By Michel Friedman

Here are some ads (paraphrased) that I found on different bulletin boards, job recruiting websites, and social media:

  • “We have so many leads, we need salespersons to give them to.”
  • “We are ‘raining leads’ – join us and get some.”
  • “Leads provided.”
  • “Assistants needed to handle leads.”

If a new salesperson is looking for a place to work, they have lots of choices. There are many different kinds of real estate brokerage models.

I have no problem with companies charging their salespeople more or less commission. I have no problem with salespeople charging the public more or less commission. I have no problem with salespeople working real estate part-time. I don’t even have a problem with salespeople who respond to ads similar to those above, although I am surprised at how naive they are, thinking this will be a solution to their real estate career problems.



Commissions charged to the salespeople

Different companies operate different models. Some are franchises who (sometimes) have to pay a hefty fee to the franchise as a fixed monthly amount per salesperson or a percentage from the top of the gross commission income.

Other brokerages provide offices, work stations and elaborate services to salespeople. This costs the broker money, so they charge the salesperson back to recover those costs.

Some brokerages have a selling broker, which makes it easier for the broker to “carry” the office expenses. Some offices have non-selling brokers.

Some brokerages work on the principal of less salespeople making more deals per salesperson, while others work the “numbers game” or “volume game”.

All options are valid and each salesperson must decide what is important and what works for them.

I spoke to salespeople who from the first day they graduated decide to join a brand name and pay hefty monthly fees and percentages. They were thinking they had nothing going for them and the brand would be their saviour to get consumers to work with them. On the other hand I have met with veterans of these same brand name companies who decided to leave, saying, “I realized it was me who the consumers trusted and gave the business to, not the brand I belong to.”

Both arguments are valid.

Commissions charged to the public

Whether we like it or not, cheaper and cheaper is the direction things seem to be going in every aspect of life (except taxes and government controlled items). WalMart is not what they are today because of exceptional service.

We all like a free market and competition, except when it has to do with our own income.

Wake up. On a recent visit to Quebec City I noticed more than 50 per cent of For Sale signs were by a “no-salesperson” company. This is just a fact of life. Prices of real estate are up. Commissions are down. Live with it.

Part-time salespeople

Of course it would help us if there were no part-time salespeople in our industry or if there were only 30,000 salespeople in the country and not 109,000. Of course it will help us if we can charge six-per-cent commissions. Of course it will help us if we can work independently and not have to pay brokerage fees  and of course it will help a broker to be (like things used to be) on a 50/50 split with their salespeople. However, you cannot stop progress, you cannot stop competition and you cannot go back in time. My personal take on part-timers, which goes along with free market philosophy, is this: As long as you disclose to your client that you are a part-timer and as long as you make arrangements within the brokerage and disclose to your client that you have backup and that your services will not compromised because of your other job, you’re okay.

Now about those leads. Here are my questions to brokers advertising to hire salespeople and provide them with excess leads:

  1. Do you really have so many leads coming in that your existing salespeople cannot handle them and you need more salespeople?
  2. Did you offer those leads to all your salespeople and did they say they cannot handle so much business, before you offered  those leads to new salespeople?
  3. Will you give a lead to a new, less experienced salesperson over an experienced proven-results salesperson in your office?
  4. If you have 50 salespeople in your office who do on average six to nine deals a year, would you help your existing salespeople make more deals by providing them with incoming leads or would you rather keep their production at the same level and hire another new salesperson for those leads?

Questions to salespersons responding to these ads:

  1. Do you really believe you (as an unproven salesperson or new registrant) will be handed a quality lead and the broker or team leader will risk losing the income, rather than giving it to an salesperson with a proven record?
  2. Will the team leader providing you with the lead (let’s say it is a buyer), allow you to put your name as the selling salesperson or is it going to be the team leader whose name will appear as the selling salesperson?
  3. Will you be taught how to generate leads for yourself (and do you have the motivation to learn to generate business for yourself) or do you want to keep being dependent on others “handing” your business?
  4. How much of your commissions are you willing to give up to get a lead as opposed to generating the lead yourself? I have heard of cases of 75 per cent payout to the lead provider.
  5. Are you familiar with the expression, “Give a person a fish, you feed him for a day, teach a person to fish, you feed him for life”?

There are no easy solutions. We must work hard for our money. We can do the legwork (door knock, cold call) or spend the money on farm newsletters, advertising and social networking.

By getting the education (training) and learning how to “fish”, then practising it, you will be fed for life.

25 COMMENTS

  1. It becomes very tiresome to me how many people are bashing part-timers. I am a part timer by choice. I work part time in real estate and do not have another job. I have one of the highest, if not the highest average commission percentage in my office. I serve my clients well. Quality over quantity. I do not advertise, do casual follow ups and basically wait for my phone to ring. And it does. A great da to all and greetings from the beach !

  2. “My personal take on part-timers, which goes along with free market philosophy, is this: As long as you disclose to your client that you are a part-timer and as long as you make arrangements within the brokerage and disclose to your client that you have backup and that your services will not compromised because of your other job, you’re okay.”

    My first question regarding the above mentioned quote would be: does the broker of record in this case have a standard written acknowledgement that “part-timers” use to present to their clients for their signatures? In the case of Designated Agency the back-up agent would need to be documented on a Designated Agency form, from the outset. However, in a Common Law Agency the managing broker wouldn’t have a tangible record of who any “back-up” agent would be to the “part-time” agent – without some kind of special documentation. Without documentation, a managing broker could potentially even disavow that he/she even was aware that one of their salespeople had alternative employment.

    The real question is: why would someone hire a “part-time” real estate person, over a “full-timer”, if they knew at the outset the complete status of the individual? Would a consumer hire a “part-timer” if they really understood what should be expected in a service sense from a real estate practitioner? Simply put, what is the motivation? Is the motivation primarily to maintain a friendship, or something else? Unless a “part-time” agent is in an ongoing partnership with a colleague, he/she might not even have any first hand knowledge of how the colleague comports themselves. Even a partnership increases the challenges around communications and hence usually requires special effort to create a functional partnership.

    If a retired part-time carpenter builds a patio deck for someone, perhaps it takes longer to get built, but it still gets built by the person whom was hired to build it – if he lives long enough. If a semi-retired General Practitioner (Doctor) works part-time at a walk-in clinic, patients understand they basically take who they get. When people do part-time volunteer work they’re volunteering their time for free, and while people still have expectations of them, it would be generally ungrateful to resent or question their part-time status.
    As an Industry, we have a fair bit of vulnerability around the “part-time” question.

    • There are three equations that are missed when speaking of part-time practitioners:

      1) for some consumers the only thing that matters is how little it costs them to retain representation and they’ll seek it out in any form.

      2) the consumer knows the practitioner is part-time and accept this for their own reason.

      3) the consumer doesn’t know.

      There is only one underlying element behind all models

      The consumer.

      And they don’t all think alike.

      • Ped,
        Actually the second underlying element is the real estate practitioner, who has a legal obligation to educate the consumer/ client. The managing broker has a legal obligation to ensure that the real estate practitioner has done all that is expected of him or her.
        Consumers don’t all think alike, but when they don’t, it’s still required that they’re fully informed consumers. Without full accountability it can be questionable as to how informed the consumer was.

  3. Interesting that some of the comments below focus on attacking the messenger rather than the message. Michel’s suggestion that part-time agents should disclose made me think about my office. I have at least one who has another job, several on pensions and one that gets paid to rescue idiots on the water. Those are the known to me. In tha past I have had municipal counsellors and reserve military personnel. None of them set the world on fire, more importantly, they didn’t set my hair on fire! But do they disclose to clients? How do clients react? Sounds like my next column.

    • You are right Marty (about the personal comments), it is one loser that writes under several assumed names. He does that in every single article which I wrote. My articles are geared towards starting a discussion and express opinions and so far I have succeeded in achieving that . Too bad that the moderators don’t see what you and many others that call me saw, and remove these remarks to keep the level of professionalism in this platform.

  4. We absolutely need to work hard for our money. And, we should earn every nickel of it.

    RossK’s numbers indicate that the average agent does about 9 transactions/deals/sides a year (and that results in a taxable income of roughly $35k). That sounds about right with the fixed costs for me (brokerage expense, franchise expense, insurance, advertising myself and my services, licensing & board/AREA/CREA memberships) being almost $20,000. Listing expenses and listing marketing would be on top of that. In Calgary that “average” has been closer to 6 sides per year for the last few years with this year going to end up being closer to 10.

    This article says, “50 salespeople in your office who do on average six to nine deals a year…” If one really does six deals/sides a year or 12 deals a year or even 20 deals a year, are they REALLY, REALLY working FULL-TIME? I think some brokerage owners are deceiving themselves when they say they hire only “full-time” reps. I see so very few — even at the international franchise where I am registered.

    Isn’t the real issue with the number of part-timers in our industry not their lack of commitment or training, but with the high commissions being charged AND that consumers can’t tell a novice from an experienced individual — and that they are usually willing to pay the apprentice the same rate as an experienced pro? Why? Because they can’t tell the difference!

    With pre-licensees not being trained during the licensing process how to actually price their services, when they finally are licensed they tend to charge what they see others charging and their brokerages seem okay with it. They price their “widget” what they see others charging — not what it’s worth. I’m okay with that since as long as brokerage owners allow novices to charge “market rates” we will always have a constant influx of newbies thinking that they can get paid well for what appears to be easy work! (Once they’re licensed only a broker/manager can advise or discuss with them on pricing or it’s an anti-competitive.) I really don’t care what another agent charges and tell consumers that all the time. What I charge is a fair rate for the full gambit of what I deliver.

    Isn’t the issue with the number of part-time agents in our industry the fact that you can work part-time and earn what many would consider a “full-time” wage? Even with RossK’s numbers, $35k/year is near a McJob rate of pay for any recent college graduate that choses to work in the restaurant business full-time. It’s not what I’m comfortable with, but obviously there are quite a few that are okay with it.

    When newbies can’t make more than a McWage, they give up. For one, I wish they would try figuring out what they’re worth and charging that well before they give up. It’s the constant churn of new real estate agents what keeps consumers from knowing a novice from an experienced pro. How many times have we heard, “fake it until you make it?” There are just too few experienced pros (…but also lots of long-time, part-timers that are supplementing their incomes from other endeavours).

    For my business until I hit 24 sides (at market average prices) in a year, I won’t consider myself “working” full-time. At 30 sides, I would need to hire an assistant and then we wouldn’t be back to both working “full-time” until we hit close to 40-50 transactions a year. Until then, I’m part-time or possibly semi-retired. Do I NEED to charge $7,700 per side (RossK’s number) when I’m actually “working” full-time? Obviously not! Not even close!

    I’m sorry, the issue with how many “part-timers” in this industry comes down to what insiders consider “full-time.” Give me a break — doing “on average six to nine deals a year…” is not “working” FULL-time in real estate! I don’t do coaching, house-renovating, home staging, or home photography, operate a home rental business, or drive a cab as side lines — I work in the real estate industry brokering residential property and my income is derived solely from that. I help people buy and sell new or resale homes.

    I actually DO appreciate the current number of “part-timers!” With the current number, my sellers can offer the market determined co-operative commission rate ($7,700 – using Ross’ number again) for the buyers’ agents’ side of their transactions and with professional, proven marketing techniques the listings will sell themselves in a reasonable amount of time roughly 99% of the time if the sellers appropriately price their properties for the condition that they’re in!

    • Tom:
      The key words in your piece are “…consumers can’t tell a novice from an experienced individual.”
      Question: Why not?
      Answer: Because much more time, effort and money is expended by newbies in pursuit of quick financial gratification (via the use of learned razzle-dazzle psychological rapport-building techniques) instead of investing in the needed time and effort to build a foundation of knowledge that will sustain them over the long term. Therefore, naïve, ignorant consumers go for the carefully prepared faux personality traits/looks etc.first and the substance last…if there is any substance at all. The short answer is consumers behave just like voters when choosing their governments/ leaders….style over substance…a la’ the Shiny Pony…Justin Trudeau.
      There is a reason why so many gimmick- producers hire marketing outfits to flog their stuff on TV infomercials: The silly, easily lead sheep go for it (the razz-ma-tazz) every time, otherwise known as the blind leading the blind.

  5. “Whether we like it or not, cheaper and cheaper is the direction things seem to be going” That’s your reality have fun!
    After 25 years all I have ever heard from the first day is commissions are going down, same old story and I still charge the same as the day I started. When times get tough good Real Estate Agents are worth there weight in gold or “sales”. Two out three new Real Estate agents fail no matter where they work, this hasn’t changed and wont change and that’s because real estate sales is hard work.

  6. i still believe that part timers do us all a disservice. Volunteer work aside if you are not committed to give real estate your all, you are not a full time “professional” realtor. I am in the percentage that makes a good deal more than the average. If that was all we made I would have quit many years ago…..it can be a wonderful career (for me since 1989) and its not about the commission its about helping people with the biggest financial decision they make in their lives. Putting the customer first, being educated and learning from my mentors has served me very well.

    • I am a “part-time” realtor with a 40 hr Mon-Fri 6-2:30 job in the home improvement industry. My husband is a “full” time realtor and my back up support for ALL of my clients. Both buyers and sellers know at the onset of every meeting that they have a “part timer” whom will be there for them at every turn. They have a contact number for emergency issues that may seldom arise. I take the same courses as every other licensee, pay the same expenses for licensing, insurance and board fees as every one else and work above and beyond for EVERY CLIENT I have ever dealt with. Not to be smart but I had better numbers in my second year selling than my husband…the FULL TIMER. It should only matter to the client what my status is not the rest of the industry. Besides the fact that most of my clients have used my home improvement expertise to help them envision their new home renos as well as understanding the importance or frivolouslessness of some of their issues with a property so don’t knock part timers..all I’ve done is proved that I’m hard working and dedicated.

  7. If you don’t care about part-timers, then why do you care about the fish? Both of these things are unprofessional. Disclosing that you are a part-timer does not make you a sales person, and when you mess up, the brokerage is on the hook. And hiring fish is a business model too. As long is it is not illegal, it will continue happening and there will always be fish to swallow the hook (part-time fish)

  8. Interesting….Orange Square realty has sold 163 homes in 2014 as of the end of October, a record year in the history of the GTA and required over 100 realtors to accomplish this lofty goal. Methinks some folks are spending more time fishing than handling leads.

  9. Hi Jim the Editor Guy:
    Methinks that maybe a picture of a bottom-feeding sucker with a hook in its mouth would have been more appropriate?

  10. Michel,
    Thirty-four years ago, when I left a mega successful career to enter our field, I had no expectations that anyone would provide leads. And they didn’t. The topic was never addressed.

    Information in this article would have been useful. I quickly went from position 26 in full office complement to the top of the list, having no expectations of so doing.

    I had never worked in a competitive environment and had no idea of sales office petty behaviour; the drunken office brawls, where liquor bottles were busted over heads. I only attended one such event and decided it wasn’t my style.

    My success marked me as an enemy among some. One gal reported the branch mgr for providing leads to me. HE DIDN’T. She would not let up and engaged a few of her friends to get rid of me. A strong producer, she quit.

    I walked out and left 7 brand new listings behind. They were put in a hat and divided among the office immediately. I didn’t know any better. They all sold promptly.

    I moved forward with my career, unscathed. But I still had no idea how leads were handled, and I still didn’t know even to ask. It simply never occurred to me. So, naturally, I didn’t get any.
    Not long after, I had a peculiar instance.

    A sign call on one of my listings. Even so it turned out not to be the house for them, we developed rapport and I was invited to list their home in the adjacent town. I listed it. WHOOPS!!! Another faux pas.

    Although she didn’t know the people, a rep from the local town branch office had canvassed that street. She complained and my new manager insisted I had to give up my listing to her. She was a high branch producer, and they didn’t want to lose her.

    I never even got a referral. The people never did buy in my area.

    I stayed a couple of years but eventually left. I wasn’t interested in moving from office to office. I found the business to be wholly less than desirable, but my clients appreciated my work, so I succeeded in spite of it all, because I had brought my own work ethic with me, wherever I went.

    The new manager said I earned too much commission so I shouldn’t get leads. Yet he said the corporate philosophy was to support company top reps. True story.

    Michel, have you considered putting your article on a bulletin board at the colleges? I don’t know if that is permitted, but it would indeed be useful to new hires to be able to take into consideration, perhaps.

    Carolyne L

  11. Reality Check for you New Fish,

    In Canada, the Top 12% earners of a Brokerage’s Sales staff, command 53% of the Office Transactions (Ontario Surveyed). Projected across Canada this means 508,800 Transaction sides will be completed by 13,200 CREA members while 451,200 Transaction sides will be completed by 96,800 CREA members.

    Did you know the CREA Code of Ethics prevents this fact from being shared with the public or New Fish??

    In real money in your pocketbook, this means 99,000 CREA members will take home NO MONEY this year and in fact will be accumulating excess debt through the required use of Commission Advance Services, Credit Cards, Lines of Credit and Unpaid Brokerage Fees.

    That is what happens when Realty is missing the I.

  12. New Fish and Bigger Nets.

    Facts,
    1) Canada 480,000 Sales versus 110,000 agents in 2014. This equates to 960,000 transaction sides or 8.72 transactions per sales rep.
    2) Canada Average sale price $400,000 @ 1.94% commission per transaction side in 2014 yr to date. This equates to $7,760.00 per transaction side.
    3) Transactions x Commission = Revenue Generated. Equates to $67,700 per CREA member in 2014
    4) Canada Average Sales Rep CRA Allowable Expenses in 2014 $31,987.
    5) Real Income per CREA member 2014 = $35,517

    Sales Volumes in Canada are now trending back to 445,000 for 2015, which will not be talked about by CREA til around June. Average Sale Price is set to decrease in 2015 as Vancouver, Toronto and Calgary are all on track to return to a more proportional representation in that average and not the higher amount in the last couple years Averages. Commissions are set to continue the downward trajectory and decrease more rapidly ( especially 2015) as more reps battle for lesser sales.

    In all probability, 2015 Real Incomes are set to fall under $30,000 for 2015.

    This is why Brokerages are using larger and larger Fish Nets to corral more and more New Fish.

    • Not sure of where the numbers came from way back when, but until the late 90’s, I think the average annual sales rep earnings were in the 16k range, Ross. So if that is correct, those outrageously high earners at 16k would have now seen their incomes double. Oh, my! Alice is still looking down the rabbit hole.

    • Hi Ross, Real estate brokerage is, is some ways, a wacky business.

      I talk to many brokers who say they don’t need my kind of training because they instruct their new agents on everything they need to know.

      On many occasions, I have suggested to brokers to determine the top 10 percent of their agents and remove them and their production and divide the remaining transactions by the remaining agents. Average production is always less than five per agent with about 30% of their agents at zero.

      The next part is why I call it a wacky business … I offer a written guarantee that any agent who attends my Aim Above Average two day Workshop will earn an EXTRA $60,000 in 12 months or I will coach them one-on-one until they do. That means, by the way, I am actually guaranteeing a total return on the $500 training investment of $60,000.

      Most brokers still insist their agents don’t need it or wouldn’t be interested.

      The reason I can make the guarantee is that, as you well know, if any agent will learn the right strategy and learn what to say, how to say it and when to say it, they will get all the listing they need to reach the (rather low) number of transactions needed to earn $60,000.

      I wonder what would happen if a broker made my training a requisite for an agent to join his/her company?

      • Jerry, with all due respect to your statements:

        “I offer a written guarantee that any agent who attends my Aim Above Average two day Workshop will earn an EXTRA $60,000 in 12 months or I will coach them one-on-one until they do. That means, by the way, I am actually guaranteeing a total return on the $500 training investment of $60,000.”

        Guaranteeing to work one on one with someone until they make $60k is not the same as guaranteeing they will make $60k. Your guarantee is that you will work with them it is not for $60k since that is not in your control unless you intervene between Realtor and prospect/customer/client communictions and/or negotiations.

        Semantics I know, but our advertising standards are very clear. We cannot for example tell a seller we guarantee to sell their house for $X unless we’re willing to put up that amount or the difference to make it up and no seller would accept a guarantee that if they list with us we’d sell their house for $X otherwise we guarantee to list it until it sells for $X.

        Are you’re in the U.S? Independent contractor means brokerages won’t and can’t arbitrarily dictate who gets to handle transactions. Perhaps those two issues may be why brokerages aren’t taking you up on your offer?

        Does your guarantee have a time limit or exempting conditions attached to it?

        • PED,

          This is not a joke… I guarantee that any real agent who attends
          my Aim Above Average 2 day workshop WILL earn $60,000 EXTRA in 12 months or I will coach one-on-one until they do.

          Why can I make such a gutsy guarantee?

          #1. Common sense: the agent
          must want to earn an extra $60,000 (using last year’s income as a
          basis). The catch, if you want to call it that, is that the agent must learn
          the presentation and actually use it.

          If they don’t try, they have no claim.
          There are people who have an entitlement mentality and expect to win the lottery without buying a ticket.

          If they try and can’t get one extra
          listing that sells faster than the local average and at an above average
          selling price (as compared to recent sales of similar homes) from the first
          three attempts, they call me and receive some immediate coaching. Repetition creates habits. Not all habits are good. We nip the bad ones in the bud.

          If they haven’t increased their
          income by $60,000 within 12 months, we start weekly (not weakly)coaching. I initiate those calls. They must answer the phone. I give advice and training; they must respond.

          #2. The strategy works. Homes and condos sell faster and for above
          average prices when the strategy is used.

          #3. Enough other agents have made it work. Top production so far: 15
          listings in four months, all sold in 30 days or less, all sold at or above
          asking, all were listed at 7% (one percent above local average). Sellers averaged an extra $2,000 to $5,000 in their settlement checks at closing. Agent earned over $100,000.

          #4. No one has reported it not working.
          #5. A TREB agent made $54,000 in one month just 3 months after learning the strategy.

          The workshop investment is $500, plus some travel cost, so
          $60,000 is a pretty good ROI.

          You know, of course, that unlike buying and flipping property, when you learn a skill, you get to use that skill for life. Fantastic ROI.

          What’s not to like?

  13. I am sorry but I find this article very disjointed and difficult to follow. I am not sure what the purpose of this article this….does anyone else have difficulty following the implied logic of this piece? I would like to comment that the author’s support of part-timer agents misses the point of professionalism and competency, which could lead to litigation amongst other things. My head is still spinning trying to decipher this article. Please tell me I am not alone.
    Kelvin

Leave a Reply