Imagine spending years creating a business one client at a time, putting in nights and weekends, keeping up with continuing education and licensing, and putting your all into providing top professional service. Then, when you finally retire, all those client relationships just disperse into the marketplace – becoming someone else’s.
Until now, that has been the prospect faced by many career real estate agents. Long & Foster Real Estate recently rolled out an exclusive program to help well-established Long & Foster sales associates acquire the businesses of their colleagues who wish to leave real estate. The Long & Foster Agent Succession Program vets candidates, conducts training and provides a structure for retiring agents to receive financial benefits as their businesses continue under new leadership.
“We’re providing the framework and consultation to help them navigate this relatively complex transaction, using best practices we have compiled over the last half century,” said Larry “Boomer” Foster, president of Long & Foster Real Estate. “Our goal is to give many of our longtime sales associates a chance at a more secure retirement, while also ensuring our clients can continue to receive the high level of service to which they’re accustomed with a Long & Foster agent.”
Foster said the company is uniquely positioned in the industry to create such a program because of its size, structure and resources. The Long & Foster agent pool is nearly 11,000 strong, and instead of independently owned franchise offices acting as small businesses, it’s a centralized brokerage firm serving seven states and Washington, D.C., in 220+ locations. Since its acquisition by Berkshire Hathaway affiliate HomeServices of America in 2017, the company has remained an independent brand, with greater access to capital than before.
The need for such an initiative to help agents retire is growing. Consider that the median age of agents in the United States is 53, according to the National Association of Realtors. Ninety percent of agents are independent contractors, without access to traditional pensions or 401(k) plans. Inman has reported roughly a third of agents don’t have a plan for selling their real estate businesses when they retire. Among those who were planning to sell, nearly half had no buyer in mind.
“All their sweat equity, all the money and capital they put into their business, all the relationships they’ve formed are all just up for grabs to the industry,” Foster said. “We’re giving our agents the ability to monetize the value of their business.”
The program matches a retiring agent with another sales associate who has the same work style, personality and business philosophy, said Rich Fino, Long & Foster’s director of professional development. Participants choose whether the transition happens quickly or over time through team building. Consultants help the out-going agent value his or her business by examining the three most recent years’ transactions.
Qualifications for those wishing to acquire another agent’s business include:
- Long & Foster agent with a strong business history and an impeccable reputation
- Cash flow statements and other proof of financial stability, at least three years’ worth
- Personal compatibility with the outgoing agent
Similar models already exist in other industries, such as financial advising and insurance sales, said Gary Scott, Long & Foster Real Estate president. A difference is, real estate clients may contact their agents much less frequently than someone who seeks advice in other situations affecting their financial life.
“The key to our plan is the selling agent and buying agent must work together for a period of time in order for the upside to occur,” Scott said. “The selling agent has to introduce the buying agent into their sphere of influence, which could be thousands of people, and create trust over time.”
Fino said agents not affiliated with Long & Foster may wish to join the company to take advantage of the professional consulting and coaching offered for a below-market rate to those who are accepted into the program. About 30 agents have started the program since it launched in late 2017, Fino said.
Agents who want to learn more about acquiring another agent’s book of business can read about it here. Those wishing to sell their business to another agent can find more details here. Contact Rich.Fino@LongandFoster.com to also learn more.