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.
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:
- Do you really have so many leads coming in that your existing salespeople cannot handle them and you need more salespeople?
- 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?
- Will you give a lead to a new, less experienced salesperson over an experienced proven-results salesperson in your office?
- 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:
- 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?
- 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?
- 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?
- 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.
- 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.