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What are the changes that are already taking
place, and will continue for the next 10 years? What are the opportunities that
you will have? NAR's Prediction:
Over 50% of the Realtors® who currently sell real estate will retire in the
next 10 years. Judy's Prediction:
Not only will 50% retire, and those who are caught off guard, will lose millions
of dollars in market share, and possibly go out of business! Current Statistics from NAR
Extra….. Extra….. Read all about it!!! WE ARE THERE!The baby boomer generation of Realtors® is
about to retire. Thousands of
very successful realtors who are currently earning 6 digit incomes, and selling
millions of dollars of real estate will soon be leaving the industry. When they
retire, that business is going to get dumped back into the general real estate
pool of properties for other agents to pick up. A new breed of agent is already
entering the market place, and you the brokers need to get ready. What will the potential impact be to many
of the large companies in the marketplace? Each
year, if they only lose 5 agents who are doing an average of $5,000,000.00 in
business decide to retire, the loss per year in business, as well as market
share could be $50,000,000.00 or more!! In
addition, many of those companies will continue to focus on hiring new agents,
which will compound the problem!! We
can no longer continue to do business as we have in the pas; we need to change
with the times.
How vulnerable are you as a company?
· Look at the current agents that you have.
So, where is the recruiting opportunity, and where do you begin? The companies that position themselves now,
with a plan to capture and recapture their market share will come out the
winners over the next 5-10 years. After all…the best way to predict your
future is to create it!! If an agent wanted to retire today, what
would they do with their business? Would
they sell it? What could they sell it for? The
problems encountered in the past with selling your real estate business:
Most agents surveyed said that they intend
to walk away from the business because it is "too much of a hassle".
Not only do they lose a lot of money, you lose money, market share, and presence
in the community. But when we asked agents: "What if you could retire whenever you wanted. Then after
you retire, we would continue to market to your client base. Whenever anyone in
your sphere and anyone they refer has a transaction with our firm, we'll
automatically send you a check. You do nothing; we do all the work. Now are you
interested in a plan like that?" 100% of the agents
surveyed said that they would be very interested in a plan like that. How would it work? Team them up with other 'rookie' agents 6
months to one year prior to their date to retire. As they work as a team, they
are known as The Team of John Jones & Sue Smith. When they are working as a
team, they work on a referral fee basis. The best agents to take over their business are fairly new to the business, 1-4 years. Why? They do not mind giving up 10% on all business that they conduct. The 10% royalty fee is on all business that is done by the agent who takes over the business. It works like a franchise fee. Otherwise, you would have an accounting nightmare. The amount of business being done by the retiring agent determines how many agents will take over the business. A large team might have a team leader who benefits from all business being done by the team. The Various Recruiting Opportunities:
Sample Guidelines to put into place: They must be with your company a minimum of one year prior to retiring to set up the system. 10% of the net amount, after the royalty fee and company fees are paid, of each closing will be put into a fund that must be used to maintain and build the business of the retiring agent. The account is controlled by the active agent, and the agent who is active in the marketplace, takes the deduction for the advertising, and marketing funds that are spent. An accounting of how the funds are spent will be presented quarterly to the company, or the retiring agent, per the referral agreement. If the agent who has acquired the business decides to leave the company, the business that has been generated remains the property of the original referring agent, and a new agent will be put in charge of the team. The funds that are set aside will be used to announce the name of the new agent who will be taking over. A 10% royalty fee will be deducted off the net amount to the agent, on every transaction closed, and be sent to the retiring agent. The only exception, will be properties purchased by the agent for the personal use of the agent. The retiring agent must remain a current license, but may keep their license in referral status. This agreement will stay in effect for a period of 10 years, or until the death of the retiring agent, whichever occurs first. A referral agreement and contract that specifies the terms of the agreement, would be signed by all parties. Why will this plan work? It's easy to manage, and easy to sell. Any agent would pay a 10% referral fee to pick up a multi-million dollar business. Sample of how it works for the Retiring
Agents: Currently they sell $5,000,000.00 in business. 3% is $150,000.00 to the agent minus their expenses. 10% of $150,000.00 = $15,000.00 per year for
10 years =$150,000.00 for their business Plus 10% of the additional business of
the agent who took over the business. An additional $5,000-10,000 per year. And
keep in mind, that most agents were going to walk away from the business. Sample of how it works for the agent who
takes over the business: Currently they earn $50,000- 60,000 per year. They take over the $5,000,000.00 business. $150,000.00 in Gross Closed Referral
Income - $15,000.00 Royalty Fees - $15,000.00 into a marketing fund, which they control, and also take the deduction for. $120,000 X 70%= $84,000 in referral
income Plus their original $60,000 in income for a total income after referral
fees of $124,000. Would you pay $15,000 per year, for a
return of $84,000.00 per year? I would!!!! That is how you capture and recapture the market share over the next 10 years. But you must start now. Is
your farming system in place? Does it have the right agents on it? Farming is
essential to consistent results. Once you get them in, you still need to have
good interview skills. But keep in mind that farming
does the pre-sell for you; you
just need to confirm their decision. Don't
try to sell them, look to find their needs. And give them the answers they are
looking for. |
