While meeting with many business owners interested in joining The Alternative Board, I have run into many real estate agents and brokers. To a tee, they sing the blues about a troubled industry. Many are internally motivated to survive what they see as a correction in their industry. They may not be able to effect the lending side of the equation but the narrowing of the sales side is definitely in their hands.

One thing that hasn’t changed in the last few years is that real estate brokers have one primary problem: They hire agents on commission, announce something like “Best options for Hilton Head condos” or “We buy houses Buck County” and kill themselves to motivate them. How else will they make money? But the fact is that like so many industries, 80% of the sales are created by 20% of the agents. In most cases that 80% is sold by the brokers themselves with a couple of stars that move around their community extracting better and better commissions when they can get them.

But like any industry, this is a troublesome model that has no solution. In order to find true success and be rid of this problem, the model must be changed. Here are my thoughts about improving sales performance in a real estate company (well, in any company.) :

1) Compensation is best tied to the profitability of your business.
You come to work each day knowing the nut you need to crack. Employees work better when they understand the facts as you do and benefit similarly.

2) People are motivated by feeling that their contribution to the whole is valued and counted.
No matter how much lip service is given to team work, there is no team when everyone works against each other, alone, rather than toward a common goal that they all understand and can measure. People are lackluster working alone. But they will walk through fire for their team’s well being. That has been proven time after time.

3) Systems run the business. People run the systems.

The flaw in many small businesses is that each person is independently repeating a series of tasks rather than the team having a system for growing the company.
Additionally, the competitive model leads to a never ending search for “perfect”, internally motivated people – just like in case of keywords to find motivated sellers when doing marketing. If 20% of the agents do 80% of the volume it is proof that it is difficult, at best, to find perfect people because the model is inherently not motivating.

If you talk to mature Hilton Head realtors with 10, 25 or 60 agents, the dollar amounts change, but they have exactly the same problems. The problem isn’t the people. The problem is a lack of motivating systems. Great systems allow teams to excel with average people.

There will be a renaissance in real estate when they seriously take a look at the model. Possibly this can change one brokerage at a time.

Source: H2RealEstate.com.

Ruth Schwartz

Ruth Schwartz is the author of "The Key to the Golden Handcuffs". She is a high performance business consultant and leadership coach. Connect with Ruth to participate in the conversation. Google+, Facebook, Twitter, YouTube .