Last week I taught a Real Estate sales training class with most of the learners three years or newer. The course was on how to increase their production and customer service skills. Real Estate has an easy barrier to entry, but fairly hard to succeed at and make a living. No one tells you that. Why?
Teresa Boardman, from StPaulRealEstateBlog writes this morning,
Real estate companies make the most profits off of the lowest producing agents, because they get a bigger cut of the commissions. They will continue to bring on new agents as long as it is profitable for them to do so. Yes real estate companies should provide more training. They don’t because there is little incentive to provide training beyond how to promote the company brand and how to hold an open house which promotes the company brand, and the agent while doing almost nothing for todays tech savvy consumer and stressed home seller.
Did Teresa unlock the Traditional Brokerage secret to profit?
- Keep bringing in fresh blood. (Barrier to Entry is easy.)
- Put them on low commission splits, give little training. (Barrier to Success is hard.)
- They will quit. (Gap to success and higher commission splits to hard.)
- Bring in fresh blood.
Does it make sense? Not really, but that does seem to be the old school business model.
Teresa also calls out Glenn Dorfman, the CEO for the Minnesota Association of Realtors. The last two years, MAR has sent out a letter to all Minnesota Realtors asking them to quit if they are not going to produce. At first thought, this seems like a great idea to me. Teresa though, has a different take on it,
Glen, your letter is just another example of how an industry in turmoil has started eating it’s young to protect old business models instead of innovating to better serve the consumer. Real estate is a self eliminating market driven profession. It works on the principals of supply and demand, as does the housing market. When agents can’t make ends meet they will seek employment outside the industry and maybe they will sell a few homes too. We call our economic system capitalism and I just love the almost endless opportunities the system brings. Anyone can start their own business, how cool is that?
You should definately head over the SPRE Blog and read Teresa’s whole take on this letter request.
St. Paul Real Estate: Has MAR forgotten who pays the bills?
The Gardyn 