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Placed Australia

Internal Recruiting vs Using Real Estate Recruiters. What are the savings?

Updated: May 24



We're all aware that the war for Real Estate Talent is very real. In a market where Real Estate Agencies have a continuous appetite for growth, and the talent pool for experienced Agents is limited, most Agencies turn to multiple avenues to find the people they need to grow...


Winning the war on talent takes strategy. We will uncover some of the benefits and pitfalls of building a reliable recruitment machine to help grow your Agency below...


Real Estate Recruiters (Pay on Performance)

Some Real Estate Agencies see the huge benefits Recruiters can offer their business and some have a closed door on the matter. They try to do it themselves wherever possible and that's fine, but what can be missed?


As a Recruiter that has been in both Agency Recruitment (mostly) and as an Internal Recruiter, I understand the mindset of Real Estate Agencies that try to tackle Recruiting all themselves. They are simply blinded by the idea of a Recruitment fee and can't understand why they should pay anything to hire talent...


It's simply because they don't understand the benefits or how to work using a Recruiter to their full advantage. As a Real Estate Agent, would you advise your sellers to try to sell their property on their own? You understand the pitfalls, the level of negotiation that happens behind the scenes and the delicate dance that ensues throughout the transaction. Recruiters do the same thing...and in most cases, using a Recruiter is the cheapest option. I will explain...


Unfortunately, Real Estate is one of those industries with a high-turnover of staff and it is totally understandable that most Principals try to control spending on hiring as much as possible.


Agencies want to take on as many of the right people as they can, but the continuous cost to replenish the team is draining on cash-flow so, some feel they are forced to do it themselves and usually make concessions due to the available talent pool. As a Recruiter with over 27 years of experience, I feel I am now somewhat qualified to highlight the pitfalls and benefits...



What Recruiters do...

Timing is everything in Real Estate Recruitment. An Agent that was totally happy 3 weeks ago may not be happy today and they might reach out to have a chat with a Recruiter to find out what options they have...


If you take the time to educate a Recruiter on the people you need to grow your team, you not only get a gun Recruiter, but someone that can market your opportunities and spread your message to the right talent.


Recruiters charge a 100% tax deductable fee for finding the right talent for the Agency. They reach deep into their networks, advertise constantly, and they pick-up the phone and headhunt! Recruiters are set-up and trained for recruiting talent. Recruiters only charge their fee if they find you someone you want. Up until that point, Agencies don't pay a cent. You don't have to pay the recruiter a wage, holiday pay or sick leave. They get paid on performance and they should guarantee the hire for 3-months.


So why is it important to keep the doors open for Recruiters to pitch your Agency talent? Because Recruiters are spending 100% of their time looking for the right talent. When the right talent is found, you are probably going to want to know about it. A good recruiter can stop the Agent form looking any further than your opportunity. The benefits from engaging a good Recruiter could be too good to ignore and you only pay for what you want and get...


Say a Recruiter you partner with comes across an Agent that is writing $500k GCI on a 60% of 90% Split and is open to move to another Agency so they can get a better deal on comms, brand, team, training, mentorship, leads etc...


The Agent will be more amicable in hearing-out a Recruiter on different options because they trust the recruiter knows a heap about different Agencies that they may never know about otherwise. They can also tell a Recruiter things they may not divulge to an Agency Principal or Sales Manger directly...


Let's say for arguments sake your average commission split for an Agent writing $500k level GCI is 65%. That's a potential $175k p.a. windfall on your balance sheet if you can get that Agent to join your team (the recruiter will do everything they can and use all their skills to make it happen).


Would you pay the Recruiter their fee to make $175k + each year from that hire? Sure you will, and you will ask the Recruiter to go out and find 5 more just like that one, I'm sure...


Say the Recruiter does that for you 3 times a year and you spend $30k odd on Recruitment fees. That's a big win. You don't have to pay the Recruiter $100k a year to turn up to the office, their sick leave, holiday pay, payroll tax and insurances. Its a big saving to add $525k odd to your bottom line for a $30k or so spend, right?


Maybe the Recruiter brings you a $1.8m GCI Writer looking for a 70/30 split...and the windfall is more like $540k p.a. Would you pay the Recruiter their fee to make $540k a year. I'd say so...


A Recruiter will bring you the right types of talent because that's how they get paid. If they get it wrong, they don't get paid...so they do their best to impress you enough to want too pay their fee.


It's a no brainer to have a gun Specialist Real Estate Recruiter as part of your talent acquisition method. It cost you nothing until they bring you what you want... That's a win!



The Alternatives...

Some Agencies recruit a Sales Manager. The main role of a Sales Manager is to make sure the team is performing and hitting their sales goals, and, Recruiting new Agents into the business.


Recruiting a Sales Manager is not a silly move for Agency Principals that don't feel they're the best person to manage staff. Maybe they are selling Principals and they know their attention is much more lucratively focused on selling Real Estate themselves than managing the day-to-day sales activities of the team. Smart... Selling Principals are usually high-performing sales people, not managers of people, and the ones that recognise that, and are comfortable handing over the responsibility of management, usually start to see better retention and sales figures from the team.


An Agency Principal that sells, will usually get super-frustrated at why their Agents don't want to work 8 days a week, 24 hours a day to get the same results as them. They just can't fathom why their team can't perform at the same level as they do...


The truth is...it's not their Agency...and the Agents might have different motivators for why they sell Real Estate than the boss (husband works in the mines on $300k a year and they do Real Estate to contribute to household income and are totally ok with selling 12 properties a year).


Instead of yelling at their team each week to sell more...they realise they need a barrier to soften their own expectation...


The Sales Manager role is a challenging one. They are only in control of convincing Agents to join one brand and can only offer one structure. If the structure is not competitive, they will struggle to get any Agents across.


If you think putting on a Sales Manager is going to be the silver-bullet to all your Recruitment growth plans, you may have overshot you expectation here too.


A Sales Manager will usually join a business and reach out to the network they have influence over (people they used to work with or manage). These are the low-hanging fruit and it usually comes with some quick hires and some wins for the Agency in the short-term but it doesn't usually last long-term.


Some Sales Managers are exceptional at training-up the existing team and helping them skyrocket their GCI, which in this case...it's the best move you could have made by putting-on the right one.


If you have only put-on a Sales Manager to focus on growing the team, once the Sales Manager has exhausted their network (Usually 3-4 months), they are now in the same boat as you were, trying to dedicate time in their week to reach out and chase new talent.


A decent Sales Manager will cost anywhere from $100k - $200k p.a. + they may get incentivised on a 2-5% of any sales from any new Recruits they bring into the business from when they started.


Most Sales Managers, as networked as some can be, are not usually trained Recruiters and have no capacity for what it actually takes to hunt and chase the right talent. Believe me...there is a huge difference between a seasoned Recruiter and a Sales Manager that was good at selling Real Estate for many years. Once their network runs dry, and you have a few of their mates working in your team...they might start reaching out to Recruiters anyway, to move the needle again.


So now you're up for the $150k odd wage + Recruitment. It can get costly. Maybe your team is big enough and kicking enough goals that you can do both. That's a win.



Internal Recruiters... ($85k - $120k)

Some Agencies have internal Recruiters. Their only Job is to chase talent like an external Recruiter. It can be a great option for some Agencies that are chasing rapid growth but again, there are limitations for the internal Recruiter, especially as they can only pitch one brand and one structure.


95% of Real Estate Agents may dismiss them readily and you might have to find new internal recruiters constantly because they get deflated quickly. You may be creating another staffing issue.


If the structure you have (comm splits etc) is not radically different or attractive to prospective Agents, the internal Recruiter will struggle. It's not that the Recruiter is crap...it's only because their hands are tide on your model. They can only sell the one thing... (e.g. If someone is shopping for a small car and you can only offer them Hyundai and they don't want a Hyundai, you can't offer them something different..so they move on. External Recruiters can offer them Toyota's, Hyundai's, Porsches and much more. Endless options...)


This naturally excludes a big section of the available talent pool (18%) and there is not much the internal recruiter can do about that except continually ask the Principal if they're willing to change their structure to get the Agents interest etc... If the Principal says "no, our structure is our structure"...then the Internal Recruiter can't do to much about that right? They might leave as a result because they feel they're not contributing enough or constantly bashing their head against the wall...


Most Agencies that are faced with this attraction dilemma, create an Associate program that takes on bulk-loads of new to industry Associates (careers nights etc) and spend time and money to train them up. If they simply can't convince experienced Agents to join their business, and they're not willing to change their structure, there are not many options left than to train eager newbies...


Taking on too many new Sales Associates is risky because we know 82% of new entrants to Real Estate bail-out in their first 12 months. You can end up creating a culture of "bums on seats" that is not attractive for any experienced Agents that could bring a higher-lever of skill to the business.


You have to be so, so careful with this model because if it's not attractive to experienced Agents, it won't be attractive to trained-up Associates in the long-run either. They will take your year or so of training and bail. Then you're back at square one...although you now have a decent Agent you've trained-up working down the road at your competitors... (horrible model).




What's the most effective way to grow a Real Estate Team?

Let's face it, my 10yro son could convince any Agent to come across to any Agency for a 90% split. That's too easy, but we all know it takes a level of finesse to work out what's motivating an Agent to move and convince them make the leap to you.


If you miss that moment, and can't demonstrate benefit to the Agent in a 10-min phone chat, their gone...especially if I get a hold of them after you ;-)


Again, if your team is big enough and kicking enough goals for you to have all these options mentioned above, then it's a win either way. If you have not thought through your talent attraction strategy...then now would be the right time.


We see so many Agencies that struggle with this. This is why we exist to be fair.


Consultation call to help win the talent attraction war. $1,500 = 1.5hrs. (Perfect for Principals, Sales Managers & Internal Recruiters).

There is so much that goes into winning the war on talent. It's certainly not a case of open the doors and they will come. The above barely scratches the surface on the strategies for winning the war on talent and how to gear up for continued growth...


You might like to do a $1,500 consultation call with Placed Australia founder, Andrew Turnbull with 27 years of Agency and Internal Recruitment background, to work out the best strategy for your Agency. We get to see a lot of structures and are in the best position to advise you on what works.


This consultation info will last with you for a lifetime. Call Andrew @ Placed Australia Real Estate Recruitment and let me know you have read this article and want to learn more about winning the war on talent. 0474 947 545 or andrew@placedaustralia.com.au


If you are being more strategic about how you attract talent to your business, then using the wealth of knowledge a Recruiter can give you on top of helping you grow your team can be invaluable.


Need staff now? If you would like to partner with an external Recruitment Agency that specialises in Real Estate Recruitment and does it all for you, please reach out to any one of our team @ Placed Australia for a chat today. We will do what we can to convince the right staff to join your team...





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