It appears overthinking the qualifications for a real estate agent could be a major mistake in hiring. There are steps to take to avoid what Peter Gilbert calls a ” cripplingly high failure rate when hiring new salespeople.”
Gilbert, writing at EvanCarmichael.com, a website devoted to helping entrepreneurs, says, “The barriers to entry in real estate are low and, regrettably, many new entrants to the industry have little or no chance of surviving in a tough business. The resulting attrition rate is high and horrendously expensive, notably the costs of lost opportunity.”
The reason, he continues, “is that these industries employ highly ineffective processes for identifying and hiring fresh sales talent.” Gilbert, a published author on sales, is the founder of The Chally Group, specializing in sales assessment and recruitment.
According to U.S. News and World Report, there are 39,000 jobs in real estate and the unemployment rate is 4.9 percent. The median income is $39,140.
It reports, “The Bureau of Labor Statistics projects 11.1 percent job growth for real estate sales agents between 2012 and 2022, which is about as fast as average. During that time period, an additional 38,000 jobs will need to be filled. Couple these projections with a fairly low unemployment rate and the promise of increased home sales as the economy continues to improve following the downturn, and the outlook for real estate agents is quite solid.”
Gilbert outlines the mistakes employers make in recruiting salespeople in general, beginning with incorrect assumptions:
- “As a talent-based vs. a learned skill, exceptional sales effectiveness is often inversely correlated with academic interest.” He’s not calling salespeople uneducated but more focused on building social contacts than theoretical learning. (That’s a point Moe Veissi, the 2013 president of the National Association of Realtors, would disagree with. In the U.S. News and World report piece, he says education comes first: “Without that education upfront, you limit yourself initially.”)
- “Psychological theory cannot predict sales success.” Throw those profiles and tests out the window because they don’t predict success.
- “Sales excellence can be coached but not trained.” In other words, you can’t make a leopard change his spots but you can train a kangaroo to jump higher.
- “Selling is a contact sport and classroom based sales training is of limited value.” Great sales coaching isn’t done inside; it’s done outside in the field.
- “Top performing salespeople cannot sell in all markets.” A salesperson that sells widgets may not be able to sell real estate.
Gilbert also offers up this interesting statistic. He claims only 15 percent of “great” real estate agents make effective sales managers but unfortunately he doesn’t outline why that is.
He does quote the International Personnel Management Association from February 1999 and its assertion that the “typical interview-based hiring process is marginally more effective than flipping a coin.” It claims the success rate is 51 percent. Hiring based on experience ups that number to 56 percent while conducting scorable interviews improves the success rate to 58 percent.
Gilbert conducted informational interviews with real estate executives who said these traits are most often associated with successful real estate agents. Yet, conversely were also associated with “abject failures.”
Here is the list:
- Hard working/High energy levels
- Outgoing personality
- Good interpersonal skills
- Good attention to detail
It’s these traits that really indicated success, Gilbert said:
- Lead development
- Problem solving
- Qualifying leads
- Commits time and effort to ensure success
- Closing skills
Gilbert adds that in spite of all of these predictive measurements of success some salespeople will still leave real estate after a year, even if they have been doing well. He said being placed in “a deal driven industry with a fairly short and intense sales cycle” doesn’t appeal to salespeople who like to nurture relationships with customers.