We can influence the real estate industry by banding together to implement real change once we show a united force of elite Agents and Teams cross brokerage. When I was a kid, I was a cartoon watcher and a fan of Superman, Batman, and they belonged to the Justice League to fight against evil. We need to band together but it would be more list LEOPARD (League Elite Of Performers Aligned Ready for Domination). Why would we want to do that? It raises the bar and demonstrates that we are committed to performance. When we succeed at improving the standards for selling houses and as commission compression continues, it will begin to narrow the field of agents.
Rob Hahn of Notorious ROB made a valid point on his blog last year that only 3000 teams are needed to sell 6 Million houses. The same could apply for the 100,000 sales in AZ. Raising the training standards and requirements will thin the herd. The challenge is the current model makes money by recruiting more new agents to brokers, but the good news is when the quality of Agents is standard, It means more business for the agents that are left. We’ll see a higher level of standards with a better quality of education and more of it. The focus shifts from quantity of agents to quality.
How many real estate agents do the real estate industry of associations and brokers believe is enough to sell, for example, there were 100,000+ homes in Maricopa County in 2020. There are now over 50,000 real estate agents in the county. Enough is enough. Only 30,000 did less than 3 deals. Service just can’t be great when you do something once every couple of months.
The growth in AZ agent count is rampant across to industry not just in here, look at the national stats!
When you compare the rising total number of real estate agents to the lack of growth in total US real estate sales, it is clear there is another plan in place by those setting the licensing criteria.
What is Driving the Industry?
It appears that the brokers, associations, and MLS are the ones creating this rhetoric, as they are the ones benefiting (fees & expansion of government) from the record number of agents. While a cumbersome home selling process gets neglected and goes unchecked for quality, causing home sales not to rise. The point I would like to make clear is that the existing practitioners are the one’s losing by the industry’s motivation to continue to keep the licensing standards and fees low to continue to bring on agents at a rapid pace. More and more competition, you, me, and the other elite agents have higher attrition to their client base yearly as a higher percentage of the public has a license and we all know that people will buy with their friend. Buyers just need someone to write the contract once they find a home which shows up as a lost client to us and often without notice.
“The existing practitioners are the one’s losing by the industry’s motivation to continue to keep the licensing standards and fees low to continue to bring on agents at a rapid pace.”
The industry and its brokers have built a business based on agent count as that’s how they make their money, but with no plan to stop the growth in licensing. A few years ago, real estate analyst Stefan Swanepoel put together the Danger Report which is a study of dangers, unpredictable events, and game-changers in the real estate market. This report helped the National Association of Realtors (NAR) identify opportunities, trends, and risks, yet it appears the industry has shown its true colors by not taking action against its clear conclusions as the industry continues to bring on more new agents. Those conclusions were published but nothing came of it. With the utmost certainty, Stefan asserted the rising population would ruin the reputation of the brand and agents. The industry promoted raising the bar but instead filled the bar.
I no longer believe these falsehoods. It’s time for the real producers, the top 5% listing and selling agents, that is you and I, to band together across brokerages. Our power is unrecognized if not, and the value of the broker is failing as they merely want to profit off of you.
Agents Fake It ’till They Make It
The second major effect of tirelessly pumping out new agents is the consumer is clearly also losing due to poor service and ruining the reputation of all the agents. There is an 87% failure rate of an agent, says industry trainer Tom Ferry on his blog. I can feel the quality of cross-sale agents fall. The best agents are losing customers to the ease of getting a license and the opinion of the consumer complaining about bad service and thinking that all agents are the same. The lack of quality training, in lieu of apprentice-style requirements, leaves these new entrants selling themselves as a good option, fake it until you make it. The reality is the consumer has a difficult time as all agents’ opinions are presented as the same in value. They’re devaluing their life-long achievements opinion vs their friend who sells 2 houses a year for the past 15 years but attends as many free lunches and regurgitated content seminars. Yes, your reputation and words are not valued as too many fake it till they make it. We need to fight for more transparency to the consumer how much each person sells. Unfortunately, the brokers have fought to keep no clear distinction between the advice of a grizzled agent and one that sells one house every other year.
“We need to fight for more transparency to the consumer how much each person sells.”
Researching, I found that the top 5% of realtors, 2500 in total, in the Phoenix Metro do 87% of the business. I realized my plan can work if we, the elite, act in unison. This elite 5% represented buyer or seller in 29 billion or the 33 billion of sales in ARMLS in 2019 and, yet, are in large part, not represented in government, clear with the passing of MLS 8.0 on a 9 to 1 vote, wow. The government structure is too political and non-innovative to interest the producers that do the majority of sales. It is a troubled government structure that benefits the ones that want to have more agents and so the smallest interest by total agent count, the elite producers, are left to improve the quality of services.