This report is available exclusively to subscribers of Inman Intel, the data and research arm of Inman offering deep insights and market intelligence on the business of residential real estate and proptech. Subscribe today.
Real estate and mortgage leaders wake up to challenges daily — often the same ones, over and over, in a Groundhog Day cycle of low inventory, high mortgage rates and, more recently, lawsuits threatening to upend old practices.
Wash, rinse, repeat.
But long-haul leaders have their eyes on the horizon, too, and new data suggest a future concern is growing out of today’s tumult.
- Approximately 28 percent of brokerage leaders who responded to January’s Inman Intel Index predict “recruiting and retaining talent” will be the most challenging part of their business one year from now.
That mark was the highest measured by the Inman Intel Index, also known as the Triple-I, since this flagship survey was unveiled in September. The same response choice had not previously cracked 24 percent. January was also the first time “recruiting and retaining talent” led all concerns as brokerage leaders look to the year ahead.
For this reason, Intel is planning a deeply reported series on the topic of recruiting in the weeks to come. The series — which will run in early April — will be based on detailed questions that will be part of the March Triple-I and conversations with experts in the field.
But in the meantime, read the full report below to learn why so many real estate leaders see recruiting as a matter of such pivotal importance in the year to come.
War of attrition
For several reasons, 2024 could be among the most competitive recruiting cycles in years.
One potentially cuts both ways: Housing headwinds keep shrinking the ranks of both agents and loan officers. Company owners are metaphorically defending the home front while having less talent to target outside their walls.
This is because, to some degree, the departures in both industries aren’t just rookies or poor fits. Several corporate leaders have discussed strong producers who did not have the wherewithal to ride out a generational downturn. This is the scenario that Compass CEO Robert Reffkin gave voice to in an interview with Brad Inman last month.
“Last year, I’ve never seen so many top agents question whether they should leave the business,” Reffkin said.
The National Association of Realtors is bracing for what could be its largest one-year membership drop ever, which would come on the heels of its first year-over-year decline since 2012. NAR Chief Economist Lawrence Yun highlighted in his most recent membership analysis that, despite a slower outflow than some expected, losses are far from over.
“Most state and local associations should anticipate further declines in membership over the next 24 months based on the lag effects of past housing cycles,” Yun wrote.
Some of the nation’s biggest brokerages acknowledged losses in their recent earnings call presentations.
EXp’s year-end agent count was also down 1.8 percent compared to the previous quarter, according to founder and CEO Glenn Sanford. During his investor call, Sanford said that Q4 was the “first time in history our agent count has declined quarter over quarter” — though he added that agent attrition appears mostly isolated among the least productive agents.
RE/MAX’s total agent count fell 6.1 percent in the United States last year and has continued falling at the start of this year, according to corporate spokespeople. Worldwide, it now counts 143,497 agents, the company said.
The fight to hold onto producers isn’t relegated to the real estate brokerage world, either. The mortgage world has been decimated by an extended period of high rates and lower home sales.
It isn’t 2007 and 2008 for mortgage originators, but approximately 50,000 nonbank mortgage brokers and bankers fell off payrolls in 2023, and layoff announcements haven’t slowed in 2024.
Consider just some of the headlines from the mortgage world in the first two months of the year:
Leveling up
On the other side of the spectrum, some real estate and mortgage brokerage firms are staffed with relative newbies who joined in the veritable gold rush created by the COVID-19 homebuying frenzy.
They thrived when mortgage money was all but free and inventory was looser, and maybe even began to establish themselves on social media as influencer.
But TikTok only goes so far when interest rates rise at the fastest pace in 40 years, or U.S. home sales were the fewest since 1995.
Some of the 22 percent of survey respondents who said “recruiting and retaining talent” was the hardest part of the present business environment cut to the quick on the topic.
Preparing for opportunity
At some point, when inventory replenishes, mortgage rates fall (enough), and household formation demand factors collide, the housing market will hit another upcycle.
- According to the January Triple-I, more than three-quarters of real estate and mortgage executives rated their confidence in their business model at a 4 or higher on a 5-point scale.
So it stands to reason that the survivors, the ones with a proven business plan, an inviting culture, and requisite technology, will be positioned to snatch market share from their rivals by winning the talent arms race.
Mortgage companies are in the thick of it now. Still, they will need underwriters, loan officers, secondary market specialists, support staff, marketing personnel, and more when the spigots turn back on. The worst position a mortgage company can be in following a downturn is being unable to deliver quality service and efficient underwriting and pre-approval for their clients and real estate referral partners.
For real estate brokerages, there there is likely to be fewer competitors 12 months from today. What is less certain, among many things, is what buyers agents will get paid and by whom. One piece of the recruitment pitch, then, could be having a clear pitch for the agent who may not feel they’re getting transparency or answers from their current brokerage.
One survey taker offered a take on today’s challenges that falls roughly in line with what others believe are the challenges coming down the pike.
“The lack of education most brokers provide their agents. They are so concerned about paying the highest splits, they can’t afford management to train and hold them accountable. The old mom and pop method is being replaced with I pay you top dollar stay up to speed on your own. In turn an agent doesn’t have a value proposition and commissions are dropping. No one is addressing this.”
Keep an eye out in early April for Intel’s full series on recruiting, where these questions will be explored in even greater detail.
Methodology notes: This month’s Inman Intel Index survey was conducted Jan. 21-31, 2024. The entire Inman reader community was invited to participate, and Intel received a total of 1,029 responses. Respondents for this survey were directed to the SurveyMonkey platform, where they self-identified their profiles within the residential real estate market. Respondents were limited to one response per device, but there was no limitation to IP addresses. Once a profile (residential real estate agent, mortgage broker/banker, corporate executive/investor/proptech, or other) was selected, respondents answered a unique set of questions for that specific profile. Because the survey did not request demographic information for age, gender, or geography, there was no data weighting. This survey will be conducted monthly, with both recurring and unique questions for each profile type.
