Why Recruiting and Retention Are the Same Problem: Sean Soderstrom on the Data Brokerages and Team Leaders Are Missing

Sean Soderstrom (Courted) breaks down the 46% production gap, why headcount is the wrong metric, and why the sales manager has the hardest job in real estate.

​🎧 Full episode available now! Watch | Listen

Why do brokerages lose more production than they gain when recruiting new agents?

Sean Soderstrom, founder and CEO of Courted, has the data on this — and it's not flattering.

His company's research shows the average outgoing agent's production was $2.11 million. The average incoming agent replacing them produced $1.44 million.

That's a 46% productivity gap.

I call this the in-and-out report. The math doesn't math. Brokerages are often losing more production than they're bringing in, even when their net headcount looks even.

Why is that happening?

Sean explains a few structural reasons. Sometimes brokerages lose top performers and replace them with new agents who haven't ramped up production yet. Sometimes solid producers retire out of the industry and get replaced with brand-new agents. Either way, the result is the same: declining overall production, even if headcount stays flat.

"Headcount is not a metric that ties to the P&L," Sean says. "Sales volume, GCI, and net contribution margin per agent — that's what actually ties to the bottom line."

Why do brokerages treat recruiting and retention as separate strategies?

This was one of the most interesting parts of our conversation.

Sean says it often comes down to who's doing the work and what they enjoy. The prototypical sales manager — what Sean calls possibly the hardest job in the industry — ends up being the CFO, COO, chief HR officer, and chief revenue officer of their office, all in one role.

That person tends to gravitate toward retention, coaching, and training. Recruiting, where you get rejected constantly, is the part nobody wants to spend time on.

But Sean's research says these can't be separated. The right goal isn't a headcount number — it's a net recruited volume goal, which accounts for both growth (opening the front door) and retention (keeping the back door closed).

Are all agents equally valuable to a brokerage?

No — and this might be the most useful insight in the whole conversation.

Sean's data shows a parabolic distribution of profit across agent splits. Agents who don't produce anything still cost the brokerage between $5,000 and $12,000 per year in fixed costs — coaching time, space, technology, and more.

On the other end, top producers on high splits (90%+) often aren't very profitable either, once you account for all the extra time, attention, and accommodations they receive.

"Generally speaking, it's the middle-tier producers who are the most profitable for brokerages," Sean says — and they're often the ones who get the least attention.

What's happening with brokerage M&A right now?

Sean points to declining profit margins industry-wide, driven by the rise of teams (which shift profit pool away from brokerages), new economic models, and a high-rate, depressed-transaction macro environment.

Well-capitalized companies are using this moment to acquire brokerages at attractive prices — and Sean expects that trend to continue, partly because competitors who don't currently pursue M&A may start to in order to keep pace.

But he doesn't believe the industry is racing toward a five-brand future. The top 100 brokerage brands in the U.S. account for only 59% of the market. Consumers choose the agent first, the brand second — which means the barrier to entry for new, smaller brokerages stays low, and that healthy churn will likely continue.

What should brokerage leaders actually be tracking?

Net recruited volume, not headcount. Profit margin per agent, not just production. And the middle-tier producers who quietly carry the business.

🎧 Full episode available now! Watch | Listen:

Let's grow,

Wendy