How to Understand the Value of Individual Agents on Your Team


Today, I want to talk about the value that each agent brings to your team. If you want to build out systems and scale your business, you need to get this part right. If you don't wrap your head around the value that an agent brings to your team, your business will never be a true business.

I find a lot of teams overpay their agents because their agents aren't productive. We're going to cover Buyer Lead Management Policy and all the tools that agents use in terms of accountability to help your agents be productive.

When you're talking to people who want to join your team, you need to figure out what a typical agent makes in your marketplace. Everyone knows that there really is no easy way to make money. When we put our applicants through the process of applying, we ask them what they've made in other positions and what their ideal compensation is. For someone that made $40,000 and wants to make $200,000 in real estate may not be able to do that.

The average agent sells between 6-8 homes per year, but that number is 10-12 if you don't include part-time agents. In my market, the average commission check is roughly $6,500; so if you sell 10 homes a year, you'll be taking home around $65,000 before expenses.

Once you take a blended 12% off the top for brokerage fees, another 12% for marketing and advertising, and perhaps another 4-5% for other expenses, like leads and websites, you take home only $40,000 of that original $65,000, at best. Agents on my team all take home more than double this, with some as much as tripling this number because they have no expenses outside their splits.

I see a lot of teams who pay their agents more because they're not productive, which doesn't make any sense. It's a bad position to be in, as it encourages lackluster performance by agents. Our agents are selling a lot of real estate in order to be compensated handsomely for their efforts. Agents on my team all take home more than double than the average net in my market.

Knowing these numbers - the difference between net take home and top line - will help you have a productive conversation with your applicants. You need to shoot for 67% gross margin to scale your business.

The bottom line is know what's going on in your market, so you can set realistic expectations for your applicants!

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