Whether you are new in real estate or seasoned with the desire to have several more productive years, you have opportunities to boost your business in 2019.
According to the latest figures from NAR, the median age of REALTORS® is moving downward; while at first glance one might presume this is due to more and more agents retiring from real estate, this is as much an indication of younger agents entering in the business as it is of older agents retiring.
Recent NAR statistics place the median age of a Realtor at 53 years, with an increase in agents under 30 entering the business. There is an opportunity for both those entering and growing, and potential retirees.
Last month we discussed succession planning for agents considering stepping away from the business of real estate. Let’s look at the actions an agent would take to acquire a book of business from one of these retiring agents.
ACQUIRING A BOOK OF BUSINESS FROM A RETIRED AGENT
When John transitioned into real estate there was so much for him to learn as a new agent. The state courses emphasized the law and terminology, however there was little focus on establishing oneself in real estate.
Many brokerages offered hours of technological training with solid basic concepts such as how to hold an open house, how to door knock and how to write offers. What John didn’t realize was the wealth of knowledge sitting in the cubicle next to him.
While newer agents receive most of the training, and busy thriving agents receive all the accolades, the senior agents with loyal client bases keep to themselves without much fanfare.
Could one of these senior agents become a mentor to educate the newer agent, as well as an opportunity for an acquisition, creating a win/win for both?
Take a few minutes right now and write down the agents in your office or market who have had a successful career.
- Would they make a good mentor?
- Would they consider bringing on an assistant?
- Is there an opportunity to acquire their book of business?
There are many ways to acquire another agent’s book of business. As we’ve helped numerous clients over the years with both selling and buying real estate businesses, we’ve found there are some key points to take into consideration.
Here are 3 key points to consider when acquiring a book of business:
- Do you have the financial resources for an outright purchase, or will the acquisition need to be paid out by a percentage of each transaction closed until paid in full? How you pay for an agent’s book of business influences how much you might end up paying.
- Is there a good fit with you and the retiring agent, as well as with their clientele? The ‘fit’ is an extremely important component to the success and return on investment of the acquisition. You need to be able to deliver at or above the level of service these clients have grown to expect from the existing agent.
- How long will the transition period be? While at times the acquisition may be immediate, a one- to three-year transition may lead to a higher conversion of the client base in the long run. Each acquisition is unique, however all of them need a marketing strategy to ensure the clients feel they’re going to continue to be in good hands.
John eventually realized that there was an opportunity sitting just a few feet away from him, so he took the next step. When John acquired Susan’s book of business, they set up a one-year transition period that was mutually agreeable to both parties.
After the financial agreement was established, their mutual focus was the client base. They arranged a party for Susan’s clients that was a combination retirement announcement and introduction of her successor. This created a fun acknowledgement to the clients of how important their relationships were along with the assurances that their needs would continue to be well taken care of.
In our last newsletter on Succession Planning, we mentioned many critical factors that are applicable in acquiring an agent’s book of business. Is there a partnership, a team, employees, agents, equipment or infrastructure to take into consideration? There are many considerations, and the process can be overwhelming. Remember, planning is key to a successful transition.
Whether you’re contemplating growth through acquisition, or potentially selling your business, let us give you some direction. Schedule a Free Acquisition and Succession Planning Strategy Session with one of our coaches today!