Virtual open houses, digital closings, conversations from behind face masks — what productivity looks like for real estate agents this summer covers new terrain for all of us. All June, Inman surveys the New Productivity: the tools, skills and insights needed to make it work now.
It’s fairly well-known that 20 percent of small businesses fail within the first year, and 50 percent fail by the fifth year. It would be safe to assume that real estate agents, as entrepreneurs and small businesses owners in their own right, would fall in line with that statistic.
According to several long-held, often-cited industry stats, the real estate attrition rate falls anywhere between 75-90 percent within the first six months to five years. That’s almost twice the failure rate of other small businesses.
In the past 60 days alone, our team put 477 homes under contract and added 30 more people.
As the owner of a large real estate team, this number is top-of-mind and something we battle against daily. Not only does the industry attrition rate pose a challenge, we also have to consider the transient nature of real estate agents who can easily move between teams and brokerages.
For those reasons, and more, I am proud of our team for building an organization that allows us to maintain a 95 percent retention rate of our agents.
Higher retention means a more cohesive culture on our team and more highly trained and seasoned agents serving our customers and clients. It has made us a strong and unstoppable team, even during times of extreme uncertainty. In fact, in the past 60 days alone, our team put 477 homes under contract and added 30 more people.
Don’t get me wrong — this didn’t happen overnight. Arriving at a 95 percent retention rate took time, years of trial and error, and a whole lot of failing forward.
Several years ago, we would add 20 agents, and 20 would leave within the same month. Retention rate: zero. Yes, there is a high rate of attrition in real estate, but I wanted to build something different. Something that lasted. Something that our real estate agents could build thriving lives and careers around.
It took a shift in our thinking and a commitment to building an organization focused on culture first to get us where we are today. It might have taken us several years to get there, but it worked.
We learned from our mistakes! I want to help you fast-track your team to maintaining a 95 percent retention rate, so that you’re reaping the benefits a whole lot faster than I did. Here’s how.
51% culture
The first thing we had to do was let go of the outcome. What we were doing — focusing on adding as many agents as possible (regardless of how many left) — didn’t work for us. The top line number looked great, but it wasn’t telling the whole story of our business.
Profit is important, and culture is 1 percent more important when it comes down to the integrity and vitality of our team.
When we took a hard look at the business, we realized our retention rate was terrible, and we were doing a disservice to the agents who were joining our team. We slowed down, reset and created an entirely new model based on culture first, instead of agent count.
Now, we are very clear, when we are recruiting and hiring real estate agents or looking to partner with a new team, that we are looking at those individuals against our scale of 51 percent culture/49 percent profit.
The right cultural fit is always going to tip the scale against profit. Sure, perhaps a high-producing agent could bring a significant amount of production and profit to the team, but if they do not fit into our culture, and could potentially be an emotional and cultural drain on the team, then it’s a non-starter.
Yes, profit matters. Our current profit margin stands at 22 percent ($2.3 million). So, yeah, it’s important. And, culture is 1 percent more important when it comes down to the integrity and vitality of our team.
Personal growth through business success
Next, we took a look at our vision and made sure it aligned with our actions and beliefs. Our vision for our company is to create a conduit for personal growth through business success. Personal growth really comes down to changing someone’s thinking, which opens their mind to changing their behavior and ultimately changes their being.
Once you have brought a new level of awareness to people, they are forever changed and will no longer be able to operate at their previous level of thinking.
Having this level of impact on another human is what our organization is all about. We believe in transforming the lives of our clients through homeownership and transforming the lives of our employees and agent partners through personal growth and business success.
Personal growth is a part of everything we do — whether that’s tactical training on building wealth through real estate investing, hosting an annual health challenge, encouraging and holding each other accountable, spending quality time with our families and friends, or masterminding around topics, such as journaling, morning routines, mindset, meditation, nutrition, relationships, or leadership. Personal growth is part of our company’s DNA.
Models and productivity
Our culture is made up of this vision, coupled with a commitment to productivity and following the model. We built an operational hub complete with marketing, listing management services, transaction coordination, sales and leadership training, technology solutions, and more.
Regardless of what you want your company’s vision and culture to look like, you must get purposeful on defining it and infusing it into everything you do.
Our internal focus on the model removes distractions from agents and keeps them focused externally on production and what they do best — getting in front of consumers, building lasting relationships and consulting them through the homebuying, selling and investing processes.
Our model is predictable and scalable. When a new agent or team joins our company, they are able to plug in easily and become productive quickly, which leads to increased profit for everyone. This model of systems and productivity is our culture. We like to move fast, take action and make an impact on those around us.
Retain talent and grow your team
Regardless of what you want your company’s vision and culture to look like, you must get purposeful on defining it and infusing it into everything you do.
Only then will you attract real estate agents who not only share your beliefs, but also will champion the vision and culture and see their success being realized through the success of the organization. A 95 percent retention rate is built on just that — 51 percent culture and 49 percent profit. Nail that equation, and you’ll be attracting and retaining talent and growing your team for years to come.
Adam Hergenrother is the Founder and CEO of Adam Hergenrother Companies, which includes KW Vermont, Hergenrother Realty Group, BlackRock Construction, Adam Hergenrother Training, and Adam Hergenrother Foundation. Follow him on Instagram.
