 8% mentioned agents leaving the industry or retiring.

But according to agents, the lack of housing remains the biggest obstacle, with 41% of agents citing this as the main cause of stress at the moment. A few agents are reporting improvements in this regard, confirming national data showing slight improvements in housing supply.

Overall, brokers seem concerned that the market is facing problems that do not have quick solutions.

“The lock-in effect is going to slow movement for a while,” said Donny Samson, principal broker of Samson Properties in Virginia. “Most people don’t want to move up if it means trading their 2.5% interest rate for 7%. Most people like their house, but they LOVE their mortgage. If fewer people are selling, we’re going to continue to see prices rise. It’s a world of supply and demand.”