Ten percent of all agents do 90 percent of the business.
We hear this axiom all the time, and there are numerous variations on this theme. The ratio may be 20/80 or 7/93, but the idea is the same.
Here’s the thing: These numbers are actually espoused by some of the industry’s leading figures, and they are a gross distortion of reality—and that should bother us all. A lot.
More importantly, propagating this erroneous ratio denigrates the hard-working members of our profession who make up nearly half of the sales by units and value.
So where is this erroneous ratio coming from? A small minority of mega-agents are likely promulgating this myth. It caters to their obvious self-serving interests. Arguably, real estate is the most overpopulated profession in our free enterprise capitalistic system, so everyone feels a need to stand out from the crowd.
Let’s use the imaginary Frezia as an example. She is a typical real estate salesperson. Her work goal is to complete four ends per year so that she can afford to visit her beloved children who are spread out all across the U.S. Frezia is among the 53.7 percent of all real estate professionals who do four deals or less in the U.S. (Canada is not much different). Does that make her a less than excellent agent? Is she less capable than some mega-agent with a support staff of 15 people? Not at all.
What about Rose, a single mom? She needs to sell a few homes to provide for her children, but at the same time, as a single parent, she needs to be available to them.
Frezia and Rose both have their goals and ambitions, which they consistently meet. They premeditate their life balance to include more than just real estate. They often refer business to others. Imagine their potential productivity if they chose to work full-time.
Frezia and Rose are just two of an enormous army of honest, hard-working real estate professionals who do four or less transactions. Their numbers vastly overwhelm the overachievers and uber-producers.
Compounding the 90/10 myth is that many of the “icon agents” who form teams usurp the achievements of their team members. They credit themselves as owners of the deals over which their team members worked hard for. This achievement theft displays them as better mega-agents than they are. It also robs hundreds of agents of a performance record, likely skewing overall production results.
Statistics That Repudiate the Myth
We did a random sampling of 732,557 agents* for this article on Jan. 21, 2020, and determined that:
- 7 percent of all agents did four transactions or less
- 4 percent did $2 million or less in transactions
Look at those numbers. They clearly indicate that the perceived “underdogs” are the ones who slog away in the trenches, find time to do community work and promote harmony in the office, all while trying to lead a balanced lifestyle. There are no trophies or newspaper announcements for them. They are the ones who deal with life’s trials while trying to care for their clients’ needs.
Fortunately, there are many such dedicated agents in the business since they are, in actuality, the backbone of the real estate industry.
The next time you hear the 90/10 rule, tell them that they are 100-percent wrong by 43.7 percent!
*Not included: New homes, private commercial listings, farms and vacant land
Leon Y. d’Ancona is CEO of REality®. For more information, please visit www.realestatestatistics.com.
Amen, and It’s good to see someone standing up and saying it. Thank you from the masses. The way team numbers are construed is a travesty to team members. I’m 71, did 3 transactions last year and I guarantee they all got excellent representation. At 71 I’m not spending thousands of dollars on poor leads and spending hours on the phone or door knocking. I stay tuned in to the industry, do more than the required hours to renew my Associate Broker license. I carry the ABR, MRP and SRES designations. Thanks Leon!
Sounds like you would feel comfortable going to a heart surgeon that only does 4 surgeries a year? Or after getting into an automobile crash hiring an attorney that takes on 4 cases a year? To say that an agent who only does 4 or 6 deals a year has the same experience, market knowledge, skill and marketing abilities as a “full time” professional Realtor who does 15+ is ridiculous and makes no sense at all. I’m certainly not saying all agents that do enough deals to make a very good living are good at what they do as that wouldn’t be the case, but I can tell in about 5 minutes of speaking or working with an agent if they are part time “doing this on the side” agents and don’t make our business an all in full time affair. It’s obvious in about every way. Please don’t sell our profession short by putting in people’s minds that working with a part time agent who does 4 deals or less a year is likely to have the same result as a professional full time agent as this is wasteful misinformation. Hope that surgery turns out well and that part time surgeon doesn’t remove the wrong organ!!
I agree with Troy 100%!
Troy is exactly correct. An agent that does one deal a quarter can’t possibly attain the experience and expertise level of an agent that actually makes a living selling real estate.
I’ve been licensed since 1980 and a Realtor all that time as well. I am speaking from experience when I say you do not want to have one of these once a quarter Realtors on the other end of a transaction.
In our board last year over 40% of the members did not do a single transaction. It makes you wonder why they’re paying dues but I’m glad they are because it keeps our dues lower.
I agree with Tony as well. I can tell you that doing 50+ transactions a year, I run into new stuff every single month, new problems, new challenges, new solutions, new clauses, changes in local governmental processes and permitting that are not released to the associations yet, that we simply stumble across during a transaction, etc., etc., I could go on forever – things that I couldn’t possibly come across if I was only working 4 Closings a year.
Some are making the assumption that 1 per quarter means those agents are not staying relevant in the market place and staying current on trends and contract changes. There are exceptions to every rule. (I’m a more than 4 agent), but can tell you, when I wasn’t (small children) I’ve took listings from 15+ agents that don’t know if they are coming or going dropping the ball left and right, reducing commission to 1% or 2% just to keep a client….
Most important is integrity and a great brokerage with integrity that supports an agent’s goals. No hard and fast rules.
I’m not sure I follow your math.
“53.7 percent of all real estate professionals who do four deals or less in the U.S.”
How does that become,”7 percent of all agents did four transactions or less /4 percent did $2 million or less in transactions” ?
Also, where are the numbers that actually dispel the myth?