How much is a recruit worth?
In this installment of our series: the new normal, we are going to look at benchmarks to determine the value a new recruit brings to an office’s bottom line in their first year with the company.
For this analysis, we based these benchmarks on:
- 800 randomly selected offices from across America
- The 6,352 agents recruited by these 800 offices
- Since some agents are recruited into “100% offices”, we included revenue from both the Agent split and the Agent billing
- We looked at agents who started after 1/1/2018 and finished the first full year before the start of COVID (3/31/2020). The benchmarks represent a full first year of new recruit production.
Question 1: How many agents are offices recruiting?
In our survey, offices are recruiting on average 8 agents per year (8.97).
Important Note: This calculation is per office, not per company. So a company with 5 offices would likely average 40 recruits.
In this analysis, the median and highs and lows are also very interesting. The median number of agents recruited per year is 5 agents per year per office. This means that some out-performing offices are making the averages higher.
| recruits | average | median | top performer |
|---|---|---|---|
| per office per year | 8 | 5 | 88 |
Question 2: What caliber of agents are being recruited?
If we look at agent’s production in their first year, we see a wide variation in production levels. The production levels give us some indication of the agents who will most commonly be recruited. The survey indicates that almost 30% of agents recruited will add nothing to the office’s net income.
| 1st year production | # of agents in survey | % of agents in survey |
|---|---|---|
| no production in 1st year | 1864 | 29.35% |
| less than $25,000 AGCI | 2660 | 41.88% |
| from $25K to $50K AGCI | 845 | 13.30% |
| from $50K to $100K AGCI | 582 | 9.16% |
| from $100K to $200K AGCI | 290 | 4.57% |
| from $200K to $300K AGCI | 53 | .83% |
| from $300K to $400K AGCI | 27 | .43% |
| from $400K to $500K AGCI | 9 | .14% |
| from $500K to $7500K AGCI | 13 | .20% |
| from $750K to $1M AGCI | 3 | .05% |
| over $1M AGCI | 6 | .09% |
Question 3: What is average production of a new recruit in their first year?
In our survey, we looked at 800 random offices who collectively recruited 6,352 agents. The average production numbers look like this:
AGCI: $42,665
Agent Net: $30,175
Company $: $9,270
Total Sides: 6
List Sides: 2.5
Sell Sides: 3.5
Total Volume: 1,597,375
List Volume: 684,507
Sell Volume: 912,865
Starting with 1st year recruits with the lowest production level (under $25,000 AGCI), offices are averaging 28.87% as company split % (gross profit) and the median company $ to the office on this group of recruits was $2,222 in the 1st year.
| Median AGCI | Median Agent Net | Median Total sides | Median Total Volume | Median Company $ | Median Company % |
|---|---|---|---|---|---|
| $8,505 | $5,185 | 1 | 283,500 | $2,222 | 29.9% |
Categorizing 1st year recruits in our survey revealed interesting and consistent trends in the company dollar split percentages as outlined in the tables below:
For 1st year recruits in our survey with AGCI between $25K and $50K: Offices are averaging 26.6% as company split % (gross profit) and the median company $ to the office on this group of recruits was $9,205 in the 1st year.
| Median AGCI | Median Agent Net | Median Total sides | Median Total Volume | Median Company $ | Median Company % |
|---|---|---|---|---|---|
| $33,700 | $22,206 | 5 | 1,284,500 | $9,205 | 19.81% |
For 1st year recruits in our survey with AGCI between $50K and $100K: Offices are averaging 21.59% as company split % (gross profit) and the median company $ to the office on this group of recruits was $15,093 in the 1st year.
| Median AGCI | Median Agent Net | Median Total sides | Median Total Volume | Median Company $ | Median Company % |
|---|---|---|---|---|---|
| $67,331 | $48,667 | 9.35 | 2,563,091 | $15,093 | 22.35% |
For 1st year recruits in our survey with AGCI between $100K and $200K: Offices are averaging 18.78% as company split % (gross profit) and the median company $ to the office on this group of recruits was $25,017 in the 1st year.
| Median AGCI | Median Agent Net | Median Total sides | Median Total Volume | Median Company $ | Median Company % |
|---|---|---|---|---|---|
| $131,681 | $98,149 | 15.5 | 4,890,142 | $25,107 | 18.80% |
Summary
- Almost 30% of recruits are likely to have no production in their 1st year.
- 1st year Non-productive agents when combined with recruits that have AGCI under $25K in their 1st year will likely represent over 70% of your recruits.
- For recruits with AGCI under $25K in their 1st year can be budgeted to each bring $2,222 to the office’s gross Profit.
- Recruits with higher 1st year AGCI are consistently receiving a larger percentage of the commission. So when reviewing recruits with AGCI between $100K to $200K we see that their production is double that of the recruits with AGCI between $50K to $100K. Yet, the income to the office is only 65% greater.
- Agents with AGCI under $200K represent 98.26% of recruits in the survey
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