Real Estate Brokerage
Industry Trends for Profitability

Traditional real estate sales training together with traditional new agent expectations continue to generate traditional mediocre results. Mediocre results generate the traditional industry mistrust of the effectiveness of training.

A comprehensive study published in 1995 revealed that only 1 out of 14 new licensees are still in the business after 2 years, reflecting a general failure as an industry to professionally support industry newcomers. The statistics have not changed over the intervening years.

New licensees are more important now to every company than ever before. They are younger, better-educated and more technologically advanced. They bring fresh energy to an industry which has a much older than average age. Because they make a bigger commitment than the average industry newcomer in the past, their expectations for training and leadership support are much higher and their contributions affect the bottom line much faster.

Profits from real estate brokerage operations are lower than ever, forcing companies to diversify into other businesses often distracting the firm from its core competency and success. Production from lower quartile agents or new agents is weak and lowers overall margins.

Brokerage leadership remains in a generally weak position in the agent-broker relationship. This is partially due to a lack of value in leadership and training support. When the agents realize that there is little difference between companies, they demand higher splits.

A disastrous downward trend in company-retained commission exists largely due to a lack of perceived and actual value in the service offering by the company and agents.