Christina Hoffmann has covered real estate and homeownership for two decades, including as REALTOR® Magazine managing editor and HouseLogic.com’s content manager, with added expertise as owner of a demanding 100-year-old house. She is currently a senior speech writer at NAR.
Top Producers Do What Many Brokers Used to Do
March 1, 1997
Some industry experts think top-producing salespeople may be gearing up to open their own one-person offices with their assistants as staff in the next few years. Only time will tell. But what is happening--and could be a harbinger of things to come--is that top producers are taking on business and marketing responsibilities that once would have fallen to their brokers.
Salesperson First, Company Second
Like many top producers, Steve Westmark is content to stay with his broker--who can worry about liability and overhead--rather than hang up his own shingle. But when it comes to advertising, he's independent minded.
''My marketing needs are 'When people think of real estate, think of me.' My broker's needs are 'When people think of real estate, think of the broker,' '' says the Minneapolis-based Counselor Realty salesperson. ''The company name is there, but I want people to call me, so my name is emphasized. The company should be a second thought.''
About seven years ago, as if to demonstrate this autonomy, Westmark hired a public relations expert, David Dorle, to supervise the design, consistency, and message of his marketing materials, get his name out to the press, and coach him about dealing with the media. Over the years, Westmark, the number one producer in his company, has spent about $75,000-$100,000 for PR consulting services but says it's been worth it. ''I'm sure that one article about me that David got into a local paper brought me $100,000 worth of business,'' he notes. Before hiring the PR person in 1989, Westmark was doing $10 million to $12 million. Since then, ''I've had years that were $23 million,'' he says. ''And 1996 should be about $19 million.''
Thinking Big About Marketing
At first blush, Sharon Falco's business--$46 million for 1996--sounds as if it had the makings of a one-salesperson company. She oversees an elaborate support staff--listing, closing, and communication coordinators, office manager, sales director, and buyer's specialists--and even her own marketing company, Laser Star Productions.
Falco and her husband, Joe, started Laser Star about seven years ago to help other salespeople achievethe success she's had. It's adjacent to Roselle, Ill.-based RE/MAX--Central--surprise!--her brokerage.
Adding another twist, her real estate business, Falco Enterprises, is housed at Laser Star, so Falco is physically independent from her broker. But she's quick to point out that she's still very much affiliated with her broker and likes the name recognition of the RE/MAX moniker: ''I promote myself in conjunction with RE/MAX. If you think of RE/MAX, think of Sharon Falco.'' Indeed, NAR data on top producers shows that 85 percent say their company's image in the marketplace is its most important attribute. Falco's clients and customers want a recognizable company name, she believes, but the boutique flavor of working with her. ''It's more comfortable for clients to be serviced this way,'' she says.
Will Top Salespeople Take a Powder?
In areas such as advertising and support staff, top producers, such as Westmark and Falco, are supplementing what brokers have traditionally provided. The National Association of REALTORS® 1996 Recruiting and Retaining the Best report on top producers found that they spend an average of $960 a month marketing themselves. The report also notes that 18 percent are most dissatisfied with their company's advertising support. In addition, only 6 percent of top producers like their company's secretarial support.
Trainer Mike Ferry, The Mike Ferry Organization, Newport Beach, Calif., anticipates that many top producers will take the independence thing a step further. ''No question, in the next three to five years, we'll see hundreds of top salespeople start their own one-salesperson offices with their staff. I can think of 10 very productive salespeople who've started their own offices in the last year. They're not doing this to compete with the broker but to have independence from the nonproductive masses in their offices.''
Even now, Ferry says, top salespeople, who, because of their volume, need a little tighter control, are doing things that once might have been handled by the broker. ''A lot of top salespeople are making an assistant a transaction coordinator instead of using broker-provided services. In addition, many are creating affiliated relationships as a broker would do,'' he says. ''They're getting involved in the title, mortgage, and escrow business. Their volume is so high--sometimes 250 homes a year--that ancillary services have become a serious income source.''
Real estate trainer Bill Barrett, Bill Barrett Seminars, Rochester, Mich., agrees that top salespeople are making like brokers, but he believes their ranks shouldn't be overstated. ''These people are the exceptions,'' he says. ''Most practitioners sell 10–12 homes a year and don't have transaction coordinators.'' (For some cutting-edge selling and marketing tips from Bill, see ''Independent Acts: Four Ways Top Producers Are Fending for Themselves,'' next page.)
Nonetheless, top salespeople may start leaving en masse in a few years, Ferry says, making the challenge for brokers to create value for them to stay without giving the store away. ''Brokers are paying such huge commissions to a small percentage that they're hardly making a profit on the group who represent most of their income,'' he says. ''On the other hand, because the margins are too thin, brokers may be better off if a top salesperson leaves.''
Then a new crop of salespeople might pick up the slack.
INDEPENDENT ACTS: Four Ways Top Producers Are Fending for Themselves
A few top producers are implementing some pretty novel business ideas that might once have been broker driven, says Bill Barrett, real estate trainer and head of Bill Barrett Seminars, Rochester Hills, Mich. Recently, he shared four:
- One practitioner set up a phone system that allows sellers to call him regularly for activity updates, so they needn't worry that they're not hearing from him enough. Every Friday the salesperson records a personal message about what's happening regarding the marketing of the sellers' home--comments from other salespeople, showing activity, new advertising. Sellers call a number and punch in their four-digit code; they can listen to this personal information 24 hours a day.
- Another salesperson asked his broker, ''Would you mind if I add a $295 transaction or processing fee on top of the commission?'' Typically, transaction fees have been the broker's prerogative. Since there's a lot of consumer pressure to reduce commissions these days, salespeople are compensating by asking for this extra source of income.
- Some salespeople are paying someone to handle a listing presentation. Brokers used to hire transaction coordinators, and salespeople would pay a set fee for those services. Now salespeople are hiring multiple levels of assistants, one of whom might do listing presentations.
- Salespeople are signing two listing agreements--one with the listing price and the other with the listing price and will-sell-for price--both, of course, with the approval of the broker. In the latter agreement, sellers give the salesperson the right to negotiate on their behalf, but not without telling the salesperson how low they're willing to go.
Senior Speech Writer
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