Over a recent weekend, I dove deep into the latest annual report by The Broker List and Buildout titled “The DNA of CRE.” As a commercial real estate professional, this is one of the more important reports you need to read. It’s one of the few reports in our industry that offers benchmarks on what your peers are doing, how they’re doing it and their results.
Over 700 of your CRE peers completed the survey. A little more than half of those who responded were associated with independent firms, and the rest hung their license with national firms. Sixty-five percent of the respondents had more than 11 years of experience. Two-thirds of those who responded to this survey were between the ages of 40 and 70. Given the number of respondents who completed the survey, their age and years of experience, the results are not only valid, they are applicable to you.
The survey shared how the industry gets its comp information. According to this survey, about 44% depend on third-party platforms. Yes, depend. And when you depend on something, you are not independent. When 44% of the industry is dependent on others for their comps, those users are not truly independent. Contrarily, 40% of respondents claimed that they got their own information. They go out into their respective markets and craft firsthand, primary information.
The survey looked at how industry users leverage technology, specifically a database. Shockingly, 47% of respondents rely on either Outlook or spreadsheets for running their personal brokerage practices. It is 2020 — this is no way to run your business! You are all business owners — even the junior agent in a national firm. As independent contractors, you own your business. Yet almost half of those surveyed are running their businesses on spreadsheets? There are so many high quality, CRE-based databases available. If this is you, please evaluate how you are running your business, how you are keeping your data and how you are managing your day and your contacts.
The survey asked how many hours people work per week, with almost 40% saying they work between 36 and 45 hours a week. Wait, what? That can’t be right. Again, knowing the majority of the respondents were between the ages of 40 to 70, your prime earning years, and all are independent contractors, you would expect the work hours to be substantially more than that. Do you think any CEO who runs a profitable business works just 36 to 45 hours a week? Absolutely not. Just over 12% of the respondents suggested they worked more than 56 hours a week.
I am not suggesting that you work insane hours. But this is your business, and what you get out of it is what you put in it. It’s the activities, the efforts, the actual “doing” that creates your results.
The results also showed that 48% of respondents prospect only one to five hours a week. I am flabbergasted. Prospecting is your No. 1 activity to create your personal independence. The more clients you create, the less dependent you are on your broker and certain clients. Good news for you: about 80% of your peers prospect just 10 hours a week or less.
Now that you understand the activities, let’s look at commissions earned. According to the survey, the majority of brokers reported making less than $200,000 gross commission income. Depending on your splits, that could be anywhere from $90,000 to, maybe at the high end, $160,000 on net in take-home earnings. While that is not a bad wage at all, refer back to the tenure and the age of most respondents. These earnings are not consistent with those in their prime earning years. My point is not to be negative; these findings clearly show that effort impacts results. Overall, 72% of respondents made less than $300,000 in gross commission income, or anywhere from $140,000 to $240,000 in net commissions. This is still not what you would expect, given the experience level and the tenure of those that responded to the survey.
The DNA of CRE is a must-read report. Its findings tell a story of effort and results in the commercial real estate industry. While the results are not pretty, the opportunity to become a market leader is there for you. You just need to do the work.
Rod Santomassimo
The Massimo Group
rod@massimo-group.com
800-517-5542
