Real estate can be a cut throat industry, and the success of your brokerage relies heavily on the expertise and dedication of your sales team. Yet, attracting and retaining top talent has become increasingly challenging—more than a third of brokerages reported that their top concern in 2023 was retaining top producers according to NAR. As a real estate brokerage, it is essential to recognize the importance of having an employee retention plan in place to ensure the long-term success and growth of your business.
While you may not think about your agents like employees—because legally they’re not—the same principles of employee retention you’d consider for your W-2 workers apply to real estate agents, if not more so. Real estate is notorious for high turnover rates, with agents seeking new opportunities and being lured away by rival brokerages. Losing team members not only disrupts the harmony within your organization but also impacts your bottom line and hinders your ability to provide exceptional service to your clients.
Having an effective employee retention plan is no longer a luxury but a necessity in today's competitive market, and in this article, we’re breaking down the top reasons why agents leave, as well as how to make them stay.
The Reality of Employee Retention at Brokerages
The real estate industry experiences some of the worst employee retention rates with an agent churn rate of 80% according to Inman. That’s a far cry from LinkedIn’s reported average of 10.6% across all industries. So what’s making agents leave? There are a couple of factors at play here.
The first and most obvious reason to note is that far more new agents enter the industry than those who actually make it in the business and stay long term. NAR reports that 87% of all new agents leave the industry within their first 5 years. This statistic alone counts for much of that 80% attrition rate, yet the reality is not completely hopeless when it comes to employee retention, even with new agents.
The other reason for the churn rate is agents moving to new brokerages, because they’re seeking more opportunity than what they believe they currently have. RealTrends data points to younger and less experienced agents doing less production as the top group that’s almost likely to leave. The most risky demographic for brokerages in terms of employee retention are agents doing less than 1 million in annual production, agents in their late thirties, and those who have been in real estate between 2-8 years.
While the dream reality for brokerages would be to focus on recruiting more experienced talent, the chances of an established, successful agent switching brokerages is very slim. This RealTrends graph shows how likely an agent is to switch brokerages based on the year they were licensed. You can see that agents licensed recently are too overwhelmed to switch, but after their first year, their chance of changing brokers increases dramatically, before falling again after 8 years.
All of this is to say, you will always need to cater to new agents when it comes to agent recruitment—which means you’ll always need a rock solid retention plan in place to ensure you get a positive ROI on your recruitment efforts.
The #1 Reason Agents Jump Ship
The short and simple answer to your employee retention problems is this: Your agents leave because they aren’t growing their business with you. Whether or not this is your fault carries little weight—although, there are both effective and ineffective employee retention efforts you can take, which we’ll discuss later on.
Agents often leave due to the perception that their lack of success is solely attributed to the brokerage itself, rather than their own efforts. This phenomenon is particularly prevalent among less successful agents who may struggle to generate real estate leads and close deals. Instead of reflecting on their own business strategies and seeking opportunities for growth within the brokerage, they often place the blame on the brokerage and seek greener pastures elsewhere.
As a real estate brokerage owner, understanding this mindset is crucial in developing an effective employee retention plan. By addressing agents' individual growth needs and providing them with the necessary support and resources, you can significantly reduce turnover and cultivate a culture of continuous development within your brokerage.
But how do you get it done? If you’re like most brokerages, you’re already providing training, leads, and a support system. If you’re scratching your head at what more you can do, we’re going to cover how broker’s are ensuring agent success with real estate AI.
How To Increase Employee Retention With AI
You can only blame real estate agents for their misguided blame so much. Many new agents are entering an entrepreneurial venture for the first time, and it's a difficult transition to make from being a traditional employee. Agents are expected to learn an absurd number of skill sets at once in order to see success, and it’s no easy task. In addition to learning the ins and outs of real estate transactions, agents must also become excellent salespeople, marketers, home stagers, and customer service representatives, as well as perform administrative, accounting, and legal tasks. This is, of course, only scratching the surface of what an agent must do, and it’s already an overwhelming list.
The truth is this—training, seminars, a CRM, and a handful of cold “qualified” real estate leads aren’t enough to provide agents with the foundations they need to launch a successful business. It’s no wonder only 13% make it, because it takes a rare amount of perseverance, hard work, and a bit of luck to beat these odds. That is, unless a brokerage can provide an all-in-one technology solution that serves as a “business-in-a-box” for their agents.
Introducing Real Estate AI as an Agent Retention Strategy
Real estate AI is the answer to providing new agents a ready-to-go business where they are fully supported every step of the way with scalable technology. Removing the need to learn various different roles means an agent can focus on gaining expertise in one area—helping their clients get to the closing table. There are so many micro-tasks that clog up an agent's day, causing overwhelm, stress, and ultimately failure to operate a successful business at scale. Some of these tasks include:
High quality, qualified real estate lead generation
Lead nurturing, follow up, and long term relationship building
Sending listings and market information to prospective clients
Sales skills and lead conversion strategies
Real estate appointment setting and calendar management
Customer service and answering basic questions
These are just some of the things an AI real estate concierge can handle, and this is what competitive real estate brokerages are adopting in order to recruit, and most importantly—retain—new agents.
How To Incorporate AI Into Your Brokerage
Using AI to increase employee retention is an investment in the future success of your real estate brokerage. By prioritizing the well-being and growth of your team members, you can build a resilient and high-performing organization that thrives in a competitive market.
A great example of a broker who has turned the “only assume a 13% success rate for new agents” statistic on its head within his own brokerage is Tom Lower, owner of MI Real Team. His main agent recruitment strategy has been to go after new agents and train them on his systems, and he heavily invests in their success by providing them with cutting edge tools, including Landslo AI. Tom discussed his recruitment and retention strategy during an interview we did with him last year—check out the interview to gain a broker’s perspective on implementing real estate AI for agent recruitment, productivity, and employee retention.
Related: How an AI Chatbot Can Increase Your Sales By 67%
Once you’re ready to start testing AI technology for employee retention, we’d love to help you explore the software by giving you a no strings attached demo of our platform. And if you’d like to partner with us, you’ll be joining countless large brands, such as United Real Estate, who license our AI.
Regardless of how you get started, know that real estate AI is the future of employee retention for brokerages in 2023 and beyond. And in order to create a truly effective employee retention plan, you must start by understanding your agents’ main motivations for leaving, and offer them something that allows them to stay and grow with you. By investing in your agents' success, you create a ripple effect that positively impacts your agents, your clients, your reputation, and the overall success of your brokerage.