How many agents do you need and how much do they need to produce? A stable of good, productive agents will allow you to pay the costs of running the office and (hopefully) generate a profit. There are many ways to recruit agents, but the two most popular ways are through the real estate school or by recruiting them away from other offices.
One of the lesser-known methods of recruiting, but one that can be done successfully, is to recruit someone from another business. Offer to pay for their real estate school and ask them to commit to working with you for a period of time. By granting success to someone, you also receive great loyalty.
It is important to have a mix of people that will work well together but who have different styles. The different styles will allow people who chose your office, because of your image or location, to pick the type of agent that they can work best with from a variety of personality styles. You will also need to think about what you can offer them, from the commission split to the working environment.
Determine the number of agents you need by first determining your costs. If your costs are 100 percent of what you need and each agent can produce enough income to cover 20 percent of what you need, you will want to have five agents to break even and more to generate a profit.
Take the average sales price of a listing, the average commission from that property, and the average office split that the transaction will bring your office. Assuming that the average sales price is $200,000, the average commission for one side of the transaction is $6,000, and the office takes 40 percent of that, or $2,400. Your office will take in $2,400 in office earnings and you, as the agent, will earn $3,600. It is generally believed that the average real estate agent does eight transactions per year. You will have big producers who do more and smaller producers who do less. The average agent will generate $19,200 per year. If it costs you $75,000 per year to run the office, you will need just a little better than four agents to break even ($76,800) and more to make a profit.
You must also consider how to best train your agents. Many franchises offer postlicensing courses for their agents. If you belong to a franchise, having your agents take one of these classes (usually two weeks long) is a great idea. If you are an independent, you may need to create your own classes. There are also many personal trainers and seminar leaders who can help direct your agents. Be sure your agents have good training, because if they make a mistake, as the broker you are ultimately responsible.