I've recently had two different people interview me for articles on the topic of Independent Contractors in the Real Estate business. It's an interesting topic for each of us, whether we are a Real Estate Agent/Broker/Manager or an individual like me, who has spent my entire life working within this industry.
The first question the first interviewer asked me was, "If you could change one thing within the industry, what would you change?" I said, tongue in cheek, that I would make all agents employees, so when the boss told them what to do, there would be a better chance of them actually doing it, and therefore becoming more productive. The person then said to me ... "Do you believe that being Independent Contractors is one of the causes of non-productivity in the Real Estate industry?" I answered with an enthusiastic, "Yes!"
My belief is that it is one of the greatest assets that we have ... for those that understand the advantage, or should I say advantages, of being independent and not being an employee. Being an Independent Contractor gives us the obvious control of our time, in most cases we can pretty much do what we want, when we want. It definitely solidifies our "freedom of speech" because we can say pretty much anything we want to say to a prospect or customer and it's considered acceptable. We can do just about anything we want to do ... as long as it's reasonable in terms of how we operate and run our Real Estate sales business (working under the assumption we're going to do everything that is legal and ethical.) All of these are true advantages to being an Independent Contractor. There are so many more and I think if a Real Estate salesperson is a dedicated professional salesperson who understands the sales process completely, a person that studies that process, and applies that process, it's a huge advantage, being independent. The biggest advantage of course is the unlimited earnings that a Real Estate salesperson has before them by being an Independent Contractor. You can produce as much or as little as you want to produce, which earns you as much or as little as you want to earn. It's one of the few professions and sales jobs where there's nobody standing above you putting a limit on the earnings that you could have. With all the advantages of being an Independent Contractor, there are also numerous disadvantages. Let's take the opposite side of what we said in the last paragraph. You don't have to follow a schedule, in fact you don't have to work at all, and you can still maintain a license and in most cases, keep that license with a Brokerage firm and remain in good standings. You don't have to learn any type of sales techniques to use with a buyer or seller, nor do you have to learn what to say to a buyer or seller that could cause them to sign a contract with you or consider signing a contract with you. Unlike most sales professions, where you have to learn scripts and dialogues to stay within the business that you're in ... in Real Estate you can say anything you want. The problem, of course, is if you don't know what to say or you're saying the wrong thing, it has a negative effect on the client and on your productivity. The negative side of being an Independent Contractor is you can do what you want, which means if you don't do anything for any length of time, it's going to be, in most cases, acceptable.
If we look at the calendar year 2011 and look at the number of agents in the Real Estate industry within the U.S. and we counted up all the agents that did not have a listing sold or a sale this year, I fear the number might be very scary. The reason that number would be scary is because as Independent Contractors, there's really not much we can do about non-productivity. Also, we all know that because we are independent, the average income for a Real Estate agent is so low that it's almost frightening. All we have to do is divide the number of agents in the U.S. into the number of transactions to realize how low the per-person-productivity is and then recognize the fact that in the business today the chasm between those that are productive in this business and those that are not is probably the widest it's ever been.
The interviewer asked me how I handled the salespeople in my own company and I said of course they're employees and we have scripts we have to follow, we have a regular hourly schedule we have to follow, and there are certain activities that every one of our salespeople has to be involved in. There are minimum standards in terms of work each day and minimum standards for productivity. When a salesperson doesn't meet those standards, they are put back into training for 30 days, and then put on probation, where they are monitored and held accountable to meet the standards we set. If the salesperson can't meet those standards, they are then replaced.
I told one of the interviewers one of the most interesting parts of the salespeople that work in my company is the fact that we are often approached by Real Estate people who would like to come to work in my company. Most of the time when they see the process we follow for a salesperson, they decline to take the job because they're too used to working within the independent status.
I think being an Independent Contractor has its advantages and disadvantages and it's probably not going to change in terms of the status we know today. It's almost sad that a good percentage of the people that join the business don't understand that being independent is not to their advantage. Interesting dilemma, isn't it?
Mike Ferry
CEO - The Mike Ferry Organization
800-448-0647
