This report was originally published on June 24, 2024, exclusively for subscribers of Intel, the data and research arm of Inman. Subscribe to Inman Intel for a deeper analysis of the business of real estate.
Recruiting is tough for brokerages these days, but one crop of agents may be especially open to a move, according to a wide-ranging analysis of Intel survey results.
- The share of agents at franchises who told the Inman Intel Index they will likely switch brokerages in the coming year is about twice as large as those from smaller independent brokerages who are eyeing an exit.
- But that doesn’t mean indie brokers are in the clear. Agents at private independent brokerages are also more likely to say they have considered leaving the industry in recent months.
These insights merely scratch the surface of what agents from three main brokerage classes — franchise, private indie and publicly traded indie — shared in late May when they took the Inman Intel Index survey.
TAKE THE INMAN INTEL INDEX SURVEY FOR JUNE
Of the 960 real estate professionals who responded to that survey, 610 were self-identified agents who disclosed the type of brokerage with which they work.
This breakdown provided Intel a rare window into the unique experience of agents at each type of brokerage — including their current commission splits, their transaction volumes and what they value most in their brokerage.
Intel’s guide leverages the Intel Index to help brokers and executives take stock of what agents are thinking at both franchises and independent brokerages — and what it will take to pry them away. Read the results in the full report.
Indie vs. franchise
It’s more than just an age-old debate in real estate over which brokerage structure achieves the best results — it has implications for how an agent is likely to respond to a recruiting pitch, Intel survey results suggest.
Some agents prefer to work for a brokerage that’s affiliated with a large franchise network, while others swear by the benefits of a more independent model.
In recent years, a third model has risen to become an increasingly prominent player: larger publicly traded companies that don’t franchise. Fast-growing upstarts like Compass, eXp Realty, or the Real Brokerage all fall into this category.
Because this public indie model blurs some of the lines between a larger network and a traditional indie shop, we’ll set it aside for now. (Don’t worry, we’ll bring it back later.)
This leaves us with the two groups that still make up the vast majority of respondents to the Intel Index survey: agents at franchise brokerages, and those at (mostly smaller) independent offices.
- 15 percent of agents at a franchise say they’re strongly considering switching brokerages in the next 12 months. Only 8 percent of agents at a privately owned indie brokerage said the same.
- Franchise agents were also less inclined to doubt whether they’re staying in real estate, with 27 percent saying they’ve considered leaving the industry in the past year. Nearly 33 percent of agents at private indie shops said they had considered hanging it up.
So with this in mind, there may be an extra-promising opportunity to recruit franchise agents. There’s also a heightened risk of losing them to competitors.
So what is it they value in a brokerage?
- Like other groups, agents at franchises tell Intel they want to know it’s a good culture fit, with 26 percent picking this as the aspect they most value in their brokerage.
- Still, that share is significantly lower than at private indie brokerages, where 36 percent of agent respondents say they value culture fit the most.
So what attracts franchise agents to a brokerage instead?
- More agents at franchises tell Intel that they most value consumer perception or brand recognition in their brokerage: 30 percent say this at franchises, compared to only 19 percent at private indie operations.
- Agents at franchises are also more focused on their brokerage’s technology and educational offerings. Just over 19 percent of the franchise group named tech and education as its No. 1 priority, compared to 11 percent of private indie agents.
Interestingly, how an agent feels about their commission structure also varies significantly from franchise to indie.
- Franchise agents who responded to Intel were more a bit more likely to have a commission split between 70 percent and 79 percent, and less likely to have a high split amounting to 90 percent or more of the transaction.
- In all, 31 percent of agents at franchises had a sub-80 split, compared to 24 percent of agents at private indies.
- That said, agents at franchises seemed to be mostly fine with this tradeoff. Only 17 percent of franchise agents said commission structure was their top priority, while 24 percent of private indie agents said the same.
When recruiting a franchise agent, there may be more room to bump them up a tier in terms of commission split. It may be important, however, to build the central thrust of the pitch around factors like your brokerage’s tech offerings, culture and brand recognition within the community.
Franchise agents are more likely to report a high-volume business in this down market.
- 24 percent of franchise agents who responded to the Intel Index in late May said they completed more than 20 transactions over the past 12 months. Another 20 percent said they had conducted five deals or fewer.
- Only 17 percent of agents at private indies told Intel they had conducted more than 20 transactions in the past year. The share of private indie respondents with five deals or fewer was 32 percent.
But focusing on these two groups, explored in detail above, leaves out one critical group of agents.
Where do Compass, eXp fit in?
Some of the biggest rising brokerage companies of the past decade deserve their own category.
These companies are technically not franchisors — although some have flirted with the idea. But brokerage brands like Compass and eXp Realty come with a lot of the same tech and network resources that a large franchise company typically offers.
The Intel Index results suggest, perhaps unsurprisingly, that agents affiliated with big, non-franchising brokerage companies look more like their franchise counterparts than their private indie cousins.
Still, there are a few key differences of perspective that agents at publicly traded indie companies display.
- Nearly half of agents at public indies told Intel they had something close to an 80/20 split with their brokerage — roughly double the concentration at this level reported in other groups. But this means they were also less likely to report a higher split of 90/10 or 95/5 or a lower split of 70/30.
- Public indie agents were the most likely of any group to say they valued technology and education resources over all other aspects of their brokerage: 26 percent said this at public indies, compared to 19 percent at franchise operations.
- While culture fit remains an important part of the picture to agents at public indies, only 23 percent of them said it was their top priority — the lowest share in any group.
In terms of top business concerns, agents at franchises and private indies shared fairly similar worries. But agents at public indies stood out in several key areas.
- Only 4 percent of agents at publicly traded indies told Intel their top concern was related to brokerage uncertainty following the lawsuits and settlements. That’s significantly lower than the 11 percent reported by franchise agents and the 9 percent by private indie agents.
- Instead, this group’s worries were squarely set on the market itself: 70 percent of agents at public indies named either lack of inventory or mortgage rates as their top business concern, compared to 62 percent of franchise agents who named the same two factors.
Because this was the smallest group, making up about 1 in 7 of all agent respondents, these results are less likely to be representative of the broader group.
Intel will continue to track these three groups of agents in the months to come, looking for ways in which the changing landscape may impact them differently in terms of buyer pipelines, transactions and recruiting dynamics.
Methodology notes: This month’s Inman Intel Index survey was conducted May 20-June 2, 2024, and received 960 responses. The entire Inman reader community was invited to participate, and a rotating, randomized selection of community members was prompted to participate by email. Users responded to a series of questions related to their self-identified corner of the real estate industry — including real estate agents, brokerage leaders, lenders and proptech entrepreneurs. Results reflect the opinions of the engaged Inman community, which may not always match those of the broader real estate industry. This survey is conducted monthly.
