Do Your Agents Understand Your Policies?

Written by Posted On Wednesday, 27 April 2005 17:00

There are some real professional owners in this business. Most of them have outstanding policies and procedures, they make sure their agents understand them, and run their company accordingly, while others lose good agents all the time to "misunderstandings."

Brokers get in the most trouble when they either:

  • Don't have good, clearly-written policies.

  • Don't enforce their policies.

  • Don't communicate their policies.

  • Don't include "policies" in their training.

  • Or all of the above.

Before I got into real estate about 30 years ago, I had the wonderful opportunity to work under a retired air force colonel, Ed Stansbury, who was comptroller of the 18th Air Force at one time. Later, he retired, and worked for me in my real estate company. He's 96 years old today and still going strong. Here are some things he taught me that I use even to this day:

It is not enough to "understand." What is important is to make sure they don't "misunderstand." When we hear the statement, "It was my understanding that..." it means that someone misunderstood.

It is not enough to send a memo or to place a note on someone's desk, and assume you have communicated with that person. "Don't ever use that as an excuse," he explained. "Always follow-up to make sure, that the other person received the message and understood it."

Policy, and the procedures to implement the policy, must be in writing. "Oral policy and instructions are not worth the paper they are not written on."

If people don't trust you with their money, they won't trust you with anything else. You can make a mistake with the floor time schedule or advertising, and once its corrected the problem goes away. Not so with money issues, he said.

Most misunderstandings within a real estate office occur because the agent doesn't understand the policy, and/or the procedures in the office. Worse yet, they don't agree with a policy or procedure that they leaned about after, not before, they joined the office.

For example, commission and fee polices should be discussed in detail before the agent ever places the license. A surprise deduction from a commission can do a lot more than destroy rapport and trust. It can cause an agent to rethink the fact that maybe, they should have joined another office.

Recently, a new agent brought a "new listing" into the office and started requesting free yard signs. It turned out to be an 'open' listing. The seller said they would pay x percent if the agent sold it. The new agent didn't know the difference.

Why did this occur? Pick one.

a.) The agent should have known better.
b.) The seller should have given an exclusive listing.
c.) The agent did not know the company policy.
d.) The broker was in a bad mood that day.

Answer: c. The agent did not know the company policy.

So when is the last time you had a policy discussion, or had "policy" discussions as part of your sales training or sales meetings?

What usually happens when there is a misunderstanding between the agent and the broker? The agent either leaves, or starts thinking about leaving. Or stays with the broker, but continues to grumble about what happened.

Multiply that incident by the multiple issues that are not addressed or communicated, such as floor time requirements, commission issues, who-pays-for-what issues, and you've got a company that can't keep agents, and probably blames it on "the economy."

Fortunately, in this company, the broker decided to bite the bullet and update his policy manual and started including it in his training program.

What is so interesting, is that most independent contractor agreements signed by the agents have a clause that says the agent has read, understands and agrees with the policy manual and the fact that the broker can change it any time. Maybe most do read the manual, but if it isn't understood, it has not been communicated.

As a broker, you could take the position that you don't have time to hold their hand. True. But do you have the time to continue to replace agents, who leave because they felt underappreciated due to some policy misunderstanding?

It is easier to blame turnover on 'that's the way it is' instead of the way you run your business and treat your agents.

Try this instead:

  • Make sure your policy manual is up to date and the procedures are clear and are in operation.

  • When recruiting, have the prospective agent read the policy manual before they make their decision to join you.

  • Ask them to write down any issues or concerns they might have so you can discuss them at that point.

  • Make sure once your agents are on board, the policy manual is reviewed, with a clear review of anything to do with money: yours, theirs or the customers.

Agents can prevent misunderstandings, too. Try this, agents:

  • During interviews, ask to read the policy manual. If the company doesn't have one, and you are a new agent, move on.

  • Take your time reading it. Don't be intimidated. Ask any question that might come up during our review of the manual.

  • Clearly understand "the money." Understanding the commission split is the easy part. The hard part is understanding, exactly, what your start-up expenses will be, and what is taken out of commission checks (E & O insurance, for example), and what you are expected to pay monthly, regardless of whether you have a sale or not (desk fees, marketing fees).

Communicating and understanding policy is, well, just good policy.

Rate this item
(1 Vote)
David Fletcher, NHCB

David Fletcher is a co-founder and CEO of New Home Co-broker Academy LLC., an online e-commerce business. Visit David's website to take his famous 3-hour online course, How To Build  A New Homes Niche, to become a certified New Home Co-broker (NHCB). More than 5,000 graduates. Content is based on his long career and onsite sales success working with both builders and Realtors to list and sell more than $3 billion in new construction. If you are a broker who wants to offer your agents a way to add new homes to their resale inventory and home shoppers, this is your solution. 

Learn more and

Agent Resource

How to capture your next prospect - click here

Realty Times

From buying and selling advice for consumers to money-making tips for Agents, our content, updated daily, has made Realty Times® a must-read, and see, for anyone involved in Real Estate.