The Self Defeating Brokerage Recruitment Model…the vicious circle continues:

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Kris Berg wrote a very compelling post on Inman yesterday Don’t Forget the Customer The article was spot-on about how brokerages function – and often how the function to the detriment of the consumer.

Now, I think most consumers would understand that in order to keep their doors open, a brokerage needs to be profitable.  The bottom line for any business is that they must turn a profit or close their doors.   Ideally, profitability should be tied to customer service.  The agents of a brokerage should provide outstanding customer service including intelligent negotiating skills, a fine marketing plan, and service that smoothes  the transaction process.  Unfortunately, that model is not the prevailing one among brokerages.

The way brokerages function often is a mystery to the consumer and it often comes as a shock to new agents who think that the brokerage is there to “support” them.  After all they are paying very hefty splits to the brokerage -supposedly for leads and support and training from the brokerage. And therein lies the rub for the consumer.  Most brokerages disconnected from customer service and the newly licensed agent course became the big  cash cow.  They recruited and recruited throwing  anyone with a license and a pulse up against a wall and hoping that something will stick.  Even a non-productive agent had a couple of good deals in them from family and friends.

But what does this offer the consumer?  Pretty much nothing more than a crap shoot with respect to selecting an agent.  WIth “training” generally at a minimum and a lot of newly licensed hopefuls trying to learn by the school of hard-knocks, the consumer is left out in the cold.  This model has been  a win-win for the brokerages and a lose-lose for the consumer.

Has this worked for the agents?  No, not at all.  The ease with which a license can be gotten and the fact that most brokerages will recruit just about anyone has created a glut of agents that has been seen in very few areas of business.  The joke is that you can’t throw a rock out the window without  hitting a real estate agent and I would say that this is largely true.  The result is thousands of agents crawling all over the unsuspecting public for a small slice of the real estate pie.  Some competent professionals, but many more struggling agents who haven’t seen a deal in months if not years.  For those who must make their bread and butter this way, the time and money spent lead generating is daunting and inevitably impacts the time spent on customer service.

Thus you have the vicious circle:  As more brokerages recruit ever more agents, each brokerage must step-up to get more of their share of agents.  As this continues, customer service gets left behind and the system becomes so glutted that the focus has to be on generating new leads.  Right now brokerages are addicted to sheer volume. Customer service will only return when someone gets brave enough to turn the model on its ear and say “quality over quantity.”  I’m not holding my breath…

© 2010 – Ruthmarie G. Hicks – – All rights reserved.

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