(This is Part 2 of a three-part series. See Part 1 and Part 3.)
What are the factors that influence real estate success in Rookie Realtors? An important new study has the answers.
Last week we looked at the assessments used to determine what it takes to succeed during an agent’s first year in real estate. Is there an ideal profile for a new agent? When it comes to the demographic data, the answer is a surprising, “No.”
Study participants
In the summer of 2005, 175 agents from different companies and geographical regions in the U.S. participated in the study. Each agent was asked to take the Real Estate Simulator, the DISC and the PIAV. Participants also completed a survey that included information on age, sex, length of time in the business, number of listings taken, number of listings closed, number of closed transactions, commissions earned, hours worked per week, and whether the agent’s company offered an in-house new agent training program.
Demographic Results
Age
Fifteen percent of the participants were ages 20-30; 28 percent were 30 to 40; 22 percent were 50 to 60; and 7 percent were 60 or older (N = 160). In terms of this study, age has no effect on performance. Older and younger people do equally well during the first year in real estate.
Gender
Thirty-five percent of the respondents were male and 65 percent were female. In terms of this study, gender also has no effect on performance. Men were no more or no less successful than women were.
Work Experience
In terms of the sample, 18 percent of the agents had less than six months of experience and another 42 percent had from six months to one year of experience. (Sixty percent of the respondents had one or less year of experience.) Twenty-three percent had one to three years of experience and 17 percent had more than three years. Not surprisingly, real estate experience was highly correlated with closed sales, commissions earned, and listings taken (correlation coefficients ranged from .46 to .67). In other words, the more experience an agent had, the more transactions they closed and the more money they earned.
Part-time vs. Full-time
In terms of the number of hours worked, there were no differences based upon age or gender. In terms of this study, 60 percent of the respondents worked at least 35 hours per week in the business. Twenty-five percent worked 21 to 35 hours per week and 15 percent worked 20 or less. This research supports the conclusion that working full time in real estate is directly related to earnings. Chi square analysis revealed that agents who worked 35 hours or more per week earned significantly more commissions, closed more sales, and took more listings. (p < .002). Many agents mistakenly believe they can be successful by working part time in real estate. This study suggests that working part time or hiring part-timers is not conducive to real estate success during an agent’s first year in the business.
Training
Sixty-eight percent of the agents reported that their company offered an in-house training program. Thirty-two percent reported that they did not have an in-house training program. Surprisingly, agents who had in-house training scored no better than those who lacked access to an in-house training program. The presence of an in-house training program had no significant relationship to the commissions earned, the number of closed sales, the number of transactions placed under contract, listings taken, or to overall performance. What the study did not address was the nature of the training offered. Some companies provide contract training without sales training. Others may rely on video or online training as opposed to live training. Additional research is needed to determine whether sales training and/or training provided concurrently with coaching influences performance during the first two years of an agent’s career.
Selection Process
If age, gender and training do not predict real estate success, the question is what does? The study results show that assessments are solid predictors of a rookie agent’s success during their first year in the business. To learn more about this study, see next week’s column.
Bernice Ross, co-owner of Realestatecoach.com, has written a new book, “Waging War on Real Estate’s Discounters,” available online. She can be reached at bernice@realestatecoach.com.
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