What are the common issues residential real estate companies face?

What are the common issues residential real estate companies face?
Published on April 2, 2020,07:00 am by Brian H. Robb for Forbes.com

Three of the most common issues residential real estate companies face are:

1. How do I rapidly recruit top talent to my real estate company?

2. How do I rapidly generate viable real estate franchisee leads that result in qualified real estate franchise sales?

3. How do I consistently deliver qualified leads?

It is vitally important for residential real estate firms to implement innovative ways to recruit top-tier talent and generate prospective franchisee leads and high-end buyer and seller leads. Real estate companies often encounter these same issues, and how they face them can either make the real estate company very successful or lead to their demise.


Individual brokerages need agents to pursue leads in the field, bring in transactions and earn overall gross commissions for the real estate brokerage. The real estate brokerage’s success is often correlated to an abundance of agents. A low number of competent agents will almost certainly lead to the failure of the real estate brokerage. An age-old saying in regard to real estate brokerages is “agents cure all.”

All too often, individual brokerages have a mindset of only recruiting top-tier agents who have a strong record of performance. Yet I have personally seen, in numerous cases, that this mindset leads to the brokerage’s failure. Top agents tend to be attracted to densely populated brokerages that have high energy and an eclectic mix of individuals. Activity begets activity, and the more agents present, the more likely the real estate brokerage will be able to recruit the top 1% as well.

Furthermore, when it comes to newly licensed agents, it is nearly impossible to adequately determine who will perform and who will not. Therefore, it is vitally important to implement a system that will methodically reach out to every real estate licensee within a territory in the simplest and most efficient way possible, leading to the greatest chance of a response.

Additionally, the recruiting system has to be continuous in nature, always prospecting new agents. The turnover of real estate professionals is anywhere from 70% to 80%, depending on the territory. Many agents leave the industry completely, while an equal number of newly licensed agents enter the field for the first time. While owners of real estate brokerages are often talented business and sales professionals, in many instances they lack the ability to dramatically increase agent count and need to quickly fill this void.


In terms of corporate operations (master regional franchises or entire U.S. operations spanning the county), sales of real estate franchises are paramount. Century 21 began the major real estate franchising push in the 1970s. Since then, the franchising concept has become a vital marketing tool for any top real estate company.

The alternative is to have corporate operations strategically place and operate real estate brokerages in territories across the country. Conversely, the franchising model sells the franchise territory rights (often confined to a limited radius), and the franchisee is responsible for the initial build-out, franchise and opening fees, along with maintaining the real estate brokerage. At the same time, the real estate franchisee is responsible for recruiting agents, bringing in leads and deals, and ultimately creating profitability.

Within the real estate franchising model, a great deal of the legal liability and time spent is shifted from the master franchisor (the corporation) and subsequently placed on the real estate franchisee. This model has not only proved very beneficial to the real estate industry, but also was formulated and successfully implemented many times in the fast food industry, most notably by McDonald’s.

Franchise operations are vitally important for the vast majority of top-tier real estate brands in the United States. A franchise sale is the beginning of a relationship between the franchisee and franchisor, and the franchisor gains significant monetary benefit through a successful franchise operation. Typically, they make a gross commission from the total commission the franchise office generates, in addition to standard transaction fees.


Without a constant surplus of leads coming into the brokerage or real estate company, real estate professionals often become demotivated. Thus, it is vitally important to implement marketing systems that constantly inundate the real estate companies and professionals with viable leads, which can then be translated to real commissions.

A surplus of leads is also a great way to attract prospective agents and real estate executives to your company. Additionally, the real estate brokerage can create another source of income by charging for these leads.


Often, real estate companies become frustrated with traditional means of franchise sales, agent growth and lead generation. Their inability to successfully find innovative ways to dramatically increase any of the above can lead to their demise. Therefore, it is critically important for brokerages to adopt innovative marketing methods that can dramatically assist them with these three common challenges.