Question Details

John Souerbry, Real Estate Pro in Palo Alto, CA

Is it time to embrace the "agent as employee" business model?

Asked by John Souerbry, Palo Alto, CA Tue May 29, 2012

I heard it again today from a licensed agent - "I don't want to run a business, I just want to sell real estate." It was the ump-teenth time this year I've spoken with an agent seeking a salaried, W-2 employee position in real estate sales.
Is it time for brokers to offer such positions? The business strategy is for brokers to cap the agent's compensation in return for providing a steady salary, perhaps even fringe benefits. Would agents in these positions have the motivation to meet sales targets that make the positions profitable for the broker? Are brokers ready to take on the management responsibility to manage staffing based upon paying steady salaries instead of commissions?

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12
Judi - are you saying that salaried or salary/bonus salesmen in other industries don't have a fire in their belly? If a salaried salesman in any industry doesn't make his numbers, he'll usually get dumped.

Mack - are you suggesting that team leaders carry salaried sales staff? That's kinda-sorta like the brokers doing it on a micro level. My concern would be training someone and then watching my investment move to another broker before I recoup my costs.
1 vote Thank Flag Link Wed May 30, 2012
That's why I am a agent. I don't need anyone to tell me what to do, how and when; I dealt with that for 20 years. If agents want an employee business model they should go back to a salaried 9-5 position where there probably will be a ceiling cap on their income and career; the ability to hold their own is not a craft for them. When the economy improves significantly this business will be flooded with new agents that believe this is a no skill, get rich, quick business. The ones that rode the tides over the past several years will reap the benefits of their resilience and that's how life is nothing for most of us is handed on a silver platter.
1 vote Thank Flag Link Wed May 30, 2012
Where can I sign up?
8 to 5 What a deal!
Benefits...wow, haven't had those for years.
Success or failures, not my responsibility, what a relief.
Do my task, keep spinning the wheel, not that is simplicity I can live with!

What will happen if the economy hits a speed bump?
Boss will need to lighten the load.
The employee will be seeking refuge in a even lower paying job.
What if the boss realizes the employees have boxed themselves into a corner and have no place to go and decide.."today we all going to go door knocking!"

And as most of us in a previous life came to realize, as a employee you are a fungible asset. The concept of security is an illusion and you will forever be poor. If we have learned anything it is that a direct exchange of time for money puts the employee in a never win situation. Only when one retains control of their time can they leverage their efforts for the future benefit of themselves and those important to them.

For many the candle of hope burns dimly. For these the sanctuary of an employer is attractive. It is my hope their curiosity will discover the opportunity before them that they never recognized. As long as the ember of hope remains, lives can indeed be changed.

The bright side is the broker will begin to exercise GREAT care regarding whom they take aboard. The 'If you pay the fee you're ok with me' tradition may begin to fade.
1 vote Thank Flag Link Wed May 30, 2012
Hi John,

Because we are hearing rumbling about a true employee/employer relationship from individuals doesn't necessarily mean the majority is seeking the same. This wave could simply be the result of new factions entering the business that don't understand how business has operated for years.

My thought is that a change of this magnitude would eliminate a ton of part time agents that operate by their own system. Can't see an employer carrying too much wet and dead wood.....

Bill
1 vote Thank Flag Link Wed May 30, 2012
I liked your comment less part time agents!
Flag Wed May 30, 2012
No, absolutely not. I agree with most of what has already been stated. If these agents want a W-2, send them to the employment office for a 9-5. I have heard this rumble myself and it is always, always from an agent that doesn't want to do anything but have a client dropped in their lap and then I end up doing both sides to get it done.

The next time you hear that, tell them to stop whining and get a 9-5 with benefits and paid vacation. They'll thank you for it.
0 votes Thank Flag Link Wed May 30, 2012
John, I don't know what these folks really want or don't want to do, so it's hard to prescribe for them. It's my understanding of "sales teams" that the Leader is the rainmaker and the job of the rest is to execute.
0 votes Thank Flag Link Wed May 30, 2012
I think that this type of agent would be better off joining a "team."

I'm not sure what the specific complaints these agents have - I imagine that they'd like the Lead Fairy to beat them upside the head with qualified leads so they can just "go out there and do what I'm good at, which is to sell property," but if that's the case, I think they misunderstand their value to their clients and to the brokerage.

However, an agent's value to the brokerage isn't quite so much lead conversion as it is generating new business for the brokerage. So while a real estate salesperson may prefer to not "run their own business," they may also need to look at what their value to a brokerage is if they essentially provide the broker with "menu services."
0 votes Thank Flag Link Wed May 30, 2012
The big question is do agents lose the fire in their belly when they are salaried vs. having to go out and find their next commission? Certainly Real Estate isn't for everyone as proven by the vast number of agents that don't make it during their first year. But for those with the tenacity and skills to make it do quite well. Personally, I think the current system works well for weeding out those that don't belong in this industry.
0 votes Thank Flag Link Wed May 30, 2012
Thanks all for your answers -

Inna: I agree with you to some extent, but there is a down side - agents who don't make their sales quota would be terminated much sooner than a contract agent who costs the broker much less and therefore can be carried longer.

Scott: I think you're right about the current generation of agents, they aren' used to strict supervision. But the new "entitlement" generation might like it just fine if they get a steady paycheck.

Bill: totally agree, part-time agents who don't meet quotas would not be around long, but part-time agents who exceed quotas might be a bargain for a broker

Annette: not sure I agree with "success or failures, not my responsibility..." If anything, if I hired an employee agent (which I am not planning to do), I would likely hold them more accountable than I would a contract agent.

Tom: I agree that business people in general have to change with the times, but the question is whether or not changing agents from contract to employee is a good idea at this particular time

Janet: You obviously embrace the "business owner" agent model that most agents seem to feel most comfortable with, trading the extra administrative tasks for no cap on earnings.
0 votes Thank Flag Link Wed May 30, 2012
Successful business ppl make money in Up Markets and Down Markets.

There are more millionaires made in down markets than in the booming UP markets.

The Depression of the 1930s saw more ppl become millionaires in than any other time in history.

Changing ones business model depending on the economy or which political party is in office is a must.

Sticking with ONE business model is like having only one product to sell. You Will Fail. It is just a matter of time.

What is our saying? "The Only Constant in Real Estate is Change."
0 votes Thank Flag Link Wed May 30, 2012
I just don’t think that business model works for this industry and the current group of Realtors® which are involved in this market. Realtors® will say almost anything and complain about everything, they are blessed with the gift / burden of gab. Some of the top reasons people are Realtors® is flexibility in scheduling, not taking crap from the man, no time clock, if they choose not to work with a client it’s their call. Realtors in general are nonconformist, free spirits and entrepreneurs. This is part of what makes great Realtors® and unfortunately contributes greatly to an extreme rate of failure in this industry. The current makeup (intangible attributes) of the realtor® would have to change and the brokers headaches would be extreme to say the least. Imagine trying to manage/control a group of free spirits, think of your own staff how many would you fire and for what reasons? The flip side would they continue to work with you? Do you really want to hear on a daily basis why they are late, haven’t returned Joe and Sally’s call, quit working a short sale, their kids are sick, but it’s a holiday weekend etc.…
0 votes Thank Flag Link Wed May 30, 2012
I think, it is a good idea.
Each realtor must have too many hats while selling real estate, it IS like 'running a business'. Not everyone can do it.
When you work as a part of a team, it is more efficient work: everyone is responsible for a certain aspect of a RE transaction: listing agent, marketing, TC, buyer agents, agents for rents, PR person, etc.

I heard about 'salary agents'. Less responsibilities, more focus, benefits, stability~ i'm sure, a lot of agents would like it.
0 votes Thank Flag Link Wed May 30, 2012
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