The Rise of Specialization in Real Estate
Ever wonder why one real estate agent completely rocks it yet another fails miserably? Is there a common underlying theme coursing through the 90% failure rate of agents out there? It turns out there is a trend behind this variance in success, and it has less to do with who the agent is and more to do with how they work. Specialization in real estate roles is an often overlooked ingredient to success.
A scientific research study conducted by Innermetrix Inc. concluded that performance and success had more to do with the degree of specialization than any other single variable considered. The study looked at 197,000 people over a seven-year period and sought to find an answer to the question, “Are there things that all top performers share in common that non-performers don’t?” In the study, each participant was given a behavioral profile called the DISC Index. Their scores were then compared with performance to see what correlations popped up. The findings were startling!
No one is great at everything.
Conventional wisdom would argue that the best performers:
- Are Universalists, that is able to do a wide array of varied tasks equally well, and;
- Had more experience than lower performers.
The research, however, found pretty much the exact opposite. The best performers are anything but all things to all people. They aren’t great at every aspect of their job; rather they are specialists whose natural talents are very well aligned with a select set of specialized activities, tasks and duties.
Those top performers had two things in common:
- Self-awareness: They had a significantly higher level of awareness for their natural strengths and weaknesses (85% compared to 55% in the non-top performer group).
- Authenticity: They took stock of their strengths and weaknesses, and incorporated that knowledge into their roles by ensuring that their success was dependent on what they did very well, and outsourcing those tasks and responsibilities that they sucked at.
In other words, the more specialized their tasks and responsibilities – the greater their results. In real estate, for some this meant working only with buyers and leaving more aggressive sales to someone else. For others, the opposite was true and they did better as listing specialists, who left the more nurturing and supportive role of buyer’s agent to another on the team. Some utilized administrative assistants to cover the minutia they hated to deal with, and dealt with horribly anyway.
A real estate agent is really 22 jobs mixed into one.
The reason behind this is that we all have certain natural traits, or core capacities, based on how we think and make decisions – how our brains are wired, basically. For example:
- For those with what the DISC Index would classify as being High D’s (Decisive), details, structure and organization are weak points. They excel in competitive environments, moving quickly, being – well – decisive. Those with a lower D made better Inside Sales or Listing Specialists.
- High I’s (Interactive) on the other hand, naturally do well with connecting, interpersonal skills, and collaboration. These types fit will into Listing and Buyer agent roles, but not as well in transaction coordinators or many roles in title companies.
- There are those who have a higher S dimension (Stabilizing), and while they are geniuses at providing support, working exceptionally well with any personality type and always making everyone feel like things are secure – they suffer from call reluctance, don’t like cold calling as a result, and hate to get into any heated negotiations.
- Lastly there are the high C types (Cautious), for whom accuracy, attention to detail and planning help them be masters of perfection; but they can struggle with chaotic situations and tend to hit the brakes under pressure, preferring to think things through instead of react by instinct alone.
Jeff Cook, a realtor in Charleston, SC, whose team is ranked #78 nationwide according to Realtrends, agrees. “The job of real estate agent is really 22 jobs mixed into one, buyers sellers, prospecting, creating marketing, detail admin, contracts, customer service, etc., etc. It’s a super role. You need a high D-I-S and C – which is simply impossible. And, those that try to do all of that alone fail, instead of focusing on their strengths and weaknesses and specializing,” says Jeff. His team averages only a 33% failure rate compared to the industry average of 90%, a rate not uncommon in agencies where specialization and shared work practices exist.
Obviously the case for specialization in real estate is supported by a team mentality versus the traditional “everyone-for-themselves” approach more commonly found in the larger “desk-fee-based” brokerage houses. By creating a team approach individual agents are able to share responsibilities and focus on putting their greatest talents to work, instead of their success being dependent on their weaknesses.
Don’t believe in throwing lots people at the problem.
John Makarewicz, with the Mark Spain team in Atlanta GA (one of the top performing Keller Williams teams internationally) thinks specialization in real estate is an inevitable evolution in the industry. According to John, “Those companies that have the old mentality of ‘people are disposable’ and ‘we try to limit our risk by investing as little as possible in them’ – will die out! Any brokerage that hasn’t already realized that human capital, getting the right people, treating them like family, investing heavily in them with training, mentoring, and leads is already in the stages of dying … they just don’t know it yet.”
Another person who believes heavily in specialization in real estate is Curtis Johnson (a realtor in Phoenix, AZ who is also ranked among the top 50 in the country by the Wall Street Journal.) “Until our industry changes its mindset from body count to quality and sales, things will continue to stay the way they are. We, and other teams that outperform most, have a completely different attitude towards the individual agent and their role. We don’t believe in throwing large volumes of agents at the problem, collecting our revenue from the fees, and not worrying about how well their strengths line up with their job. We’re the exact opposite. We very carefully hand pick each and every team member, vet them very seriously, and support the hell out of them by allowing them to specialize in what they naturally do so well,” says Curtis.
Change is difficult
So how prevalent is this trend towards specialization in real estate and the team-model that makes it possible? According to those interviewed, only about 5% of all agencies are taking this newer approach. Yet, within the top 10% of agencies (based on sales), as many as 50% are incorporating this mentality. In other words, while the majority of the entire industry isn’t doing it, the majority of the best performing agencies seem to be.
Are you ready to take your agency to the next level?
As with all things new, change is difficult. Newton’s First Law of Physics will always come into play with any change, because an object at rest prefers to stay at rest. This is no less true of any established way of thinking or doing business. Those who are leading this innovation and embracing specialization in real estate roles have made the investment in the effort and energy required to move that resting object. It hasn’t been easy for them – but their results would argue it’s definitely been worthwhile.