Managers Who Sell

How to know when to stay in the game

September 1, 2004

Norman K. Brooks, broker-owner of Commonwealth Realty in Richmond, Va., was in the field working on one of his transactions when one of his sales associates called him on his cell phone. The associate wanted advice on two offers he’d received for one of his listings.

Brooks’ ability to provide his associate an effective answer relied greatly on the fact that, after 23 years in the business and now as owner of a six-person real estate company, he continues to sell every day and is intimately familiar with the market.

What’s more, the call shows that, even though he sells, his salespeople understand he’s not competing against them but working for their benefit. “For a small company like ours, it’s important for me to keep selling to know what’s going on in our market,” says Brooks, who launched his brokerage in 2003 after leaving a mid-sized company at which he was a partner.

But to make the arrangement work, Brooks says he must make it clear that his pursuit of sales won’t crowd out his associates’ efforts.

Imperative to sell

Maintaining a good relationship with your associates as you continue selling is key for small broker-owners for another practical reason: finance. The sales you generate might be the only thing standing between the company and bankruptcy, says Bob Beck, broker-owner of Beck & Beck Realty Co. in Nashville, Tenn.

Given the large commission split sales associates command in the market today, Beck says, few owners can afford not to sell, so it’s the rare small company in which sales associates find a non-competing broker-owner. “When I started selling 35 years ago, the commission split was 50-50,” says Beck, who launched his company in 1967. “Today new associates are getting 70 percent to 75 percent, and experienced associates are getting 80 percent.”

To make the economics work for their small company, broker-owners rely on income from their associates’ sales to cover their company overhead and rely on their personal sales to put money in their pocket, says Ronald McManamy, CRB, CRS®, broker-owner of United Real Estate Solutions in Sioux City, Iowa. “What selling broker-owners close costs nothing to generate because associates’ commission income covers the brokers’ costs, such as out-of-pocket expenses to prospect, market listings, and process paperwork,” he says.

To compete or not to compete?

Still, not everyone in the industry thinks brokers who manage should continue to sell. “Other brokers try to use the fact that I’m a selling broker against us in the competition for new recruits,” says Larry Sutherland, CRB, CRS®, broker-owner of #1 Properties in Cheyenne, Wyo. “They say to salespeople, ‘You don’t want to go over there because they’re competing brokers.’ The perception is, we’ll take floor time, we’ll take their leads, and so on. But that’s not the case.”

Another argument made against broker-owners who sell is that they’re spread too thin and the sales associates might be the loser as a result.

But broker-owners who continue to sell paint a different picture, saying their experience and the leads they generate are a net plus to their associates. “If you’re in business a long time, you generate a lot of repeat business,” says Roger Cox, broker-owner of Roger Cox & Associates Inc. in Albuquerque, N.M. “You can only do so much yourself, so you refer additional business to your salespeople. They benefit from your sales activity.”

Cox’s company focuses primarily on commercial real estate and is developing and selling a 3,700-acre housing subdivision, but his associates also list residential property.

“When you get into a 20- to 25-person sales office, you have more issues to care for as a broker, and running the company should become a full-time job,” says McManamy, who sold while he was a sales manager but quit selling after he became a broker-owner. His company affiliates about 60 associates.

Rules for fair play

Broker-owners who sell say it’s a simple matter to set up your office in such a way that you and your associates avoid direct competition for customers. The arguments that brokers will take all the business don’t hold up, they say, so long as brokers follow a few rules. Here are some of the ways selling broker-owners can avoid stepping on salespeople’s toes.

  • Don’t take floor calls.
  • Don’t prospect for business. Rely instead on referrals.
  • Do try to sell associates’ listings.
  • Do bring listings into the inventory for your associates to sell.
  • Do give leads to your associates, particularly to new associates.
  • Do defer to an associate when the customer is ready to become a client and both you and the associate have been talking to the same customer.
  • Do lead by example by digging up business when the market slows. Less experienced associates may need a model for finding customers in tough times.

The competitive sales manager

For companies large enough to have them, sales managers should continue to sell as well, say brokers. But the same rules for avoiding competition should apply to them. “We have a fundamental understanding with our sales managers that if they’re faced with competition from an associate, they always back down,” says McManamy.

That kind of competition can occur fairly regularly, since managers often meet customers on the floor. “One of the associates might be talking to people who are still deciding whether to sell their house,” says McManamy. “At the same time, the sales manager might be acquainted with the customers, too, if they came into the office when the associate wasn’t there. Once the manager becomes aware that the prospects are talking to the associate, the manager formally recommends the associate and in so doing helps the associate acquire the listing.”

For associates, the benefit of a sales manager who continues to sell is the manager’s market knowledge. Like a selling broker-owner, a selling manager can advise less-experienced associates on key pieces of their transaction—how much to price a listing, where to look for potential buyers, how to help sellers evaluate two offers.

Once associates see the benefits of having a broker or manager who’s active in the field, it becomes a non-issue or even a plus, say brokers. And that’s a message they convey to recruits who might otherwise be scared off.

“We just explain to prospective associates that we’re going through the same problems over appraisals, inspections, interest rates, and open houses that they are,” says Sutherland. “We lead by example. And when we say that and show associates how we can work together and also help them get business from our leads, we gain greater respect from them.”

Robert Freedman

Robert Freedman is the former director of multimedia communications at NAR.

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