Recruitment Insights’ Q1 report revealed an increase in agent mobility and explained that headcount growth doesn’t necessarily translate to increased productivity.
The fourth-quarter hiring freeze has been lifted, according to a joint report from Recruiting Insights, Lone Wolf Technologies and MyBFF Social released Monday.
External agent movements increased 25% sequentially and 7% year-over-year in the first quarter, representing $16 billion in annual output from these agents. Internal moves (including moves between offices) also increased in the quarter (up 38% year-over-year), and these agents averaged more annual revenue than external hires ($5.47 million vs. $4.27 million).
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This report is based on trade data from four Multiple Listing Service (MLS) systems, which cover approximately 30% of all trade volume in the United States.
Who’s moving?
Agents who closed deals of $1 million or more in a year were the most likely to move in the first quarter (55%), followed by agents who closed deals of at least $4 million or more (19%). Meanwhile, agents who closed deals for less than $1 million (13.5 percent) and agents who closed deals for more than $8 million (11.7 percent) were least likely to take action.
Agents who close at least $4 million annually provide brokerages with the “highest return on investment,” according to the report. Because they already have the skills and systems to succeed, but they need intermediary partners to help them scale more efficiently. On the other hand, agents who close at least $1 million a year are “fee payers” and need in-depth training, education, coaching, and lead generation support to move to the next stage.
The report said agents at the top and bottom of production should be approached with caution, and top producers should only move if the intermediary can offer “sophisticated wealth building, estate planning and bespoke operational support”. Finally, companies with less than $1 million in deals should only be hired if they have a “clear growth trajectory.”
Ben Hess |Credit: LinkedIn
While production is an important metric, the report points out some caveats to keep in mind. 80% of agents don’t produce consistently, often going through booms and busts from quarter to quarter. The remaining 20% consistently close deals and are the “core productivity” that brokerages should focus on recruiting or retaining.
“Strong recruiting is about more than just attracting agents,” Ben Hess, managing partner at Recruiting Insights, said in a prepared statement. “As the market changes, it’s important to retain top talent within the ecosystem.”
quality over quantity
On the brokerage side, the report notes that industry participants often overestimate the impact of business models (traditional, virtual, value, and hybrid) on a company’s success. “The market is divided into winners and losers in every category, proving that execution matters more than billboard labels,” the report said.
Recruiting Insights has calculated the Efficiency Ratio (ER), which measures how effectively a brokerage firm is increasing production per agent compared to losses. The best-performing companies had an ER value greater than 1. This means that for every $1.00 you lose, you earn $2.00 in profit on incoming production.
The report anonymizes intermediary names across 12 brand categories. Scaling tech hybrids struggled the most among these categories, with ER falling from 1.80 to 0.69 in one quarter, despite having the highest agent net margin (+210).
“Established Generalist,” “Mid-Atlantic Legacy,” “Legacy Institutionalist,” and “Global Franchise Legacy” also experienced a decline in EQ, bottoming out at 0.7.
“Scaling Tech-Hybrid gained 210 agents and decreased production quality per dollar by $1.11 in the quarter,” the report said. “This is the clearest example in our data set that headcount growth and production quality can go in diametrically opposite directions. For broker owners competing against technology-focused brands, this is a concrete, data-backed talking point. Our competitors added 210 agents this quarter while simultaneously shrinking their revenue base.”
Mark Johnson |Credit: LinkedIn
In nine of the 12 brand categories, more than 30 percent of departing agents decided to strike out on their own. Agents in the “emerging value model” were most likely to be independent at 73%. “This is a clear sign that agencies are rethinking the value brands bring and the costs of partnering,” the report says.
Mark D. Johnson, managing partner at Recruiting Insights, said the firm’s first-quarter survey results prove that retention is key to a brokerage firm’s long-term success, especially as brokerages adjust their value propositions to meet the needs of high performers.
“The wait-and-see market is over,” he said in a press release. “The brokerages that are gaining traction today are those with strong value propositions, disciplined hiring processes, and the ability to speak directly to what productive agents actually want.”
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