Feel the churn: Tallying the biggest swings in resi agent count

In the dog-eat-dog world of residential brokerage, the battle for talent is among the fiercest.

“In the life of a brokerage, everything revolves around hiring and retaining agents,” said Eddy Boccara. He leads a New York City-based real estate data firm Space, which tracks brokerages’ agent count, retention rates and growth.

He said his business exists because of the hunger of New York firms — particularly mid-sized firms with less than 300 agents — which are more focused on recruitment and retention.

According to Boccara, 2,000 agents enter the business every month in the city, while between 1,600 to 1,800 real estate license-holders become inactive.

On a national level, Real Trends’ Steve Murray claims that nearly one in five agents will leave their firms every year, though it is unclear what percentage of these agents surface at other firms versus leaving the business altogether.

“The last two years the industry has never had, in all my years, so many different companies coming into the industry and attempting to recruit agents to build their businesses,” said Murray, who has been in the industry for 43 years.

Brokerages across the board have been facing headwinds. In New York City in particular, the industry has to contend with a softening sales market and unfavorable new policies. The pressure has led firms to cut costs, and in some instances, merge.

To understand the effect these changes have on the ground in the Big Apple, The Real Deal analyzed big swings in agent count between 2018 and 2019 by comparing licensing data from the Department of State’s Division of Licensing Services from Dec. 4, 2018 to the same date in 2019, across all five boroughs. (These numbers show how many agents are licensed at each individual firm, but not whether those agents are actively doing deals.)

The results show who is making strides in recruitment and retention, and who has lost some bench strength. TRD’s analysis focused on firms that saw swings of more than 15 percent, up or down. For large firms in particular, gaining or losing that much of a workforce would stand out and indicate a significant event such as an acquisition or merger. That said, some of the city’s top producing firms, including Douglas Elliman, the Corcoran Group, Halstead and Brown Harris Stevens, all saw net agent losses in 2019 below 15 percent.

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Gains

The firms that saw the largest growth in headcount, Scope Realty and E Realty International Corp., handle both residential and commercial deals and got started in the outer boroughs.

Scope was founded by broker Paul Reisner in 2017 to focus on residential deals in the Bronx and Queens. From 2018 to 2019, the firm grew 139 percent into a 433-agent firm, up from 181.
Reisner, who was formerly a sales director at The Trump Organization, runs a lead-generation firm where he promises new agents that “the day that you come work with me I provide you with buyer and seller leads. Day one.”

He buys some of those leads from Zillow, others he collects by shelling out money for paid advertising on Facebook. Scope also has four people fielding calls and passing out leads to agents. He said he also opens up his personal book of business to keep agents busy.

Every agent at Scope starts out each month with a 50-50 commission split. As an incentive, agents can increase their split to a maximum of 90-10 with every deal they close. The split resets to 50 percent at the end of every month.

“In the grand scheme of things I’m looking to make a little bit of money on a lot of agents,” he said. Reisner said he’s now making a push to gain market share in Manhattan and Brooklyn.

E Realty’s management did not respond to requests for comment, but, according to the firm’s website, the firm’s main address is in Flushing, Queens. The firm’s headcount ballooned by more than 55 percent to 638 agents, up from 411 in 2018. In recent years, brokerages in the borough have seen some of the sharpest changes in size, be it growth or contraction. And E Realty in particular has seen its ranks grow.

Compass, which made its name in New York in large part due to its hyper-aggressive recruiting, swelled by nearly 53 percent to more than 1,969 agents last year. That’s compared to 2018 headcount of 1,287.

Notably, the firm got a big boost in April of last year, with its acquisition boutique firm Stribling & Associates. The deal added nearly 300 agents to Compass’ total headcount. (Compass is now the second largest brokerage in New York City by headcount, according to TRD’s most recent ranking of residential firms.)

Rory Golod, who leads the brokerage’s New York region, attribute the gains to Compass Concierge and the firm’s bridge loan service, which respectively fronts money to sellers for staging costs and provides six months worth of loan payments for buyers who borrowed against their former home to buy their new house.

When top BHS agent Rachel Glazer jumped to Compass in August, she also cited the brokerage’s Concierge program as a draw. Darren Sukenik and Benjamin Glazer, both formerly specializing in new development at Elliman, echoed the sentiment when they decamped for Compass in December.

With so many firms vying for agents, Murray from Real Trends said agents are able to be more choosy and leads have become “the new currency of the realm.”

He pointed at the fact that between 2014 and 2018 the number of teams defined closing either 75 deals or $30 million quadrupled. Murray attributes that to team leaders being able to consistently feed team members business.

“Having a national brand now is useful, but is it as important as it used to be vis-a-vis generating leads? Of course not,” he said. “There’s a big shift going on.”

Losses

Agents’ preference for lead generation hasn’t translated to a massive exodus at any of New York’s major brokerages, which traditionally don’t provide leads to agents.

Elliman, Corcoran, Halstead, BHS and Sotheby’s all retained more than 80 percent of their agents from 2018.

Interestingly, the firm that saw the biggest drop in headcount was one of New York’s premier lead-generation firms, LG Fairmont.

Aaron Graf, CEO of LG Fairmont, said that even though his firm’s model revolves around providing agents with leads, it doesn’t guarantee success.

“It takes a talented person with a lot of help to consistently close leads,” he said. “One good agent can close more leads than three.”

That realization led to Graf to slash his firm’s headcount by a whopping 40 percent of its agents, ending 2019 with 192 agents, down from 322 the previous year, according to TRD’s analysis.

“We decided to maximize the revenue per agent rather than the headcount,” he explained, saying the firm will never be larger than 200 agents going forward.

“There [are] a small percentage of agents that can do this really well,” he said.

Keller Williams NYC also saw a significant loss of agents last year, closing 2019 with 405 agents — a 32 percent net loss from 2018. Austin-based Keller Williams Realty International (KWRI) acquired the beleaguered brokerage last month from co-founder Ilan Bracha, and transferred it to Richard Amato, who owns several other Keller Williams offices in Nassau County. The firm will be folded into the formerly separate Keller Williams Tribeca.

Mark Chin, the former Tribeca CEO, will be running the amalgamated firm. He admitted 2019 was a “challenging year” and attributed the loss of agents to a lack of vision from management.

At its peak in 2018, the Keller Williams NYC office had 900 agents. But it faced a slew of issues, including turnover in its management, and in April 2018, KWRI sent the Midtown brokerage a letter of default. Around the same time the firm began missing rent payments, according to its then-landlord, Dow Jones. (The two parties settled the nonpayment issue after the brokerage claimed it would be shutting down; Dow Jones sued this January after the talks of a potential sale of the franchise leaked.)

In 2019, then-CEO Bracha told TRD said the firm was going through a period of restructuring after growing too rapidly. Bracha declined to comment for this story.

“I think whatever attrition you’ve seen is the worst of it,” said Chin. “We have big goals for this year and I intend to hit them.”

When the sale was announced in February, Chin said he wants to grow the firm to around 1,000 agents within two years.

Bond New York also saw a significant decline, losing 24 percent of its agents over the year to close out 2019 with a total of 439 agents.

Bond did not respond to a request to comment for this story, however it was among several rental firms claiming last year that changes to New York’s rent laws were eating into their bottom lines. In January, Bond snapped up 56 agents through its acquisition of another Midtown rental firm.

Write to Erin Hudson at ekh@therealdeal.com