The Smart Class: Expand Training on a Tight Budget

With the help of webinars and shared scheduling, training costs don't have to break the bank.

October 1, 2008

Eric Lee oversees 105 sales associates—including four or five new associates a month—at his Equity Real Estate branch just north of Salt Lake City. But Lee faced a problem shared by many brokers today: how to bring new recruits up to speed on the brokerage’s proprietary services and provide ongoing sales and legal training to his established associates without breaking his training budget.

Four years ago, Lee found his answer. He began hosting all his training online, reserving his in-person educational sessions for intensive coaching. Online training via webinars, or online seminars, lets him reach more recruits at a lower cost than traditional classroom sessions.

"We’re so big and spread out—we cover four counties in western Utah—it’s the best way to get the message to everybody," says Lee, who today hosts two online sessions a day, involving up to 20 sales associates a session.

Tip 1: Try Webinars

Lee's online education sessions have virtually no technology costs except for a subscription fee he pays for the webinar host. While Lee didn’t reveal his preferred hosting company, many online solutions providers offer webinar platforms to companies. One such provider, WebEx, offers webinar hosting with different pricing models, including pay-per-use or monthly subscription. Subscriptions start at about $40 a month. Costs are higher if you include document-sharing capabilities.

To make the online courses at Equity Real Estate cost effective, the brokerage charges new associates $200 up front and another $500 from their first two transactions. 

Lee says the fees are necessary because the brokerage, a 100 percent commission company that limits its charges to a $499 per-transaction fee, doesn’t generate sufficient revenue from associates to absorb the training costs as an overhead expense. For their fee, the associates receive the webinar, plus a 100-page manual, a DVD with role-playing simulations, and a resource CD.

"When you factor everything in, the costs are equivalent to the associate earning a 90-10 commission split for their first two transactions," he says.

Tip 2: Partner Up

Online education is just one way today’s brokers are expanding their training options without draining their financial resources. With fewer than 30 associates, Craig Plantz’s brokerage, Resident Realty in Fort Collins, Colo., lacks the scale to offer in-house training cost effectively. So Plantz partners with local title and mortgage companies to bring in speakers on special topics.

"They can bring in three to four other brokerages to help defray expenses for all of us," says Plantz.

Title companies and mortgage lenders often step in to help cover class costs because they have the chance to share information about their services with sales associates during the sessions, Plantz says. Even so, Plantz ends up paying a nominal amount such as $20 per associate to cover costs for food and to defray the expenses of the trainer. He usually absorbs that amount rather than charge associates. (To avoid any implication of a RESPA violation, be sure that classes sponsored by an ancillary service provider are open equally to all associates.)

"It’s to my advantage for sales associates to have all the knowledge possible," he says.

Plantz’s educational partnerships are limited to one-off classes, which typically address timely legal developments such as meth lab disclosure, changes in water rights, or new contract requirements. Sessions that cover proprietary topics such as marketing and sales techniques and in-house technology he covers himself at the office without outside partners.

Tip 3: Adjust Fees to Demand

Sharon Pelt, vice president of the Fonville Morisey Real Estate School in Raleigh, N.C., is paring her training costs by charging sales associates at the company’s 11 offices an adjustable fee for certain high-interest courses.

For example, says Pelt, "Our licensing continuing education classes are extremely popular, and when we offer them for free people jump all over them." For such popular courses, Pelt sets a time window before which the 750 associates at Fonville Morisey can attend the class for free. If they miss the window, she applies a charge. The charge is nominal, from $45 to $65; while that doesn’t fully cover the associate’s share of costs, it helps the brokerage keep expenses down by concentrating attendance into fewer sessions, says Pelt. The more associates that attend a class, the more cost effective the sessions are for the brokerage.

Well-known national trainers are also a big draw that warrants a training surcharge. At the height of the housing boom, Fonville Morisey brought in a two-day luxury home sales certification course and charged associates $499 to help cover costs. Even with the fee, the course attracted probably 40 percent more attendees than other education programs. The success prompted the company to bring it back for a second run.

"The programs aren’t revenue generators for us, but we do need to cover costs," says Pelt. "We try to work out an equitable deal on a case-by-case basis, and sometimes we just take the hit because our associates need it."

Tip 4: Provide Free Basics

Although most of the special-topic sessions Mike Jarruti makes available to the 260 associates at Vaughn Co., Realtors®, in Albuquerque, N.M., are free, he’s also begun charging for CE courses. Costs to his brokerage for accredited CE instructors tends to run higher because of their required material and testing—typically from $65 to $85 per person compared to about $35 per person for other courses—so Jarruti levies a modest fee to help ease the financial sting.

"We’ll charge each salesperson about $25 or $45, just to cover the cost of the instructor," he says.

The brokerage takes an entirely different approach on basic training for new recruits. Through a program it calls Journey to Mastery, associates new to the industry attend mandatory training until they close six transactions, a process that typically takes between two and four months. The 48 hours a week in training consists of classroom instruction, some of it taught by outside consultants, and hands-on field work such as staffing open houses.

The brokerage absorbs 100 percent of this training cost but makes it back in other ways.

First, it requires sales associates to commit to a one-year minimum with the brokerage. Second, it structures the field portion of the training not only to provide experience but also to help associates build their businesses. When working open houses, for example, associates are required to put up a minimum of 60 signs, including ones in the yards of surrounding neighbors. Because they must knock on neighbors’ doors to get permission to place the signs, "they get a lot of results from that," says Jarruti. "Sixty to 70 percent of associates get follow-up appointments from the door knocking. It lets them get in front of people."

Today, more than ever, brokers often find themselves caught between shrinking revenues and a growing need for training at all skill levels. Yet with an eye on your bottom line and on the use of partnering, online courses, and flexible fee arrangements, you can minimize the financial hit of education and still provide valuable training to your associates.

Robert Freedman

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