Real estate has typically been a self-made industry, with low financial and educational barriers to entry and dominated by big, street-smart personalities who have pulled themselves up by their bootstraps to make themselves successful. But research shows a new breed of business-educated and managerially savvy real estate agents are starting to make their mark. These new agents run tighter ships that are more profitable, have better employee engagement and are more transparent around process and client management.
The research identified:
- Two-thirds (66%) of real estate agents identify the quality of leadership within their organisation as good (45%) or excellent (21%) compared with 12 per cent who say it is poor or non-existent.
- Nearly 40 per cent of all those surveyed – and 31 per cent of principals – have received no formal business training at all.
- In fact, 82 per cent of principals feel qualified to lead their business but are keen to learn more, while five per cent feel completely unqualified.
- The higher the education levels, the greater the likelihood of financial success – 47 per cent of businesses experiencing negative growth and 44 per cent of those experiencing flat growth had no formal business training.
- Coercive leadership styles are the least likely to achieve results – 17 per cent of those surveyed whose businesses were experiencing negative growth described their boss as ‘just do as I say’, compared with just six per cent of those who were experiencing growth above 10 per cent.
- The leadership style (see definitions below) used by the most financially successful agents is Affiliative, with 29 per cent of agencies experiencing growth higher than 10 per cent identifying this style, followed by 22 per cent Coaching.
- The research shows that despite record property prices across most states, 29 per cent of those surveyed were experiencing flat or negative growth in their businesses, while 43 per cent were experiencing growth of up to 10 per cent and 28 per cent were experiencing growth of 10 per cent or higher.
The Real eState of Leadership Report canvassed the insights from 508 real estate agents in an online survey run from January to April this year. Of those who participated in the survey, 27 per cent were principals, 49 per cent sales agents, six per cent property managers and 18 per cent worked in management roles with franchise or boutique groups.
Most (46%) had worked in the industry for more than 10 years, while 19 per cent had five to 10 years’ experience and 35 per cent had less than five years’ experience. Most (48%) worked within agencies belonging to a major franchise (defined as more than 30 offices) while 22 per cent worked in boutique agencies, 24 per cent were independents and seven per cent worked within corporate offices.
The survey also shows an industry dominated by the over-40s with 31 per cent aged over 50, 27 per cent aged 40-50 and 25 per cent aged 30-40. Just 17 per cent of respondents were under 30.
The survey found that 39 per cent confessed to having no formal business training whatsoever, while a further 39 per cent had undergone short courses in business and 16 per cent had completed a university degree. A further six per cent had undergone postgraduate training in the form of an MBA (Master of Business Administration).
It further found an ‘Affiliative’ style of leadership – where emphasis is put on team members to build morale and make them feel good about working together as a team – is the style of leadership most favoured in real estate, with 23 per cent of respondents identifying the behaviour of their boss (or themselves if they were the boss) in this way. This was closely followed by an ‘Authoritative’ style (21%) where the leader sets goals, but lets team members decide how they are going to get there and be self-directed.
“My principal is quite agile and responsive to the market. He opens the table for discussion and is willing to improve,” wrote one respondent.
PRINCIPALS VERSUS SALES AGENTS
The research shows that a typical principal of a real estate agency today is likely to have undergone some kind of formal business training, with 45 per cent stating they had undertaken short courses in business (other than their real estate licence training), 16 per cent having a university degree and eight per cent having an MBA. It found close to a third – 31 per cent – had no formal training at all.
This is in comparison to 44 per cent of sales agents who claim to have had no formal training at all, 36 per cent who have undergone short courses in business, 14 per cent who have a university degree and eight per cent who have an MBA.
The greatest proportion of principals were aged over 50 (47%) with 29 per cent aged 40-50 and 24 per cent younger than 40. This compares with sales agents who are fairly evenly spread across the age groups.
Principals were consistently more likely to have completed training on topics such as managing people (61%), dealing with conflict (55%) and understanding personal strengths and weaknesses (53%). This compares with just 42 per cent of agents who had undergone managing people training, 44 per cent who were trained in dealing with conflict and 44 per cent who understood personal strengths and weaknesses.
Principals are most likely to describe their own leadership style as Affiliative (32%) where emphasis is put on building morale within the team by making them feel good about working together. This was followed by 27 per cent who said their style was Coaching, where the leader loves to help others improve their habits. Not a single principal identified their leadership style as Coercive, based on ‘do as I say’ and orders.
Interestingly, this self-assessment was not backed up by sales agents, with only 16 per cent describing their bosses as Affiliative, and 11 per cent identifying their leaders as Coaching.
In the eyes of the followers within real estate, however, the most dominant leadership style is Authoritative (25%) which is a goal-led style with team members being self-directed and needing to decide how they will achieve their goals. This was followed by 16 per cent who identified their boss as Affiliative and a telling 14 per cent who said their boss was Coercive.
“My boss likes to think he is Affiliative, but in fact he expects people to do as they are told,” wrote one respondent.
“We are abused if we are not in the office enough, and then we are railed against if we don’t get six appraisals a week by a boss who himself has a team of three and yet rarely does more than three a week,” wrote another who captured the theme of consistency. “I don’t mind being told what to do – as long as it’s consistent and the rules are equal across the board.”
EDUCATION VERSUS SUCCESS
One of the key findings of the survey was the importance of formal business training in the success of a real estate agency. The survey found that none of the businesses where agents had undertaken an MBA or university degree had experienced negative growth, while 48 per cent of those with negative growth had had no formal training.
The survey showed a coercive leadership style was least likely to achieve results; 17 per cent of those surveyed whose businesses were experiencing negative growth described their boss as ‘just do as I say’ compared with just six per cent of those who were experiencing growth above 10 per cent.
Agents who have MBAs or university degrees are more likely than those with no formal training to have more structured staffing management systems.
The survey found that tertiary-trained agents were significantly more likely to have created ‘safe spaces’ and tolerate making mistakes (54 per cent of MBAs compared to 25 per cent of those with no formal training) and were more likely to invest in regular training by industry experts (50 per cent of MBAs compared to 41 per cent with no formal training) or send staff to conferences (43 per cent MBAs compared to 38 per cent no formal training). MBA and university-trained agents were also more likely to hold weekly one-on-ones with their staff (29 per cent compared to 16 per cent) – although this activity was conducted by less than a third of the industry across the board.
“I think some leaders are excellent and others need work – but this comes with time and experience,” wrote another. “The biggest issue is when a leader tells you to do something after hearing about it in a seminar, but when it is put into a real-life situation you are admonished for it by your peers or more experienced agents. You also see the successful sales agents who do their own thing and are not pulled into line but are called out by the same management for being successful – so there is a clash of cultures and mixed messages about how success behaves.”
The research shows real estate agents are a self-motivated bunch when it comes to training, with 32 per cent of those surveyed saying they had paid for all their own training and a further 22 per cent stating they supplemented the training paid for by their company with their own funds.
LEADERSHIP SKILLS AND HOW THEY ARE DEMONSTRATED
The survey showed that across the board leadership skills were rated as good with the skills of vision and strategy for the business (25%) and empathy and making time for people (27%), two of the top skills most likely to be rated as excellent.
The skill most likely to be average was administration and management, while work/life balance was the skill most likely to be average (31%) or poor/non existent (19%).
Team building was another skill that ranked poorly, with 19 per cent claiming it was poor or non-existent in their business and a further 25 per cent saying it was average.
Performance is measured mainly through sharing results in weekly meetings (63 per cent of respondents) while the good old office whiteboard (61%) is also a vital management tool.
Interestingly, only 34 per cent said they currently measured listing conversion rates and 38 per cent said they measured prospecting activity to see what got the best results. A further 34 per cent identified that they needed to measure and manage performance better, while 13 per cent stated they were too busy getting through each day to measure properly.
“Balance sheet and profit and loss are basically the only measurements in our business.
There is never a discussion about why are the numbers good or why are the numbers bad – it’s just simply are the numbers good?” wrote one respondent.
WHAT NEEDS TO BE DONE BETTER
The survey identified that a significant proportion of real estate agents are crying out for better quality leadership within their organisations, and help in staying motivated and positive.
While 61 per cent of respondents identified that personally staying positive in changing times was the most important challenge their business faced at the moment, few businesses know how to achieve this.
The survey shows that while 63 per cent of offices held weekly team meetings, their motivational effectiveness dropped off, with 55 per cent of respondents claiming that they were used to inspire them to greater performance. More than a third of respondents said fun and engaging social activities (37%), reward and recognition programs (31%) and team incentives (26%) were used to keep staff inspired.
“The reward and recognition from my peers and boss are encouraging,” wrote one respondent. “You spend a lot of time at work and have to enjoy what you are doing – and I do – plus it helps if it pays the bills too!”
But, somewhat alarmingly, 40 per cent said more definitely needed to be done, while 12 per cent of respondents said they were not encouraged at all, identifying that the leadership challenge for real estate is yet to be conquered.