Medallion! Top 10%! Top 1%! President’s Club! Executive Club! Platinum Award! 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:
- Monthly dues (fixed revenue)
- Per transaction fees (variable revenue)
Typically there is an inverse relation between these fees. High monthly dues results in lower per-transaction fees, while low monthly dues results 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 awards 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 gives 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 behaviour. 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 from 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 behaviour, they reward the employees who exhibit that behaviour. When an industry wants more of a given behaviour, they reward the members who exhibit that behaviour.
The question we need to ask of ourselves is not one of more sales 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-orientated processes.
I think business operations could learn a whole lot about accolades from Freemasonry! Most Grand Lodges award one or more Masonic Medals of Merit.
The person does not know he is even being considered for this award… the nominating person submits a form noting the performance of the nominee WITHOUT the person knowing or being asked any questions directly. The medal is only given once to a member and is not ostentatious and is worn proudly by the recipient but not in public.
I was awarded this medal in 2009 in my home province and wear it proudly to official meetings and gatherings.
I personally keep my awards for one year. It is a sales job, there is not getting around that and I like my sales awards. I don’t have them on my business card or e-mail footer but I like them. But once they are outdated I ditch unless it’s a truly special one. There are very few people that can win awards for a lot of sales and not be giving good service and strong values. In fact over the long term, I have not seen one. So while this article is thought provoking, it’s not accurate in my opinion.
My late father used to scoff at awards when promoted by sales agents. When I entered real estate and started earning awards dad basically said, “go to the supermarket, pile up your shopping goods and after all are rung up, present them with your award.” I tell my broker every year, “what does the award you are giving me cost, $50? Skip the award, I have enough but I have never had enough $50s!”
Couldn’t agree with you more. When we recognize our agents with awards, it is for excellence in service, not sales. There are no leaderboards or loser clubs, but we do love to share stories from satisfied clients. Our awards program recognizes Excellent Customer Service, Team Building, Leadership and Community Service. We believe you ARE what you measure, and measuring customer satisfaction leads to happy, returning clients. Our approach also leads to a collaborative, supportive culture within the brokerage.
Oh! That’s really interesting. Also news to me! Mind if I ask which office/company? [Please feel free to insert shameless plug].
Hey Cameron,
We’re Liv Real Estate in Edmonton, Alberta 🙂
Good article! In 26 years I have never been asked if i am in the medallion club. The public only cares about ” whats in it for me?” Their own outcomes and that is where we need to be.
Sales is a push word. Don’t push people, lead them, be the clients confidante, consultant, information resource, professional. Its not sales, its psychology. Know your product and your clients. Ask questions, learn great communication skills, the remuneration will always follow. Focus on the task, not the cash.
Excellent Article, thank you. Consumers see the 4 page newspaper spread of annual awards with outdated photos, they see the social media posts of grand award events in Athens Greece, Las Vegas, California, etc and they wonder why all this grandiose and the cost. Its no wonder commissions are so high. Realtors egos have exploded like reality TV. Everyone is followed by a film crew, posting their next listing, new luxury car, boat, travels, and silly chat as if they are Kardashians. When have we seen the Heart Surgeon award for their 500th Transplant, Oncologist Award for curing our loved ones cancer, Orthopaedic Surgeon for a 1000 knee replacements, OBGYN for delivering 500 babies? These “Professionals” study for years to serve us. You don’t see them posting their new Porsche, Swimming Pool, Wakeboard Boat, Grand Vacations on Instagram. You don’t see them takeover every platform ie. twitter, Facebook, LinkedIn Instagram etc boasting how wonderful they are. You see them at fundraisers, helping others.
Its time to stop flaunting the outrageous money people with little education are making and loose the US realty tv style. It really is sickening to watch.
And the word in the industry is recruit, recruit, recruit. As a result we see a vast number of registrant who lie, cheat and do anything to get the sale. Get the recruiting under control and you have true merit.
Good article! Long felt that sales awards based on production (i.e. dollar amount or number of sales) is demeaning to the industry. The only person/people they serve is
the ego driven agent and the money driven brokerage. I get that survival of both the
agent and the broker/company is based on earning money from the generation of sales. However, giving awards is clearly a form of bragging publicly of how much one makes
and how successful one/company is. It’s part of what the industries image problem is. Next time you look for a surgeon to fix something, consider asking the doctor how much money he/she makes as opposed to how good their work is. Very early in my 31 year career I won a monthly sales award based on volume after which I realized that this was not the reason I became an agent. It was simply to do an honest and good job. The income looked after itself. There many excellent realtors who serve the public and the industry well. Awards for service and credibility are warranted – not for the volume of “how much did I make this year”
Is it sales or can it be a profession? When I hear that of approx- 70,000 agents, IE: TREB, 30,000 of them, m/l sold nothing last year. 1-5 sales per year -the next 30,000 agents m/l, and the rest of the market sold by the remaining 10,000?
Can it ever be a profession? The brokers (I was one) hire as many agents as they can hoping to increase profit and also hoping to find the next top achievers.
One of the very few industries that still promote sales rather than minimum standards even if you sell nothing, you are still a Realtor. Try to raise monthly and yearly dues by 100% and see how many complain. The ones who don’t sell much. If TREB get $200 a month from 70,000 agents – that is $14,000,000 per month or $168,000,000 a year. Follow the money?
CREA? $$$
Provincial boards? $$$
Do we make it a sales business or a profession?
Great Article
I have never worked for a company that offers rewards and personally feel that these “awards” are so misleading to the public. When I see a REALTOR who gets a President’s Club Award and I know they have done minimal deals, it’s a joke. Testimonials are far more important!
Very happy to see this topic being discussed. Very good points made –
I was boarding an Air Canada jet for a trip to Vancouver but in the interest of safety, I changed my mind and exited the plane. While boarding I peaked into the cockpit and did not see any trophies or plaques. Clearly not very skilled pilots.
A couple of more comments on this very important subject… as far as agency income… it has been my experience that these “top producers” will seek out an agency that will give them the highest retention of their commission… they don’t contribute to the well being of the Broker or anyone else… it is all me!
Another thing that bothers the heck out of me is the constant referral of Real Estate agents as “professionals”… they are NOT PROFESSIONALS. Period. Professionals (i.e. doctors, lawyers, football players, etc.) get PAID REGARDLESS OF OUTCOME!… if the patient dies… the doctor gets paid!… if the criminal goes to prison… the lawyer gets paid!… if the football players fumbles the ball and the team loses… the player gets paid. You don’t sell or list a property that sells… you as a Real Estate agent DO NOT GET PAID. Period.
Francis. Many lawyers also work on retainer. I do like your comments on Free Mason Awards though.
My former brokerage would run full page ads in newspapers with all the award winners and one year I simply declined to participate as it was such a tough year economically for everyone and it just felt wrong to me that we would be advertising our so called success. I say advertise within the brokerage if you feel that it motivates agents within the brokerage but this public bragging has really gotten out of hand and does our industry such a disservice.