With earnings season nearly upon us again and many companies getting ready to publish their Q3 2024 financials now might be a good time to look at one of the metrics that is constantly touted as a significant positive–agent count.
About Agent Count
For years real estate brokerages have been pushing the narrative that agent count equals value. To some extent you can argue this, especially if you subscribe to the notion that more agents means more transactions and more transactions means more revenue and more revenue leads to more profit. But is that REALLY the whole story? Simply put, no.
The agent count mantra is perhaps the most widely-used metric of a brokerage’s prominence today yet the underlying metrics regarding the health of the business bely that notion. More agents certainly means more boots on the ground and more people to talk about the brokerage in the market. But it also means more risk and liability as evidenced by any company’s E&O policy. And if you look at what generates the bulk of a company’s profits, it’s plain and simple–transactions. So if you have more PRODUCTIVE agents, then business is flowing. But raw agent counts on their own don’t always mean that........
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