We spoke to industry leaders in an effort to find out if the industry could be heading for a crisis. The responses were mixed, but one thing was clear; more can and should be done to attract new real estate agents.
The number of interns has declined over recent years
Although the EAAB didn’t respond to questions relating to the official number of intern estate agents currently registered with the board, by all accounts the numbers have dropped sharply over the past few years. Should we be concerned or should we sit back and wait for the situation to normalise?
Unfortunately, unlike in previous years when all it took to boost agent numbers was a property boom, anyone wishing to enter the industry these days has to undergo extensive training and mentoring. While the educational standards are welcomed and have benefited agents greatly, are the powers that be doing enough to attract fresh blood into the industry and if not, what can be done to draw the right candidates into the real estate arena?
Commission-based structure of real estate may be putting potential agents off
Generally speaking, people who have attended university or college make more money than their less educated counterparts. And while there is a great deal of money to be made in real estate, it is commission based and therein may lie the rub. Those looking for a set income are not going to be lured by promises of the high life. They may yearn for bigger and better things, but they also want to earn a regular income.
The option to become a real estate agent has never featured very highly at school career evenings and if we think about it, how many school leavers do we know who entered the profession immediately after their matric exams had been written? It could be fair to say that in the past, the industry tended to attract an older person, very often someone who had either retired or wanted a career change later in life. It stands to reason that one of the reasons that the industry has far more female than male agents is that in many cases, the lady of the home was not regarded as the breadwinner and therefore a consistent monthly income was not a prerequisite.
The number of actual agents is also waning
Remember the days when all an agent needed was a cell phone and a car in order to start pounding the streets? The old EAAB exam was scrapped in an effort to entice previously disadvantaged people into the industry. The result? An onslaught of people who thought that selling real estate was a quick and easy way to make some serious money. This may well have been possible in the past, but as always, the boom ended and those who didn’t have the ‘right stuff’ soon faded into oblivion. While we were still coming to terms with the fallout from the recession, the announcement came that new compulsory educational standards were to be introduced. Many older real estate agents threw in the towel at this point, believing that they were too old to go back to school to be taught something they had been doing for years. No one was disputing that the industry needed a shake up or that agents needed to be better equipped in order to do their jobs properly, but it was simply too much for some and the industry lost yet more highly experienced agents.
The educational requirements are now in full force – the problem is the standards, while lifting the industry as a whole, could well be making those who would have once considered entering the industry rethink their decision and focus their attention on a qualification that would, in theory, allow them to start earning the moment they qualify.
With that in mind, we approached a number of big names in the industry to find out if enough is being done to attract the right sort of people to real estate and if not, what can be done to ensure that the industry doesn’t become a sort of haven for aging agents.
Should more be done to attract young people to the industry?
Roderick Williams, head of operations and training for the Chas Everitt International property group, doesn’t believe the industry is doing enough to attract new recruits. He feels that a more united effort by the industry (EAAB, IEASA, REBOSA) is needed in order to position property as a career choice at school level, and in the media to reframe it as a lucrative career option.
When asked if he felt that the required educational standards could act as a deterrent, he pointed out that those who may view the qualifications as a hindrance shouldn’t be in the industry anyway.
He has a very good point. Surely those who are unwilling to put in a bit of effort in the form gaining a qualification (no matter what the profession) should be treated with the contempt they deserve?
In Williams’s opinion, for them it is more the commission structure and the competition for the commission than the educational requirements that could deter some from entering the industry. “However, for true sales professionals, neither is a barrier and that means fewer, better qualified and experienced professionals in the industry. In these cases, The Pareto Principle applies: 20% of the estate agents produce 80% of the income.”
He also doesn’t believe that the industry will be faced with a chronic shortage of agents in the near future. “Downward shifts generally weed out the non-producers and less than ethical operators and we should rather focus on the best performers and on managing talent within the industry. The number of transactions taking place and the potential income to be derived from them is the prime determinant of the supply of agents to the market and competition will continue to eliminate the unprepared. We can’t get away from the fact that real estate is a cyclical business in response to economic shifts that cause sellers’ markets to change to buyers’ markets and vice versa.”
Some positive news
Herschel Jawitz, CEO of Jawitz Properties, is of the same opinion and says the number of potential agents estate agencies recruit is determined by market factors and by the individual needs of the agencies themselves. “Over the last two years there has been an increase in the number of new recruits as the market improved off its lows of 2008-2010.
“The education requirements should not be seen as a barrier to entry but rather as a standard for those who are serious about making a career in property. There are challenges in terms of completing the year as an intern, writing the exam and the costs associated with the process. That is why it is important for people wanting to enter the industry to make sure they join a company that will ensure they successfully complete the process to qualify.
“I think that principals need to look at agents as professionals in the same way one would a lawyer or a banker and base their recruiting strategy on that mindset. Real estate is a career and your recruiting strategy should include looking for people who share that view,” he says.
There are obstacles facing new recruits
Bruce Swain, MD of Leapfrog Property Group, believes most companies are actively campaigning for new recruits. “However, the ‘you only earn if you sell’ barrier remains a major obstacle because new agents generally need to be able to carry themselves financially for at least six months before they start receiving an income. The EAAB has access to funds in terms of articles 12b and c of the Estate Agency Affairs Act, and the time may have come to explore how this can better facilitate the entry of beginners.”
He also believes that as things stand, existing agents are in a strong position, given that any increase in the demand for good, qualified agents will result in remuneration packages becoming even more competitive.
Harry Nicolaides, CEO of Century 21, says almost all real estate company owners continuously undertake recruitment drives for new agents through direct and indirect marketing. “I do not believe that any real estate company is ever satisfied with either its quantity of agents or its quality of agents at any given time and thus will always be on a recruitment drive to improve its agent force. Real estate business owners also play their part by offering new agents training, tools, proven systems, marketing and office support.
Could the regulatory body be to blame for shortages in the future?
That said, he does feel that while agents may have been put off entering the field because of the educational requirements, he believes this is not due to an unwillingness by potential agents to improve their own standards, but rather due to the way the EAAB has handled the whole process.
“The industry will be faced with a shortage of compliant estate agents if all, including the EAAB, do not make it an attractive proposition to those looking to join.
“The industry in general does offer all that is required to make the career of an agent enjoyable and lucrative. However, the concern is the way the EAAB is handling accreditation with all the confusion, change of policies of management, unfair practices, shifting of dates, accreditations of educators and general apathy. This is not conducive to allowing the industry to grow.”
When asked if there was anything more principals could do in order to entice new recruits, Nicolaides says, “There is not much more principals can do to attract fresh blood. It is now up to the EAAB to get organised and to up its game in order to add value to the industry by being accurate, professional and friendly, with clear, concise and fair programmes and policies that facilitate ethical market activity for the benefit of all and to move away from being an obstacle to job and wealth creation.”
By Lea Jacobs