One of the biggest mistakes new broker owners make is trying to be all things to all agents.

Afraid of competing with big franchises, they end up recruiting too many kinds of agents, only to find that they have no hope of actually supporting all of them. This usually ends in disaster.

In this article, I will go over a more strategic recruiting plan for new brokerages. Instead of casting a wide net out of fear, I will show you how to focus your recruiting efforts on one specific type of agent that will allow you to sustainably scale your business. Then I’ll go over the best compensation plans and services you will need to keep them.

Effective Recruiting Starts With Your “Why”

Brokerage Business Plan Graphics

One of the most common questions I get from new broker owners is which types of agents they should recruit. I always answer the same way: You’re asking the wrong question. Instead, ask yourself what type of agent is my brokerage most likely to attract?”

The first step to uncovering which agents will be attracted to your brokerage is to reflect on “WHY” you decided to build it in the first place. As with any big step you take with your brokerage, the answer lies in your Mission, Vision, and Values (MVV). If you haven’t worked on your MVV yet, you have no business recruiting anyone. Stop reading this article, and go read my guide to creating a Mission, Vision, and Values for your brokerage here.

Your brokerage’s Mission, Vision, and Values communicate to your customers, employees, and potential agents why your brokerage exists and how it is different from the competition. This message is specifically designed to attract the agents who are aligned with your views and repel the agents who aren’t. You don’t want to waste your time with agents who don’t align with the vision of your company, do you?

Of course, understanding which types of agents you are likely to attract is only the first step in the process. If you want the agents you recruit to actually stick with you, you need to have a clear understanding of the services and compensation models they need to thrive.

How to Build a Brokerage With New, Newer & Low-producing Agents

woman working in a cafe

I know what you are thinking: Who would be crazy enough to build a real estate brokerage with brand-new, newer, and low-producing agents? Well, you’re listening to him right now. When I opened my real estate brokerage in Boulder, Colorado, I knew it would be challenging for an outsider like me to gain the trust of the producing agents in such a tight-knit community.

I also didn’t have a hundred-million-dollar budget to write large checks to attract producing agents like Compass did. What I did have was six years of experience coaching agents as Team Leader and BOLD Coach for Maps Coaching and Keller Williams.

So my solution was to build the brokerage from the bottom up by recruiting and training brand-new real estate licensees, and newer and low-producing agents who were struggling to get their career started. The result was outstanding, and I grew the startup brokerage to over 40 agents in the first six months!

Leveling Up

After showing the Boulder real estate community that I could guide the most challenging group of agents to be successful quickly in a hyper-competitive market like Boulder, I was able to gain the trust of the established and higher-producing agents. Within a short period of time, we repositioned ourselves from attracting newer agents to mid-level agents, then top producers and teams.

If your brokerage wants to recruit more new or newer agents, you will need to consider what services you will need to provide each of them and the right compensation plan that will both appeal to them and support your brokerage.

The 4 Services You Must Provide to Support New, Newer & Low-producing Agents

real estate brokerage office

While new, newer, and low-producing agents are easier to recruit, they are also the most challenging group to get into and keep in production. This is because many of them lack the knowledge, skills, discipline, and mindset to be successful.

Your goal should be to help them achieve a closing with your brokerage within their first 90 days. To do this, you must get them into action quickly. They need to learn the business and generate leads at the same time. There are four services you must provide if you choose to build a brokerage to support new agents.

  • Structured training schedule: If new agents don’t have a solid understanding of what their job is and how their actions are helping customers, they won’t have the confidence to talk to people about buying or selling real estate. To get new, newer, and even low-producing agents producing commission income quickly, you must overcome these two challenges. First, you must quickly grow their real estate transactional knowledge. This includes each task related to working with buyers, sellers, and managing a pending transaction to close. The second is the chance for them to develop skills like showing homes, writing contracts, and giving presentations. You can provide this by creating a 12-week new agent training schedule that repeats each quarter. The benefits of a repeating schedule are that it allows agents to revisit classes as needed and new agents will feel comfortable knowing that your brokerage is willing to take the time to teach them how to be successful.
  • Office or meeting space: More than any other type of agent, new, newer, and low-producers need personal interaction. This is done by having a comfortable place for them to come for the weekly training, monthly team meetings, and when they have a question or are facing a challenge. I am fully aware that all of this can be online, but if COVID has taught us anything, it is that in-person education is better than virtual. Humans need human interaction, and I believe that newer agents will still prefer a physical office over a virtual office in the post-COVID future.
  • Agent marketing plan: One of the greatest challenges for all agents is creating and managing an effective agent marketing plan. This is accentuated for agents who don’t have experience, listings, or a budget to market themselves to their sphere of influence (SOI). To solve this common challenge, my brokerage handled their marketing for them. Each month, we mailed a postcard to their SOI. It was a simple postcard marketing one of the brokerage’s new listings. This provided more exposure for our listings and presented the new agent as active in real estate to their friends and family.
  • Leads, lead generation strategies, and accountability: Believe it or not, you can run a very profitable brokerage with only newer and low-producing agents. I have a colleague who operates an independent split brokerage model, in which the brokerage receives up to 70% of the gross commission, and in 2019, his independent brokerage profited over a million dollars! With his unique business model, agents are happy to pay a higher split because in addition to standard brokerage services and agent training, they provide a steady flow of qualified leads so even a newer agent can produce one to two closings a month consistently. If you are not providing leads, then you must provide them with lead generation strategies so they can generate leads on their own. The method I used was to teach them about the different real estate lead generation strategies and guide them to pick one based on their Myers-Briggs personality type. This turned into the basis for my book, “16 Strategies for Sales.” Once they selected their lead generation strategy, I helped hold them accountable with weekly one-on-one accountability meetings. Even though this was a time-intensive approach, it is the most effective way that I’ve found to get new agents into production quickly.

Newer Agents Prefer a Low-risk Compensation Plan

New licensees are worried that the money they saved to start their real estate career will run out before their first commission check comes in. This is because there are many fees they must pay before they can start their real estate career. In the state of Colorado, where I live, the cost just to start your real estate career, including the real estate education, National Association of Realtors, errors and omissions (E&O) insurance, and MLS, can exceed $2,000.

So if you want to have new agents join your brokerage, you must alleviate these fears. One way to do this is to offer to pay for their licensing course. I did this as a payback through the first two to four closings they had with the brokerage.

Most newer and low-producing agents are also enticed by split compensation models. This is because split models are a lower risk for the agent. It allows them to pay fees only when they have commission income from a closing. A benefit of new licensees is that they are less likely to dismiss your new brokerage simply because of a larger broker split.

If you’re building a transaction fee brokerage model, I don’t recommend targeting new, newer, or low-producing agents because managing a full training schedule is too time-consuming and expensive to do effectively for a low fee or split. For this model, I would recommend pursuing mid-level and higher agents.

Why You Should Recruit Mid-level Agents to Your Brokerage

Recruit Agents

While many recruiters and broker owners chase top-producing agents, the real “bread and butter” of any brokerage are the mid-level agents who produce between 10 and 20 transactions a year. This is because they are more predictable than the other agent types.

Unlike new agents, they require less one-on-one time and their production is more consistent. They will also stay with your brokerage longer than top producers because they aren’t constantly getting poached by other brokerages. Any successful brokerage must have a plan to recruit and support mid-level agents.

The Services That Mid-level Agents Desire

Mid-level agents who sell between 10 and 20 transactions a year are doing well for themselves, but are usually not producing enough to hire their own assistant to handle their business marketing, listing marketing, and transaction management. Therefore, brokerages that include or provide these services can be very attractive to mid-level agents. Here is a short list of services you can provide to help attract and support mid-level agents.

Brokerage Services to Support Mid-level Agents

Brokerage ServicesDescription Cost
Transaction CoordinationContract-to-closing file management$300-$600/transaction
Showing Service FeeFee charged monthly or per listing$20/month or $75/listing
Signs and Lock BoxesSign rental and installation$75-$150/listing
Open House SignsRented and/or installed$50-$100/listing
Listing MarketingListing marketing packages$300-$600/listing
Individual Property WebsiteIndividual property website$50-$100/listing
Listing PresentationsProfessional, quality printed listing presentation$25-$50/listing
Just Listed/Just Sold Cards100 cards printed and mailed (includes postage)$100-$200/listing
Listing PhotographyProfessional listing photography, drone photography$150-$400/listing

Mid-level Agents Prefer Predictable Compensation Models

When you are creating your agent avatar of your ideal mid-level agent, think of a real estate agent who has been in real estate full time for at least five years. They consistently produce 10 to 20 transactions each year. They have a desire to sell more homes but lack the understanding, time, or resources to sell more. They seek brokerages with predictable fees and that reward them for their loyalty.

A successful compensation model to attract mid-level agents should also be predictable and reward them for their loyalty. The monthly fee compensation model is more predictable than the split compensation model. You can improve the standard monthly fee model for mid-level agents and show them appreciation for their loyalty by offering them the option of a longer-term agreement.

Amend your monthly fee agreement to a three- to 10-year agreement that guarantees the brokerage fees will not adjust or adjust only moderately (3% to 5% per year) for the term of the agreement. This will give the mid-level agents the predictability and appreciation they desire, and it provides you the security of a long-term agreement.

Once you have proven your brokerage business model with mid-level agents, it’s time to tackle top producers and teams!

When You’re Ready to Recruit Top Producers & Teams

Recruit Top Producers

Recruiting top-producing agents and teams is completely different than recruiting mid-level or new agents. This is because unlike the other agent types, most top producers’ businesses already rely on their own processes, systems, and employees.

Therefore, it may not matter to them if your brokerage offers a “top-of-the-line” customer relationship management (CRM) system because they already have one. Not to mention making a change can be a bigger pain than it is worth for them.

Top Producers Are Less Interested in Services

Top producers and teams are attracted more by opportunity, recognition, and better compensation structures than services. You can learn more about how to recruit top producers and teams in our previous article, The Ultimate Guide to Recruiting Agents for Your Team or Brokerage.

The fastest way to get the attention of top producers and teams is to offer a fair compensation plan that also allows them to increase their production without increasing expenses, or growing their team without taking on undue risk.

Compensation Plans That Entice Top Producers

The brokerage compensation needs of top producers and teams are quite different from the other agent types. What a top producer wants is a compensation model that reflects that they are running their own business and that they are making a choice to run their business under your umbrella.

Most top producer and teams’ business plans strive to keep the costs paid to their brokerage to under 10% of their total commission earned. For example, if they earned $500,000 in gross commissions, they need to keep their total brokerage costs below $50,000 in order for them to afford their marketing, systems, and employees who operate their business.

The simple way to attract top producers and teams is to create a compensation model that allows them to grow their production or team without the brokerage costs rising at a rate greater than the revenue earned. After all, this is probably one of the reasons they are shopping brokerages in the first place!

This can be achieved by having a compensation model that has a fixed-cost component but also doesn’t charge a large monthly fee for additional team members. This will allow top producers to add new team members and not increase their monthly fixed expenses.

The split with a CAP model is effective for team members because it allows for team growth without the large financial commitment of the monthly fee model. The challenge teams face with all split models is when their team members are successful, the team split can exceed what it would cost for them to run their own brokerage. This is also when teams shop around for other brokerages or decide to go out and build a brokerage of their own.

The other compensation model that works for top producers and teams is the transaction fee model, with low monthly fees for team members. This allows the team to use other services provided by the brokerage, like marketing, transaction coordination, and software, to be used and paid for as needed. This model works because it allows them to keep their costs within their budget and to not feel that they are paying for systems and services they are not using, like most other brokerages.

Further Reading for Aspiring Broker Owners

If you are building or considering starting your own real estate brokerage, check out our growing list of industry insider articles on starting, running, and growing your brokerage.

The Ultimate Guide to Recruiting Agents for Your Team or Brokerage

How to Craft a Powerful Story to Attract Top Agents to Your Brokerage

How to Create an Inspiring Mission, Vision & Values for Your Brokerage

Are Brick & Mortar Real Estate Offices a Waste of Money in 2022?

The 5 Employees You Need to Hire to Grow Your Brokerage in 2022

Over to You

Do you have an ideal type of agent in your brokerage? Let us know about it in the comments.