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All real estate salesperson is required to place their business through a licensed real estate broker. Logically speaking, agents should rarely switch around brokerages since every move can create a temporary interruption to their business. In other words, you might not be able to adequately serve your clients during the transition.
However, I continue to witness sales agents changing firms over and over again regardless of a nationally branded company or a private-owned brokerage. It is very common for real estate agents to change brokers. According to the National Association of Realtors (NAR) 2020 Member Profile, the median tenure for REALTORS® with their current firm is four years.
So why do real estate agents quit a firm to join another one? Real estate agents change brokers are mostly due to dissatisfaction with the commission split, operating fees are too high, misalignment with the company’s culture and business model.
In this post, you’ll find out why real estate agents choose to jump from one brokerage to another and what are some important considerations during the decision-making. I also interviewed a professional real estate broker, and she shared why so many sales agents decided to switch their business to their firm.
Top 8 Reasons Why Real Estate Agents Change Brokers
Reason#1: Payout is too low
I have a Realtor friend in California who manages real estate offices for years. He always says, “I didn’t invest my hard-earned money and time to become a real estate agent to remain poor. I chose real estate because I saw an opportunity to make a good living.”
I have seen some brokerages offering a 50/50 split to agents who just started in the field. As the production increases, the split will rise to 70-30. Then once you reach a certain sales volume, it will increase to an 80-20 split. I have even seen brokers who will do a 95-5 split! (However, there could be other fees involved.)
Hence, commission split or lower cap is probably one of the most apparent reasons why agents leave. This is especially true for experienced salespeople who no longer need as much hand-holding or support from their firm.
Reason #2: Operating fees are too high
Some brokerages are very transparent and set their fees relatively down to earth. They only recoup the expenses that they incur from a third party – for example, MLS fees and E&O insurance. Well, typically speaking, you will need to pay for those regardless of which firm you join.
However, some brokers are charging additional fees such as desk fees, transaction fees, broker support fees, training fees, advertising fees.
These expenses could add up rapidly and eat up your profit. I’m not saying these fees are necessarily unreasonable. After all, it comes down to the level of services that the broker is providing to the agents. It also depends on whether the agents value those support.
Reason #3: Lack of training for new agents
Many brokers are willing to take on new agents, but many do not provide adequate support or training to get the ball rolling. Simply speaking, lots of new agents are very lost after they got the real estate license. They do not know how to generate leads and prospecting, ask the right questions to find out the clients’ objective, the proper compliance procedures, and the technology that streamline the process.
The problem is not that the brokers do not want to provide good training, but rather they might not know-how. Many brokers succeed in this business through years of trial and error. However, they rarely document what works and what’s not. Therefore, though they can find and service clients effectively, this becomes more like a subconscious instinct to them, and it is difficult for them to teach to others.
Without a repeatable system, new agents find it challenging to develop the required business skills. This is why the turnover rate for new agents is exceptionally high in the first 3 years.
Reason #4: Not in sync with the broker’s business culture
Nowadays, most real estate agents would like their brokerage to be transparent, approachable, and have excellent brand recognition in the sector. The majority of sales agents prefer their real estate broker to behave as a coach rather than a transaction referee.
A year ago, I visited a real estate office where the outdated rules are so rigid that they greatly frustrated their agents. Despite there have been online conference tools available, the brokers insisted the agents drop by the office whenever there is any question.
Also, one of their agents told me that their office still requires paper documents. They prohibited electronic signature from clients even though it was widely adopted in the industry and approved in their state.
Due to such failure to adopt, what could be done in minutes took the agent at least half a day to complete. Therefore, this real estate agent left the firm and joined another one that in sync with his preferred method of real estate practice.
Reason #5: Limited advancement opportunity
Some real estate agents are fine working in the front line servicing their clients directly, while some would like to recruit other agents and build up their own sales team. Some agents even desire to become a managing broker or set up their own branch.
However, small brokerages might not have such advancement opportunities. After all, they do not need so many people in managerial or executive positions. Their primary focus could be motivating their existing agents to close more sales.
Therefore, some agents would change to reputable franchise brokerage firms with the platform and resources to provide such an opportunity.
I personally know several Realtors who overlook a region of branch offices. Their primary duties are more on managerial and strategic planning. They only deal with a small number of clients to keep their skills sharp.
Reason #6: Poor support
Although I previously mentioned the importance of adopting technology, it cannot replace the broker and salesperson relationship.
A licensed salesperson once told me that though she appreciates the constant technology improvement of her firm, she has no idea who she can turn to when there is a problem.
Whenever she has any questions, her manager just refers her back to the procedural manual. Even when her manager answered her, most of the responses did not even answer her questions.
To give you an example, once the agent asked the manager whether her clients can use electronic signatures on the purchase sale agreement, her broker replied the following. “I agree that eSigning can bring great convenience. And it is important to comply with the State regulation and broker’s procedure rules.“
So does it mean a yes or no? So she tried calling the head office for clarification. Every time a different customer service staff would take her call, and she would end up re-explaining the situation. There is just no continuation in the conversation.
In the end, the head office instructed her to consult her branch manager. She felt that her firm just treated real estate agents as another number.
As Michael Scott said in the Office, “A good manager… hires people and inspires people. People, Ryan. And people will never go out of business.“ Keep in mind that real estate indeed is a people business. This applies to the broker-agents relationship too.
Reason #7: Do not provide quality leads
Real estate is an extremely competitive industry. Agents are constantly looking to close new deals. If a broker could provide them with quality leads, this can help the agent tremendously.
I have a Realtor friend whom I met back in university. When he started as a real estate sales agent, he had a shy character, making it very difficult to prospect new clients. He had a terrible result in the first year and considered quitting the profession.
Then he met another real estate broker with an established practice. This broker had been in the field for over 20 years and regularly received more referrals than he could handle. Therefore, after my friend joined his firm, all those leads were passed on to him.
Rather than spending time prospecting for new clients, my friend could focus more on working the deal itself. Although he needed to split more commission with the broker for the referred sales, they did help him to survive in the early stage and became a solid foundation of his current practice.
(Here’s another post you may be interested: Can an Introvert be a Good Real Estate Agent?)
Reason #8: Clients segment no longer aligns
When people talk about real estate, they mostly think of residential homes such as houses and condo units. However, there are many other specialized niches such as commercial properties, offices, malls, industrial buildings and, farmlands.
If a brokerage office only deals with residential properties, they may not have the resources and experience to support the real estate agent. So agents would change to another broker who could properly service their clients.
Expert opinion on why real estate agents switch to their brokerage
Most of the above discussion focuses on things that a firm is lacking. But I also want to know what some successful brokers are doing right to attract the right talents. Therefore, I talked to Vicki Deane, Assistant Manager at Baird & Warner, as she regularly witnesses sales agents leaving their previous broker and join their team.
Here’s the insider insight from Vicki.
“Real Estate agents change brokerages for many reasons. It is not a decision they make lightly as timing and market conditions can make the change challenging. There has to be a compelling reason to shift their business and client base from one firm to another.
Here at our office – Baird & Warner Fox Valley Branch- we see several predominant reasons for experienced brokers choosing to affiliate with, or come back to us: business support, collaborative culture, and training.
One of the primary reasons is support. We have created a network of systems and personnel specifically designed to allow an agent to focus on what they do best – working with their clients.
Baird & Warner provides everything from industry award winning in house marketing materials and support, full time administrative staff, non-competing managers who focus solely on agent development, and a complete transaction team including our own mortgage and title businesses.
Support is more than systems and services however. Our business can feel isolating and challenging as we are all independent business owners. Culture and cooperation is a rare commodity and one not to be taken lightly.
We find brokers returning to us or choosing to move to us because of our 166 years focus on a climate of support, collaboration, and choosing the “right thing”. Baird & Warner has created a unique corporate culture in each of our 28 offices.
Agents come back saying they missed the camaraderie of the office, having other brokers willing to back them up with last minute showings/open houses and other tasks, and the most important, the ability to share ideas and talk over issues with other brokers.
Having a non-competing manager is also extremely rare in this industry. Our managers are available to agents at all times to mentor, develop, and serve as a sounding board. We do truly enjoy being together as an office and that was probably the biggest challenge of the past 18 months.
Finally, we come to training. I have heard time and again from experienced agents who have joined us that “they didn’t know what they were missing out on”. Recognized as being a leader in training within the industry, we have in-office trainers for one on one sessions, multiple levels of ‘in person’ and virtual training programs to keep our agents current and always informed of best practices, and a corporate training staff responsive to local needs. Agents don’t have to hunt down training in their spare time.
Changing brokerages is about more than the money with all the challenges we face in today’s market. Everyone’s business model is different and finding the right fit that allows you to pursue your goals is the ultimate deciding factor.”
Vicki Deane – Assistant Manager and Real Estate Broker at Baird & Warner
(Here’s an exclusive interview I had with Vicki. She shared her journey and the key elements to becoming successful in the real estate industry.)
The Bottom Line
So here are the common reasons why a real estate agent decides to leave their current brokerage firm. However, even if your firm falls into one or more of the 8 reasons, it does not necessarily mean you should quit it immediately. After all, how you value a specific item could be different from another agent. Someone could desire greater broker support over a higher commission split or vice versa.
Besides, there could be other causes too- for example, an about-to-retire agent moves to a firm with better succession planning, or a Realtor relocates and needs to find a new broker licensed in that state.
I hope this can give some insights to real estate brokers on how to retain their most valuable assets, the members of the sales team.
If you are a licensed real estate salesperson and thinking of switching firms, I’m sure this will be a huge decision for you.
Here’s another article I wrote. In there, I went through the entire thought process of what a real estate agent should consider before changing brokers. Be sure to check it out.
When choosing a real estate school to complete the CE requirement, consider one where you can take the courses online. This way, you could study at your own pace whenever and wherever. McKissock is a trustworthy real estate education provider. You may click here to see the CE courses offer in your state. (**)
Good News! Due to our excellent partnering relationship with McKissock, you may enter the promo code “NYNC35” at checkout to receive a 35% off website pricing on certain selected course packages. Terms and conditions may apply.
Disclaimer: The information in this post is for general information only, and not intend to provide any advice. They are subjected to change without any notice, and not guaranteed to be error-free. Some of the posts on RealEstateCareerHQ.com may contain views and opinions from the interviewees. They do not reflect our view or position.
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