Here is a guide of 5 KPIs you should look out for before recruiting more real estate agents.
What drives growth in a business is its people, and if the people are ambitious and successful, the business will also thrive. This sounds like an easy equation, but finding the right people has always been the most demanding aspect in any industry, especially real estate.
Recruiting capable real estate agents and then building a team from there is an essential duty that all team leaders and brokers must indulge in when they want to see their business grow. Hence, looking at important KPIs is essential because they indicate the recruitment flow of the real estate team or brokerage!
Of course, the first couple of hires will always be significant for team leaders and brokers since they will eventually build the cultural base of the entire team. But then again, you will never know if your recruits are good enough until you put them to work. This hit-and-trial undertone hiring has, can only be tackled with years of real estate experience and knowing the KPIs that indicate recruitment.
There are some fundamental questions you need to answer before you start hiring real estate agents
Do I really need to start Agent recruiting?
Is this the right time to recruit?
And finally, what key performance indicators do I need to look at that indicate a hiring process?
5 Real Estate KPIs You Should Look Out For Before Recruiting More Agents
KPI 1. It’s Time to Delegate
A broker/owner should only do everything by himself till he has no work to delegate.
Michael Hellickson, Founder, and CEO of Club Wealth, in his session at Uplift 2020 (Annual Real Estate Summit by Auctm) explained the importance of scaling at the right time.
- Tier 1: Focus on converting and building for future agent hires
A Broker/ Owner makes around 0-25 transactions a year. Here the focus should only be on personal business and growth and less on recruitment. Why? Because there is a chance that you are not selling or making enough to support new talent, and if you’re not doing that, new talent will not come to you. And even if it does, it will be a waste of time, money, and effort.
- Tier 2: Time to hire for growth
This is where a broker or a team leader begins to make more than 40 transactions a year. Your focus should shift to recruitment, new agents, and upcoming industry talent. Now is the time to expand your business and delegate listings.
- Tier 3: Hire to retain top talent and let go of the bottom 20%
As a team leader, you are still the top producing agent of your team/ brokerage. Your focus should be on lead generation and delegation, hiring talent who can produce higher outcomes, top grading the team, and letting go of the bottom 20%.
- Tier 4: Delegation is the key to success
This is where your recruited team’s production starts to match your production, you can then start hiring team managers and team leaders who can now handle micro-aspects of your business. And while they work in the business, you can spend your time working on the business.
KPI 2. Get Over Your Plateau
Even if agents give their 100% for every listing and every deal they get, there will come a point where productivity will halt. Every team has a ceiling, and once this point is touched, their sales will start to plateau.
In real estate, several KPI metrics help indicate a plateau. Some of them are:
- Lesser than average GCI.
- Lack of talented agents in the team.
- Outdated marketing strategies.
- Improper tooling
This does not mean that there is something wrong with the team; it just means that another component needs to be added to accelerate growth.
It is essential to recognize this plateau and start recruiting and delegating leads so that your team does not reach burnout.
KPI 3. Agent To Lead Connectivity Ratio
Lead connectivity is a simple metric to understand but a tough metric to keep track of. It indicates the amount of effort made by an agent in pushing a client towards closing or keeping them in the loop. Key Performance metrics here include a number of leads called/ texted/ emailed, speed-to-lead, attempts-per-lead, and more.
There can be various reasons why agents lead connectivity is lesser than the team’s average. Some of these reasons are,
- Slacking in speed to lead
- Lesser than average outreach levels
- Overpacked with leads in the pool
- Lesser than average outreach attempts per lead
These reasons can affect your hiring process.
If your agents have more leads than they can handle, you as a team leader can boost recruitment. On the other hand, you need to coach the non-performers and give marching orders to those who show no improvement in their performance.
The question then is, how can we easily track Lead Connectivity metrics?
Auctm provides you with a 1:1 meetings dashboard that has an agent-wise Performance Report. Through this, you can coach your agents in a more personalized manner.
The dashboard provides you with all the essential Lead Connectivity metrics that will help you be on top of your agents and your real estate business.
KPI 4. Agent ROI
There is some amount of capital an agent invests into a client when they are nurturing them to close the deal.
ROI then becomes - Money earned divided by Money invested. If the ratio is more than 1 that means the agent is profitable, and if not there is something wrong with how the agent is trying to close their deal.
This KPI becomes essential when it comes to hiring. If your ROI is less than the money invested, it’s a direct loss in the entire income you’re getting from a sale.
Through tracking and understanding your ROI, you can determine which agents are performing well and which ones are not. If your average ROI is lesser than your average investment, there needs to be a performance-related discussion with the team.
One of the solutions can be hiring new talents who are capable enough to give you a higher ROI.
KPI 5. Conversion Rate
Understanding your conversion rate, i.e., “the rate at which your real estate leads eventually turn into clients,” is essential for your business. As a team leader, you should always want your agent to aim for high conversion rates while moving through the funnel.
Not only will an average to high conversion rate KPI help you when you are trying to expand into new locations, get more technology, try new lead sources, but it will heavily help you in your recruitment process.
Auctm’s Conversion Quadrant helps a team leader or a broker/ owner easily identify their top-performing and lowest-performing agents. It will help you identify agents who need more coaching, additional leads, or where you need to redistribute leads to ensure a healthy pipeline and improve your team conversion rates.
If a broker/ owner or team leader decides to understand why some of their agents are struggling deeply, they can quickly scroll down and inspect their pipelines for a more in-depth overview.
- Even though it is crucial to look for new talent constantly, it is also important to understand when you can expand and onboard this talent.
- Problems always arise when you are constantly spending more than what you earn.
- Sales in real estate can reach a plateau, just like any other business. It is crucial to identify this plateau and add force for growth.
- It is always crucial to fix bad fits - Do not be afraid to let go of underperforming agents.
- Look at your numbers before you hire so you can make data-driven recruitment decisions.