To all the Brokers/Owners of Real Estate Brokerages, are you finding that this economy is causing agents to go inactive for a while? In Arizona, the "rumor" has it that roughly 15-20% of all currently active agents will be hanging up their license until the market turns around. Costs for brokerage fees, franchise fees, Association dues, etc is getting to be too much for some agents.

Add to the costs that working with buyers on Short Sales and REO's is sometimes quite frustrating because of all the time delays.

What are you finding? What do you feel we as Brokers/Owners can do to help the agents get through these trying times and keep their license active?

I am not looking for the "magic answer", I'm curious what you are seeing and hearing in other parts of the US.

 I have found that as the number of transactions shrink, so does the agent population. In the big picture, that is not such a bad thing. Though certainly, some of those who leave the business have great potential and another profession may pick up their talent, it seems that many who have left should have never entered real estate sales to begin with. This is a time to really focus on retaining our productive and talented agents. It is also critical to step up the training and coaching for those who are not yet producing, but will likely do so with proper guidance. As for the bottom 15 or 20% that tend to wait for the business to arrive (order takers, if you will), I say, best of luck to them. When the dust settles, the strong will be stronger--that applies to the agents and brokerages alike.

Pam, I agree that agents are going inactive and I understand the number is higher than 15%, in Colorado the real estate commission raised rates by almost 500% to cover their costs for the number of agents leaving the industry.

In fact I recently became the state broker for MyGreenParachute.com, we are a company that works directly with brokers on agent retention tools by offering an option for the agents that are leaving the industry, creating new referrals for the agents that are sticking it out.

You may want to contact your state broker Frank Nicholson at fnicholson@mygreenparachute.com to see how he can help you.

Pam, Our company has created another "company" which is for referrals ONLY.  The agent in question, instead of going inactive, will transfer to the referral company and upon a closed transaction will receive a 50% split of the referral.  They are not allowed to list, sell or even hold an open house.  For that split their only expenses are license and CE.

I hope this gives you another option.

Doug

I'm not an owner/broker, but as an educator and agent who keeps a finger on the pulse of the industry, I feel qualified to make some observations.

At our agency we've "lost" several agents who just decided it's not worth the expense of remaining active. On a personal level, it's perhaps unfortunate as some of these agents were true professionals who did quality work -- just not enough to break even and they were smart enough to see that. It's called "supply and demand." In some cases they left because they recognized they could not keep up and provide the level of commitment and service they thought they should. I salute them!

The "referral company" trend is an interesting one that bears watching. I would half expect the Realtor Organization to crack down on this as a "work around" to Realtor Membership... or perhaps, eventually, regulatory agencies will take a harder look.  Company policy may be "preventing" these people from performing tasks, but they are, in fact, licensed to conduct brokerage activity and the public isn't going to know that they have limited (or no) experience and very little supervision. I have had some of these "agents" in CE courses and I can tell you it's not pretty.

It any market it pays to play to your strengths as an individual and as a company. One thing I've noticed is that there are still people getting into the business, but the demographics are changing somewhat to a "higher caliber" candidate. That's good news. The industy needs to "retain" a high standard of service and quality, not just agents.

Walter .. I hope you don't mind me quoting you:  "The "referral company" trend is an interesting one that bears watching."  I agree with you and think both National and State Associations may begin watching this very carefully -- not just from a financial stanpoint, but from legalities. In Arizona, our agents are still listed as Active, they can stilll "talk the talk" but they cannot write contracts if they are with a "hanging company." All they can do is referrals.

As Designated Broker, tracking the actions of 400+ agents on a day to day basis is very challenging -- and I want the agents to understand the risks involved with my position. During my orientation class, I provide them with an anology (Readers Digest version provided here):

Each agent has 3 teenagers, all minors. Let's make it better ... they are 3 sets of twins! It is Friday night and all teens go out for the evening. About 3:00 AM you (agent) as the parent have the house phone and cell phone ringing while the front doorbell is ringing. The local police have returned your teens --- BUT are telling you all the costs, liabilities, possible jail time, etc that YOU (agent) are responsible for because you are not "properly parenting your teens".

I end the analogy with: congratulations agents, you have now been formally introduced to your "parent" --- ME --- who is responsible for your every word and action!

Now, taking this one step further means that within a hanging company, the agent may not be writing contracts --- but what is stopping that agent from "talking real estate" and giving advice? Nothing!!  I have thought about opening a hanging company, but .... it didn't take much thinking to realize I have enough responsiblity with this one brokerage. (As VP of Operations, I ultimately have responsibility for every brokerage this corporation opens in Arizona).

Stefan Swanepoel
Author: Swanepoel Trends Report

When the "going gets tough" -- prevails again today!

The realtors who got into the biz when every listing was bombarded with offers within the first three days...are trying to find out how to market properties to get that FIRST offer!    

Let's direct as many of these newer realtors as we can to this site!

In the 1980's-early 1990's, when mortgage rates went through the roof in the mid-20% range, our Board dropped from over 22,000 licensed Sales Associates to under 10,000.   This number gradually dropped to a low of under 7000.    We experienced

a number of Companies dropping out of the business...they just couldn't cover the overhead.    The TEN PERCENT of the agents who were doing 90% of the business

survived--well the majority of them.   Their incomes dropped significantly, but they still completed enough sales to stay in the game and wait out the recession.

A little housekeeping now and then is a good thing.   Back to MickeyD's and other retail sales or trades.  Easy come--easy go.   That's life.

They'll  reconsider when the business booms again.

In the Northeast portion of Connecticut (very small state as compared to AZ) there has not been much of a change in the agent base as of yet. I have begun to recruit based upon the inactivity of other competing Brokers. I think we (Broker/Owners) need to work harder and teach our agent base how to thrive in these times of uncertainty. I have full-time associates only who all need to feed their families... so far so good. I am hoping for a reduction in the licensees and believe it is a necessary component so that the sales previously going to these agents go to the agents who are in real estate as a profession.

Pam, Here's an idea. . . . Why not offer realtors something that makes sense? Fewer costs and more support? To the agents that can't compete and don't bring excellence to the profession, then good riddance. To others who are smart and ambitious and hard working, the old model of broker bondage has got to die. My broker has got my back, provides support where necessary, and charges me $399 per transaction, $100 per for E&O and $299/month to be a part of Area Pro. Last year, I closed 35 properties w/ GCs of about $175k and paid my broker less than $18,000. You do the numbers and compare. Can you support a big box brokerage on that? No. Can I make a living on that? Yes. Since it is the realtor that creates the business, where do you think the future of broker/realtor relationships is headed? The big box brokerages are dinosaurs and they don't know that Noah's got his boat built.