The real estate industry is full of people claiming to be “Number One.” These claims often vary, but the variation is often nuanced. For example, the claims can range from Number One Team in America, Number One Individual Agent in Menlo Park, Number One Brokerage in America (based on number of agents), Number One Brokerage in America (based on total sales), to Number One Brokerage in Palo Alto.
From there, the claims get much more focused, like Number One Agent in My Office, or Number One Left-Handed Agent in My Office Based on Transactions with Less than Two Bathrooms. It is easy to see how the claims can get silly.
To understand these claims, one must understand the way the real estate industry is structured. There are two overarching considerations: how the brokerage is structured, and how the agents interact, if at all.
How the Brokerage Is Structured
Generally, brokerages fall into one of many different categories. For example, there are large brokerages that operate independent franchises all around the country (such as Coldwell Banker, Keller Williams , and RE/MAX), regional brokerages that operate primarily throughout the Peninsula or the Bay Area (such as Alain Pinel and Intero), and boutique brokerages that focus on a tight geographic area (such as DeLeon Realty). The brokerages offer different levels of training and supervision, ranging from very little to comprehensive one-on-one mentoring or intensive structured programs.
Unlike most industries, most brokerages face little or no cost to bringing an agent onboard, albeit as an independent contractor, not an employee. In fact, many offices charge a monthly fee to the agents so the brokerage actually makes a small amount of money even if the agent never completes a transaction. The monthly fees often cover things such as desk rent, professional liability insurance, computers and websites, and can run from practically nothing to almost $2,000 per month. Thus, some agencies are very liberal about giving people a chance with the hope that they may sell some homes or learn on the job. Generally, offices with higher monthly fees pay higher portions of the gross commission to their agents so they tend to attract more experienced, higher-producing agents, whereas part-time agents tend to favor offices with lower fees.
Therefore, when a brokerage claims to be Number One, be it Coldwell Banker nationally or Alain Pinel in Palo Alto, they are using an aggregation of all the sales made by all of their independent contractor agents. On the other hand, when Keller Williams touts itself as Number One, they are basing it on entirely different criteria, like the total number of independent contractor agents they have nationwide.
How the Agents Interact
Every year, the Wall Street Journal publishes a list compiled by Real Trends, Inc. This is the seminal list that ranks the sales of individual agents or integrated teams. The focus is upon the various people and resources available to the client—or, in other words, the salaried people hired to further the goals of the team and the client. Generally, this is the most important ranking because it is the fairest gauge of the client experience.
The rankings referred to in this article are per the 2014 REAL Trends/Wall Street Journal rankings. By the time this article is circulated, new 2015 rankings will have been released.