Amid Commission Chaos, Talk Turns To Ongoing Gripe: Clueless Agents

Key Takeaways:

– Many brokerage leaders believe that a lack of serious agents with a full-time commitment is a drag on the industry
– Intel’s report on this issue is available exclusively to subscribers of Inman Intel
– The report highlights the frustrations of broker-owners and executives regarding underqualified agents and the low barrier of entry in the industry
– Brokerage leaders express concerns about the impact of inexperienced agents on industry credibility and business operations
– The recent settlements in the commissions lawsuits are expected to reduce the ranks of real estate agents, potentially addressing the issue of underqualified agents
– Despite expectations of improvement, some brokerage leaders believe the problem of low-performing agents will persist in the industry
– Challenges in attracting agents to structured educational programs are identified as a key issue for the future of the real estate industry

inman:

Leaders at many brokerages say a lack of serious agents with a full-time commitment is a drag on the industry. Intel asks whether this might change in the wake of the latest settlements.

This report is available exclusively to subscribers of Inman Intel, the data and research arm of Inman offering deep insights and market intelligence on the business of residential real estate and proptech. Subscribe today.

In the course of surveying hundreds of real estate professionals each month, Intel did not ask brokerage leaders about underqualified agents.

But by the dozens, broker-owners and executives have offered this beef unsolicited, bemoaning the industry’s low barrier of entry and reciting a long list of grievances that have caused headaches for their businesses.

These brokerage leaders in January and February dished to the Inman Intel Index survey on how dealing with a group of low-knowledge agents — either for their brokerage or others — is one of the most frustrating parts of working in real estate today.

And it takes a real toll on the business, some believe.

“So many unskilled real estate practitioners,” one such leader wrote, harms “industry credibility and the buyers & sellers.”

It’s against this backdrop that news broke earlier this month of a major settlement by the National Association of Realtors in the ongoing commissions lawsuits. The fallout from the lawsuits is widely expected to reduce the ranks of real estate agents.

If these brokerage-leader testimonials are any indication, many of these agents wouldn’t be missed.

Explore this trend in the full report below.

It’s not just you

As it does each month, Intel asked brokerage leaders what the most challenging part of the business environment is today.

The answer choices offered in the survey ranged from interest rates and margin compression to recruiting and regulation.

  • More than 1 in 3 leaders opted to select “other” and wrote out their response instead. This is an especially high share to have not selected one of the main provided options, compared to other questions in the survey.

This high “other” response rate represents an opportunity for Intel to hone its response choices to better serve its readers.

But it also serves as an opportunity to get unsought-for, unfiltered access to the frustrations of real estate decision-makers.

And one of the top unprompted responses? This brokerage leader respondent from January spoke for many in this group.

  • “We have dumbed our industry down,” this leader wrote. “We take inexperienced people with little/no knowledge of the real world of the business and who have never been mentored — they drive brokerage fees down and get us in trouble via incompetence.” 

Many of these brokerage leaders point the finger squarely at the agents, who they believe aren’t working hard enough to improve at their craft.

  • There is a “below threshold quality of agents in our market,” one reported. “They are so busy posting on social media they are not focused on the necessary skills needed to be valuable to the consumer.”

Others expressed as much frustration with competing brokerages for letting down their less experienced agents.

  • “The lack of education most brokers provide their agents” is the problem, a brokerage leader wrote. “So concerned about paying the highest splits they can’t afford management to train and hold accountable. … In turn an agent doesn’t have a value proposition and commissions are dropping. [No one] is addressing this.”

Winnowing the field

As the industry turns to a new chapter, this issue may not weigh as much on real estate decision-makers as it currently does.

That’s their expectation, at least.

  • When asked what the most challenging part of the business environment will be 12 months from now, fewer brokerage leaders went out of their way to name low-performing agents in both the January and February surveys.

That may be because a majority of real estate professionals Intel surveyed in November expected a number of agents to leave the industry as a result of the commission lawsuits and settlements. And it stands to reason that lower-producing agents would be among the earliest to bow out.

But for many brokerage leaders, this problem is entrenched enough that it seems likely to persist.

  • Brokers and agents alike are “still unaware and unable to encourage change and spend the time to train and focus on the real estate process and professionalism,” one broker wrote in response to the February survey.

Half a dozen others echoed this sentiment when asked about their top business challenges in the year to come.

We’ll let one of them — a brokerage leader who responded anonymously to the January survey — have the final word:

In my view, the most challenging aspect of the business environment 12 months from now, particularly in the realm of real estate education, will be ‘Other: Achieving adequate registrations at schools offering structured, non-self-paced courses.’

The core challenge lies in attracting attendees to in-person or virtual classes. This difficulty stems from several factors unique to the real estate environment.

Firstly, fluctuating Realtor incomes, which can be uncertain and inconsistent, make committing to structured educational programs financially challenging. Secondly, the prevalence of dual career agents, who juggle real estate with other professional responsibilities, often results in a significant time constraint.

These factors combined make it increasingly difficult for such educational programs to maintain robust enrollment numbers, especially when compared to the flexibility and accessibility of online, self-paced alternatives.

Methodology notes: This month’s Inman Intel Index survey was conducted Feb. 20-March 3, 2024. The entire Inman reader community was invited to participate, and Intel received 811 responses. Respondents for this survey were directed to the SurveyMonkey platform, where they self-identified their profiles within the residential real estate market. Respondents were limited to one response per device, but there was no limitation to IP addresses. Once a profile (residential real estate agent, mortgage broker/banker, corporate executive/investor/proptech, or other) was selected, respondents answered a unique set of questions for that specific profile. Because the survey did not request demographic information for age, gender or geography, there was no data weighting. This survey will be conducted monthly, with both recurring and unique questions for each profile type.

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Property Chomp's Take:

Leaders at many brokerages are expressing frustration over the lack of serious agents with a full-time commitment in the real estate industry. This sentiment has been shared by broker-owners and executives who believe that the low barrier of entry and lack of qualifications among agents are negatively impacting the industry as a whole.

In a recent survey conducted by Inman Intel, brokerage leaders shared their grievances about dealing with a group of low-knowledge agents, both within their own brokerage and at other firms. Many expressed concerns about the industry's credibility being compromised by inexperienced agents who do not have a solid understanding of the real estate business. This, in turn, affects the quality of service provided to buyers and sellers.

The news of a major settlement by the National Association of Realtors in ongoing commissions lawsuits has brought the issue of underqualified agents to the forefront. The settlements are expected to result in a reduction in the number of real estate agents, with lower-performing agents likely to leave the industry first. This anticipated shift may alleviate some of the frustrations expressed by brokerage leaders.

Despite the expected changes, many brokerage leaders believe that the problem of underqualified agents is deeply rooted and may persist in the industry. They point to the lack of education provided by some brokerages to their agents and the focus on high splits rather than training and accountability as contributing factors to the issue. The challenge of attracting agents to structured educational programs is also cited as a barrier to improving the quality of agents in the industry.

As the real estate industry moves forward, it remains to be seen whether the reduction in the number of agents will address the concerns raised by brokerage leaders. While some are hopeful that the industry will see improvements, others believe that more needs to be done to address the issue of underqualified agents. Only time will tell how the industry will evolve in response to these challenges.