Not according to Ryan Schneider, CEO of Realogy. Schneider explained his lack of enthusiasm for agent signing bonuses at a recent Keefe, Bruyette and Woods Real Estate Finance and Asset Management conference, according to a recent InmanNews article by Patrick Kearns.
Schneider’s concern regarding signing bonuses centers on the trade-off between recruiting top agents to maintain/enhance market share or retaining top agents. In an owned brokerage like his, NRT, that offers franchising opportunities, an agent- signing bonus is questionable in terms of a positive return on investment for and with essentially free agents who can choose to stay or leave the firm any day.
“Sometimes you’re faced with a choice in life: do you want to lose money (by offering signing bonuses to top agents when/if they can leave you for another opportunity) to hang on to market share? Or, are you going to stay focused on your bottom line choices, and occasionally that means you have a bit of market share violence or someone is going to leave you?”
Schneider’s position is to forego agent-signing bonuses in order to remain focused on his combination of agents, brand, technology and data to enhance the consumer experience with more efficiency and productivity.
Other brokerages see agent-signing bonuses differently. For example, Compass, a venture-fueled private real estate brokerage that does not offer franchising opportunities, sees market share (ie. top producing agents) as its primary focus. In other words, the more top producing agents, the more market share. And in order to get those top-producing agents for that coveted market share, companies such as Compass are willing to fork over big bucks to get those agents.
Schneider seems a bit dismayed about the competition among brokerages for agents from a recruiting standpoint. He said, “…I had thought…that competition…for particular agents…in a (particular) zip code couldn’t get any higher (than it was) earlier in 2013…but…(that competition) is even more intense now…” due to agent-signing bonuses.
So now the question from Schneider’s perspective may be, is “…the biggest disruption in the real estate business that of technology or that of aggressive financial recruiting?”