This is the third article in our four-part series covering broker recruitment strategies. This article details the steps a broker needs to take for a highly effective interview to take place and the main characteristics to look for in an ideal hire.

The first article covered the creation and maintenance of a broker’s recruiting plan and goals. The second article covered broker solicitation techniques for each of the types of hires available to employing brokers.

The pre-screening of prospects

As an employing broker, once you’ve located a potential hire, you need to vet them to gauge their individual potential. Before calling a potential applicant in for an interview, first gather fundamental information about them to determine whether a face-to-face interview is merited. This saves you the time of interviewing a candidate that is clearly not a good fit for your operations.

To gather this preliminary information, a prudent broker gives prospective hires the Agent Interview Sheet,  a questionnaire the agent completes remotely before an interview is calendared. The prospect prepares and submits the questionnaire to the broker, providing the broker with critical information about the qualifications of the prospective employee. On receipt, the broker reviews the information contained in the interview sheet to initially evaluate the prospect. [See RPI Form 500]

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The Agent Interview Sheet queries prospective hires for information about their background, education and real estate-related activities. When they fill it out and return it, their effort indicates they have an earnest interest in being employed as an agent with your brokerage office. [See RPI Form 500]

The Agent Interview Sheet collects personal information on the prospect’s:

  • real estate license status and background, including:
    • their Department of Real Estate (DRE) license number and the date it was obtained [See RPI Form 500 §1.1];
    • other professional licenses or endorsements they hold [See RPI Form 500 §1.2];
    • any negative actions taken against the licensee or the existence of a criminal record [See RPI Form 500 §1.3-1.5];
  • professional affiliations [See RPI Form 500 §2];
  • educational levels attained [See RPI Form 500 §3];
  • real estate activity conducted [See RPI Form 500 §4];
  • personal contacts known to the prospect, and preferably also known to the broker, who may serve as references [See RPI Form 500 §5]; and
  • conditions of employment. [See RPI Form 500 §6]

On reviewing the completed Agent Interview Sheet, determine whether their answers align with your recruiting plans, recruiting goals and business model. [See RPI e-book Office Management and Supervision Chapter 2]

When you deem the prospective hire is worth your time and energy to consider them for hire, then schedule an interview.

The broker supplies information

Brokers, by experience, tend to be more aware of the type of personality most likely to succeed as an agent performing the various services the brokerage office provides to the public. Also, brokers who already employ agents are better able to anticipate the income an agent will generate and the expenses they will incur than brokers who have not employed agents in the past and, of course, recently licensed agents.

A broker’s primary objective when hiring an agent is to increase the gross broker fees received by the office without incurring a proportionate increase in operating expenses. When a broker has an office already up and operating, another hire adds an element of efficiency as office overhead and promotional expenses do not typically increased to accommodate additional hires – until too many are hired.

For the broker to make hiring a productive endeavor, the broker needs to organize an agent selection and evaluation plan to focus on how best to avoid a high turnover of agents.  Agents who remain with the office for only a short period of time before leaving result in unrecoverable loss of the broker’s sunk time and energy tending to this now-gone agent. [See RPI e-book Office Management and Supervision Chapter 2]

More generally, long-term employment of agents by brokerage offices contribute to a favorable industry-wide public perception of brokers. The longer a broker holds staff on average, comparable to time in the business – longevity in location – the greater the reputation of the broker both within the real estate industry and with the consuming pubic.

Here, stability adds value to the office’s existing goodwill for which the broker receives a return of and on the resources invested with each agent hired during the employment process and nurtured as an agent of the broker.

Energy, money, time and enthusiasm all wane fast when the turnover of talented agents is driven by the failure of unrealistic expectations held by an agent.

A broker’s full disclosure — upfront and prior to employment — covering the agent’s likely income and expenses, and why the fee sharing and expense allocations are reasonable, leads to a realistic expectation of income by the agent when hired.

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Revealing income and expenses

The broker interviewing a prospective hire needs to provide the prospect with an income and expense sheet and review its contents for amounts they are likely to experience while employed at the broker’s office. [See RPI e-book Real Estate Practice Chapter 2]

To assist the agent in an analysis of potential earnings using an income and expense data sheet, the agent enters the approximations made by the broker for the various expenses a typical agent experiences during their first year with the brokerage office. [See RPI Form 504]

The income data the agent needs to collect includes:

  • the price range of property the agent is most likely to list and sell;
  • the number of sales the agent is likely to close in that price range during the first year;
  • the gross broker fees generated by the number of sales during the first year; and
  • the share of the gross broker fees the agent will receive under the fee-sharing schedule offered by the broker.

The likely gross fees the broker is to receive on projected closings, and the agent’s share of those fees, are entered on the sheet based on discussion during the interview. [See RPI Form 504 §§1 and 2]

Ultimately, the sales goal set by the agent is reflected in the amount of after-tax income the agent seeks for themselves to maintain their standard of living. [See RPI Form 504 §11]

Related article:

Form of the Week: Agent Interview and Income Data Sheet — RPI Forms 500 and 504

Conducting the interview

During the interview process, the broker needs to be proactive by showing the prospects – whether as a finder, agent or broker-associate – the value of joining your brokerage office. Also, have a prepared list of all the unique benefits your company has to offer and hand the prospect a copy so you can evaluate their questions or comments.

Review the Agent Interview Sheet with them by discussing its content to confirm the prospect’s education and professional background. [See RPI Form 500].

You need to know what motivates them. You might assume agents always go where higher fee splits are offered. However, that is not universally the case. Many are looking for training along with the support of an efficiently run brokerage office which will help them improve their sales numbers and better succeed.

Pay attention to your prospects’ needs and determine what you can give them. Their success on your staff directly affects your company’s success. A substantial part of this is in your training program for new recruits which you need to constantly update to cover changes in the real estate market and technological advances.

Recruiting is not just about replacing and finding new talent — retaining is equally important.

Make sure you have a strong retention program in place for your most talented staff, along with an environment that enhances productivity and likelihood of success. Keeping your recruits happy for the long haul sets the pattern for the growth of your company. Otherwise, you’re treading water, or worse.

When your agents are happy, chances are you are too!

Assessing characteristics

When interviewing, ask questions which determine whether the prospect’s characteristics are in line with the objectives you set out for agents and broker-associates you want to hire.

The following seven habits and characteristics are found in great agents:

  1. A positive, energetic lifestyle. 
    An optimistic attitude held by a prospective agent toward resolving any type of situation that arises brings constructive new energy to your office. Also, agents who are optimistic are more likely to push on through rejection to find a way to achieve the end result they seek. Most importantly, they need to understand they must endure many “no’s” while making the effort to get to the “yes’s” — a key component of every successful licensee whether the services they will render are in sales, leasing or mortgage origination.
  2. Initiative to set and achieve goals.
    Self-motivated agents have the personal wherewithal to set their own goals and pro-actively push them through to completion. These agents have talent: they determine what they want, figure out how to get it, and get it without creating a drama.
  3. Discipline to consistently generate leads.
    A prospective hire’s attitude needs to display they understand the necessity and consistency for lead generation, the identification of their target groups for mailings and online advertising campaigns, as well as routine telemarketing, social events and civic involvement. Prior clientele, while great for referrals, seldom need real estate services more than once in a decade or more. Thus, to succeed requires lead generation for sufficient annual income,
  4. Knowledge of scripts for sales and closings Successful agents tend to be well-versed and willing to learn sales scripts as distinguished from agents who believe they are so talented they can “wing it.” Also, demonstrating during an interview that they know how to be silent and when to listen makes an agent appear professional and experienced.
  5. Versatility to adapt to diverse conditions
    The trait of curiosity shown by a prospect asking questions about your office, or you as the broker, most likely brings with it a resilient mentally to overcome barriers that require emotional strength and competence to resolve. They then know how to respond to questions or cure obstacles to listings, contracting and closing transactions. The upshot is they possess a practical “can-do” approach and thus achieve the desired results when working with clients and others.

Determining whether the prospective hire’s traits are conducive to your own goals and staging requires an open dialogue about your expectations and their behavior. This environment allows you and your prospective hires to make an informed decision about whether they will thrive at your brokerage.

Related article:

Brokerage Reminder: Setting standards for recruiting agents

The agent’s right to compensation

A real estate broker is required to have a written employment agreement with each of the licensees hired to act on the broker’s behalf. The agreement covers material aspects of the employment relationship between the broker and the agent or broker-associate.

Realty Publications, Inc. (RPI) publishes two employment agreements used by a broker employing a licensee, including:

  • Sales Agent and Broker-Associate Employment Agreement [See RPI Form 505]; and
  • Independent Contractor Employment Agreement — For Sales Agents and Broker-Associates. [See RPI Form 506]

Brokers most often negotiate a fee disbursement arrangement which calls for the use of an independent contractor (IC) agreement to document their employment of agents. [See RPI Form 506]

Alternatively, and possibly trending, brokers may choose to withholding taxes and other amounts from the agent’s share of an earned fee and disburse the net fee remaining, the accounting for which is set out in an employee agreement form. [See RPI Form 505]

An IC agreement, in contrast with an employee agreement, shifts amounts otherwise withhold as well as separate additional employer contributions on to the IC  employee who then is responsible for paying them on filing their personal tax return, not the employing broker. [See RPI Form 506 §2.13]

Regardless of the type of written employment agreement used and signed by the agent, the broker and agent are compliant with Department of Real Estate (DRE) regulations when using either one.

Despite the labels given to these agent employment forms, an agent or broker-associate is always an employee of the broker under California’s labor law and DRE regulations. The status of an IC is limited solely to income tax reporting and unemployment benefits.  Thus, the broker is an employer and must answer for their agent’s wrongful conduct when the agent is acting within the scope of their employment with their broker.

An agent may not act independent of the broker when acting as an agent in a real estate services transaction, even when an IC agreement is used to document the employment. Further, the broker employing agents using an IC agreement owes the DRE a duty of supervision of their agent, as well as always maintaining a mandated worker’s compensation policy. [See RPI Form 506]

After discussing the terms of employment set forth in the employment agreement with your prospective hire, it’s up to you to make the final call.

When the prospect and you can come to an agreement on income and expense arrangements and the terms of employment, and you have determined their characteristics are a good match for your brokerage, you can move forward with employing them by entering into an employment agreement form. [See RPI Form 505 and 506]

Related article:

Form of the week: Agent and Broker-Associate Employment Agreements — RPI Forms 505 and 506

Getting the interviews started

Not sure where to find new talent?

Brokers with 10 or more employees are eligible to join firsttuesday’s CalPaces program, a Broker Appreciation Program that gives brokers access to recently licensed agents and broker-associates through its Recruit Local Licensees feature.

Through this feature, brokers locate potential recruits, making the steps towards arranging and conducting an efficient interview quicker, easier and customizable to your desired location.

Join CalPaces today by calling 951.781.7300 and asking to speak to a CalPaces representative or by visiting CalPaces.com and leaving your contact information.

Broker members in CalPaces pay nothing for the service.

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Infographic: Recruit for success

Visit the firsttuesday Journal for reports on your local real estate market and real estate trends.

A few useful tools provided by CalPaces include:

Not a CalPaces member? Brokers with 10 or more employees are eligible to join. Broker members in CalPaces pay nothing for the service.

Join today by calling 951.781.7300 and asking to speak to a CalPaces representative or by visiting CalPaces.com to leave your contact information.