Some interesting facts came out of a study conducted by Ray White Concierge. One statistic was particularly powerful. 70% of real estate agents who join our industry peak at year two in terms of the number of sales they do. Actually, they may well be making more money at this point – it’s common that the value of each transaction will increase as time goes by. But the reality is most agents at this stage are still skating on thin ice and the ice is getting thinner.
At this critical point, the agent’s business is actually in decline, although it may not yet be obvious to them that this is the case. There’s also of course a flow-on effect for the principal of the business in which they operate. The highest point of churn for staff is between two and four years into the agent’s career. It’s the danger period during which businesses most commonly lose staff and ironically, it’s also the common point at which businesses most successfully recruit agents who are coming across from other operators. It’s clear from these results that most agents between two and four years into their career have declining businesses and are looking for a magical solution. In the trend towards moving agencies at that time, the agent is also clearly looking for someone else to blame other than their own actions (or lack of action).
The big question is why? Why does the number of transactions drop off after year two for the vast majority of agents?
The answer comes back to prospecting and an effective database. When an agent first starts in our industry, they prospect hard. As soon as they start getting stock, the amount of prospecting starts dropping off until eventually, they reach the point where they’re barely prospecting at all – funnily enough, about 18 months to two years later.
Despite what some people might think, this trend is not just about laziness. As a new agent, the currency you use to prospect when you first start is time. Let’s face it, when you first start you have lots of it to spend. As time goes by and you pick up listings, stock robs you of the currency to prospect. At that point, if you’re going to continue to prospect, you have to use other currency – process, structure and investment in your business. However, not enough agents say, “I’m getting so busy, I don’t have time to prospect. I’m going to have to hire someone to do it forme.” Most agents focus on managing their stock and spend less and less time on prospecting. It’s almost like they think new business will take care of itself somehow.
To compound the problem, many agents don’t run an effective database which underpins the whole process of prospecting. They just can’t see for themselves that prospecting is the key to being an effective salesperson and you can’t ever afford not to do it, no matter how good you are. Consequently, it’s also critical for a principal to make sure there’s an ongoing commitment to prospecting, otherwise there will be a constant churn of people coming and going from the business, all looking for that magical solution outside themselves which just doesn’t exist.
It’s an absolutely clear message that prospecting is not an optional extra. Along with a solid database, it’s one of the two fundamentals to achieve success in real estate – unquestionably.
For information about a career in real estate, talk to Rebecca Geldard on firstname.lastname@example.org.