The fourth-quarter recruitment freeze has thawed, according to a collaborative report by Recruiting Insight, Lone Wolf Technologies and MyBFF Social released on Monday.
External agent moves increased 25 percent quarter over quarter and 7 percent year over year during the first quarter, with those agents representing a $16 billion in annualized production. Internal moves (e.g., office-to-office transfers) also ticked up during the quarter (+38 percent year over year) with those agents, on average, outproducing external recruits in annual sales volume ($5.47 million vs. $4.27 million).
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The report is based on transaction data from four multiple listing service (MLS) systems that cover roughly 30 percent of all U.S. transaction volume.
Who’s moving?
Agents closing at least $1 million annually were most likely to move during Q1 (55 percent), followed by agents closing at least $4 million (19 percent). Meanwhile, agents closing less than $1 million (13.5 percent) and agents closing $8 million or more (11.7 percent) were the least likely to make a move.
The report said agents who close at least $4 million annually offer the “highest return on investment” for brokerages, as they already have the skills and systems to succeed but simply need a brokerage partner to help them scale more efficiently. Meanwhile, agents closing at least $1 million per year are “who pay the bills for the brokerage” and need deep training, education, coaching and lead generation support to move them to the next tier.
Agents at the top and bottom tiers of production should be approached carefully, the report said, with top producers moving only when a brokerage can offer “advanced wealth building, legacy planning and bespoke operational support.” Lastly, those closing under $1 million should only be recruited if they’re on “a clear trajectory of growth.”
Ben Hess | Credit: LinkedIn
Although production is an important metric, the report noted a caveat to keep in mind: 80 percent of agents don’t produce consistently and often go between boom and bust from quarter to quarter. The remaining 20 percent are consistently closing deals, making them the “productive core” that brokerages should focus on recruiting or retaining.
“Strong recruiting is not just about bringing agents in,” Recruiting Insight Managing Partner Ben Hess said in a prepared statement. “It’s about keeping high performers inside your ecosystem when the market shifts.”
Quality over quantity
On the brokerage side, the report said that industry members often overestimate the impact of a business model — traditional, virtual, value or hybrid — on a firm’s success. “The market is split between winners and losers in every category, proving that execution matters more than the label on the sign,” the report read.
Recruiting Insights computed an Efficiency Ratio (ER) to measure how effectively brokerages increase their production per agent relative to their losses. The top-performing firms had ER values above 1, meaning they gained $2.00 in incoming production for every $1.00 they lost.
The report anonymized brokerage names across 12 brand categories. Among those categories, the “Scaling Tech-Hybrid” struggled the most, with its ER dropping from 1.80 to 0.69 in one quarter, despite having the highest net agent gain (+210).
“The Established Generalist,” “The Mid-Atlantic Legacy,” “The Legacy Institutionalist,” and “The Global Franchise Legacy” also saw their EQs drop, bottoming out at 0.7.
“The Scaling Tech-Hybrid gained 210 agents and lost $1.11 in production quality per dollar in a single quarter,” the report read. “This is the clearest illustration in the dataset that headcount growth and production quality can move in exactly opposite directions. For broker-owners competing against tech-heavy brands, this is a concrete, data-backed talking point: their competitor added 210 agents this quarter and simultaneously shrank its revenue base.”
Mark Johnson | Credit: LinkedIn
In nine of the 12 brand categories, more than 30 percent of departing agents decided to go independent. Agents within “The Emerging Value Model” were most likely to go independent, at 73 percent. “This is a clear signal that agents are re-thinking the value a brand brings versus the cost of affiliation,” the report read.
Recruiting Insight Managing Partner Mark D. Johnson said his firm’s Q1 findings prove that retention is key to brokerages’ long-term success, especially when brokerages adjust their value propositions to meet the needs of high performers.
“The wait-and-see market is over,” he said in a press release. “The brokerages gaining traction now are the ones with a strong value proposition, a disciplined recruiting process, and the ability to speak directly to what productive agents actually want.”
