Medallions! Top 10%! Top 1%! President’s Club! ExecutiveClub! Platinum Awards! Top 100! Number one agent! Number one agent in [market area]! Number one agent…according to my mom*.

*only mom surveyed

There are almost as many awards as realtors. The challenge is the majority of our awards are geared towards awarding one thing… money. Most awards are for MLS points, dollar volume sold, gross commission earnings, or other similar metrics.

Before we continue, yes, I fully acknowledge that there are awards for community service, contribution to the profession, and other non-sales-driven activities, but these awards are in the minority. They are few and often the least publicized. So, with all the opportunity to celebrate achievement, we should ask what we are celebrating and why those things are important.

Understanding the real estate industry’s obsession with sales awards

Simply put, the real estate trading services industry is sales driven. The drive for more and more sales and higher and higher earnings arises directly from the relationship between realtors and brokerages. When we examine a brokerage, we find that they only have two primary ways of making money:

1. Monthly dues (fixed revenue)
2. Per transaction fees (variable revenue)

Typically there is an inverse relation between these fees. High monthly dues result in lower per-transaction fees, while low monthly dues result in higher per-transaction fees. As a result, brokerages have two primary ways of growing revenues.

Either a brokerage can recruit more realtors to their office, increasing both fixed and variable revenues, or they can assist existing realtors in selling more, increasing variable revenues.

Beyond the dollar signs

To grow variable revenues, brokerages have offered a two-pronged approach. First, brokerages offer sales training. In short, join our office, and we’ll teach you how to sell more homes in less time. Second, brokerages cultivate a culture of rewarding commissions earned. Top-producing realtors are given awards at multiple levels, from the local real estate boards to company awards to brokerage-level awards. Hence, we find titles like “Top 1%, Top 10%, Executive Club, Chairman’s Award” and more.

These award titles are stand-ins for the criteria of earning them. Suppose one holds an “Executive Club” award. That could mean earning as little as $50,000 or as much as $500,000, depending on the company that gave it to you. These high-earning realtors are displayed as heroes to their peers.

As a result, we see the proliferation of two kinds of behavior. First, we see many realtors doing “success breeds success” marketing. The idea is that consumers want results, and if I can show you a track record of results, you’ll choose me. The proliferation of successful marketing has turned everyone into a “No. 1 Realtor” or “Top Producer.”

Integrity vs. incentives

Second, we see integrity gaps open up as more and more people strive for both earnings and recognition. The awards we offer are money motivated.

The message from the industry is clear; sales are what is valued most. The message from our brokerage is clear; our office values ​​sales. The message from our peers is clear; I want more sales.

It is the repetition of that message that begins within the industry that leads to integrity gaps in the industry at large. When sales are valued over our fiduciary responsibility, someone will inevitably opt to protect their interests over the client’s.

Charlie Munger once said, “Show me the incentive, and I’ll show you the outcome.” Every brokerage is fully dependent on a realtor to sell a home for it to receive either its monthly dues or per transaction fees. If realtors don’t make sales, then the brokerage itself dies. If realtors don’t make sales, then that realtor ultimately leaves the industry.

The development of these business practices doesn’t have to be seen through a conspiratorial lens. There is no dark cabal of managing brokers who wear hooded robes and manipulate their agents into working. Many of these business practices evolve naturally in many sales organizations.

When a business wants more of a given behavior, they reward the employees who exhibit that behavior. When an industry wants more of a given behavior, they reward the members who exhibit that behavior.

The question we need to ask ourselves is not one of more salesmen but one of the character of the industry we want to construct; not “What do we want to earn?” but “Who do we want to become, and how shall we reward that?”

Cameron has worked within the real estate industry for over a decade. With early success in sales and winning a handful of local and corporate awards, he transitioned to the management side of the office. It was in this phase of his career that he found his strength. He has consistently worked on business development for brokerages since, consistently recruiting 50+ realtors per year, coaching and developing new realtors and designing custom brands and business strategies for senior realtors. Today, Cameron continues in this work, helping offices and realtors consistently grow their bottom line through implementing results-oriented processes.