This is the first story in Recruiting War ’24, a multi-part series exclusive to Intel subscribers on how brokerages are poaching and retaining top agents in a down market. Keep an eye out for the second installment on April 15.
Summer was drawing to a close in 2022 when eXp Realty shared some news: The virtual brokerage had just recruited top teams from Keller Williams and RE/MAX.
About a month later, Compass picked up a top team in Rhode Island — and continued making similar headlines for the next year and a half. Meanwhile, Coldwell Banker, The Agency, Ryan Serhant’s brokerage and other firms all touted their own victories in recruiting the industry’s top performers. Indeed, Inman has published dozens of similar stories over the past two years.
These stories all had something in common: Almost none of them mentioned brokerage headcount. That’s actually a big change. It wasn’t so long ago that the most notable headlines about recruiting had to do with companies like eXp hitting ever-higher headcount numbers. But by last week, when Compass announced a new major acquisition, the brokerage’s press release didn’t even mention the fact that the company it bought has thousands of agents.
In other words, recent years have seen a gradual but significant shift in the way the industry spotlights recruiting wins. Quantity today is almost an afterthought — at least publicly — while at the same time brokerages are working hard to tell stories about the quality of their recruits. Top performers. Top teams. No. 1 agents in No. 1 markets. That kind of thing.
This shift reflects a radically altered, and leaner, housing market. But it also highlights a new chapter in the real estate industry in which competition for talent is more fierce, and in which the playing field is more crowded.
And the result is that many agents are currently fielding near-constant recruiting inquiries, our latest Inman Intel Index survey of 1,009 real estate professionals found.
A slow market and more competition
So what exactly pushed companies to focus on top performers rather than big numbers?
- The market shift: Mortgage rates rose dramatically in 2022 and 2023, driving down the number of home transactions. With fewer transactions, there was less business for each agent, and by last spring the total number of Realtors in the U.S. was in decline. In other words, the market shift acted as a constraint on the supply of agent labor.
National Association of Realtors data shows a drop off in transactions in 2022 and 2023. Credit: Jim Dalrymple II
- More crowding: Collabra Technology CEO Russ Cofano said recruiting also evolved as the marketplace became more crowded. RE/MAX and then Keller Williams were first- and second-generation companies that leaned heavily into recruiting and headcounts. EXp was another. But now other companies — the Real Brokerage, Fathom Realty, LPT and others — are growing quickly using similar models. So, it’s not just that there are fewer agents, it’s that there are more companies competing in the same arena for those agents.
- “When that happens, they have to redirect their outward facing message to, ‘Hey, don’t look at our growth, look at who we’re getting,'” Cofano told Intel.
EXp earnings reports show slowing headcount growth. Credit: Jim Dalrymple II
- The crowding is recent: OJO President Chris Heller told Intel that during his time as CEO of Keller Williams in the 2010s, “We didn’t really have any competition and we were able to really grow at the expense of other companies.”
- On the rise of growth-focused companies, Heller said, “that just wasn’t there 5 years ago, 6 years ago at the level it is now.”
- Compass has been instrumental in shifting the narrative: Though it is growing agent count, it makes relatively little noise over those numbers, instead more often focusing on big names. Compass’ rise as the top U.S. brokerage by volume gives it significant influence in the way companies recruit, and talk about recruiting.
- “They’re all about quality, and they never bought into the agent growth sort of PR cycle because that was not part of what they were about,” Cofano said. “Compass had no interest in promoting agent growth to their agents.”
- “The more brokerages that are being aggressive, the more other brokerages will respond in kind,” Heller said.
Compass’ principal agent headcount has been gradually increasing each quarter. In Q4 2022, the company reported only the yearly average number of principal agents, not the quarterly number. Credit: Jim Dalrymple II
Agents field constant inquiries, but few heed the calls
Intel will dive further into brokerage leaders’ thoughts on this situation in a future installment of this series.
But in the meantime, it’s worth noting that the pressure on — and opportunities for — agents has been tremendous.
- Most agents are getting recruiting offers: An astonishing 71 percent of agent respondents to the March Inman Intel Index survey indicated that another broker had tried to recruit them in the past 60 days. On top of that, another 12 percent said they hadn’t fielded a recruiting pitch in the past 60 days, but were targets of a competing broker’s recruiting efforts last year.
Credit: Jim Dalrymple II
- Brokers, not agents, are leading the charge: Almost no survey respondents (0.6 percent) indicated that they, as agents, reached out to brokers in the last 60 days if they hadn’t also been recruited. Overwhelmingly, agents who weren’t being actively sought-after were not actively looking to jump to a competitor.
- Recruiting calls come often: Nearly 19 percent of respondents said someone tries to recruit them at least once a week. Another 32 percent field inquiries at least once a month. And 26 percent get requests at least once a quarter. In total, more than three quarters of respondents face several recruiting attempts every year.
Credit: Jim Dalrymple II
- Most recruiting attempts fall on deaf ears: An overwhelming majority (90 percent) of survey respondents did not switch brokerages last year, and that trend is likely to continue in 2024; nearly 74 percent of the agents who took the survey said they “100 percent will not” switch companies this year either. The numbers suggest a few more agents may be open to a switch this year than in 2023, but ultimately near-constant recruiting efforts are not luring most agents away to new companies.
In the coming weeks, Intel will break down the state of brokerage recruiting in more detail, drawing from detailed questions in the Inman Intel Index and interviews with experts in the field.
Methodology notes: This month’s Inman Intel Index survey was conducted March 20-April 1, 2024. The entire Inman reader community was invited to participate, and Intel received 1,009 responses. Respondents for this survey were directed to the SurveyMonkey platform, where they self-identified their profiles within the residential real estate market. Respondents were limited to one response per device, but there was no limitation to IP addresses. Once a profile (residential real estate agent, mortgage broker/banker, corporate executive/investor/proptech, or other) was selected, respondents answered a unique set of questions for that specific profile. Because the survey did not request demographic information for age, gender or geography, there was no data weighting. This survey will be conducted monthly, with both recurring and unique questions for each profile type.
