Is it OK for principals to compete with agents in an estate agency?

Adriaan Grové
Feb 24 · 5 min read

I have regular conversations with agents and principals, from small to large offices. A lot comes out of the woodwork with these interactions, and one of the touchy subjects is where principals of agencies are also sales agents.

I ran this poll in the Property Practitioners Group and The Real Deal Forum, the question was:

When principals work as agents…

How do you feel about principals selling and competing directly with agents in their agency? Would you or are you currently working for such an agency?

Would also be interesting to find out if something like this is not allowed in any franchise structures?

Agents are OK with principals selling

As you can see in this poll result, half of the estate agents are OK with their principals selling. For a third this is a big no no. 12% of agents feel it could cause internal conflict depending on a number of factors:

Agents share their views

I guess for most agents, it boils down to past and current personal experience. This is also clear from some of the feedback received:

A Principal with less than 10 agents, will often have no choice, but to sell themselves. Some of the best companies that I coach is where the Principal still sells. ~ Anthony van der Riet

Yes. I would only work for such an agency. You need someone that knows the market. The last thing you need is someone that is not operating in an existing market telling you what you should be doing. Your principal is an agent with the same tools as you. If he or she outsells you learn from them. ~ Martin van Rensburg

I agree with Martin van Rensburg — a non-selling principal loses touch with the market. In many cases, non-selling principals still end up selling through a proxy. Best to keep it in the open. Office Managers, however, must be non-selling and have complete transparency of the distribution of leads. When it comes to company leads — the company should send client 3 options based on which agents are the best in the area where the property is located ~ Clinton Begley

This does always pose a problem down the line and will create conflict with the agents. If the principle needs or wants to work in the area, the ideal solution is for the Principal to have his own “closed area” even if he is working with a team or another agent. The Principle must abide by his company referral policy ~ Rob Downey

I think the question would be, “Is your Principal a Sales leader as part of a sales team or is your office a group of wolves unwilling to share their success? As soon you have infighting about “that one sold my mandate” you have an infernal spiral that will burnout your average agents and cause top sellers to leave to a place with less friction and more co-operation and a profit-sharing culture ~ Dirk Brink

Quite simply — principals should be teaching — not selling or renting. I have found that Principals capture all the leads and use them for themselves. ~ Paul Davies

In almost any setup a client would rather deal with the TOP dog/agent (no offence to dogs :P) and that makes it difficult for a Principal/Owner to sell properties or operate in the marketplace. To be fair leads generated must go direct to the agents, and the Principal should oversee, in a managerial capacity. ~ Brendon Funnell

I don’t normally comment on these things but this one is important to me…. As a director of a large agency… There simply is no time to be a) selling myself and B) taking more than what’s due…. Support your people, pass the leads on, train them well and support them to be the best they can be….we are all in this together and we all have a job to do…. let’s do it with absolute conviction. If you’re being squeezed for more…. Find a reputable agency that will support you…. Not take from you… ~ Clinton Martle

We have principals that sell, and it doesn’t interfere with any agents, in fact, it is good for the company. We all have our own areas and so do our principals. We all work on a referral basis and we all work well together. ~ Nikki van der Riet

It’s a fine balance. To train my agents well I need to keep my sales and negotiation skills up to scratch by still being a little involved in some sales. Hard to train agents or come up with better systems and procedures to help your team with their sales if you are not on the ground enough. At the same time, you need to make sure u are feeding your agents as many hot leads as possible as I believe it is the agencies job to provide their sales agents with leads. ~ Stuart Purdon

It depends on how big the Agency is. I have a very small Licence and have 2 agents. For now, I have to sell to cover the high costs of running an Agency. Our farming area is fairly split and all leads that come in are on a roster. I am planning to step away as soon as it is possible because I would like to focus more on running the business. ~ Helga Clemo

It boils down to the principal

My personal view is that it is all up to the principal to make or break this. If you love selling, and lead by example, this can certainly work, and works for a great deal of our clients. With this structure you need to ensure that clear operational processes are in place and that there is full transparency with agents on leads distribution, operational areas and commission splits. You need to be a great communicator. Your business model should be a win-win for everyone.

For larger offices, there is a real risk of conflict as a direct result of the sheer size of the office. I would argue less personal connections between the agent and the principal and a view that the principal is ‘double-dipping’ can soon follow if everyone is not on the same page. With larger offices, principals generally have their hands full with operational duties which makes it tricky to put on the sales hat.

At the end of the day, more competition in the market will result in more optimised real estate agency structures, and you need to find the sweet spot for maximum profit.

Now you’ve heard both sides of the story.

The Real Deal ZA

Promoting opinion, insights, transparency and challenges in…

Adriaan Grové

Written by

I’m the CEO of www.entegral.net, I love working with my remote team to solve real estate problems. Questions everything.

The Real Deal ZA

Promoting opinion, insights, transparency and challenges in the South African and International real estate industries

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