The Ultimate Guide To Real Estate Teams

The advantages agents seek from the team model are plentiful. A survey from Inman Group that allowed respondents to pick more than one answer found that 61 percent of respondents cited “work-life balance” as a reason to form a team, 56 percent (respondents could pick more than one answer) cited “the chance to expand their business opportunities,” and 50 percent cited “providing more effective representation for clients.” These benefits are alluring, but building a successful team requires more than hiring a few people and turning them loose to work. The process requires careful planning of goals, the structure of your team, and the roles and responsibilities taken by your team members.

This guide details the team-building process for agents who are interested in starting their own teams, as well as agents looking to revamp or expand their existing teams. It focuses on the importance of good planning, provides sample frameworks that teams of various sizes might take, details several defined roles your team may include, and explains how a team-centric brokerage can help you achieve success.

MORE REVENUE/EARNING POTENTIAL

Successful lone wolf real estate agents may encounter an unusual paradox holding back their careers: their own success. The more sales you make, the greater your reputation grows, the more potential clients come your way—this cycle of success ultimately can lead to turning away clients because your plate is too full. Subsequently, your revenue tops out simply because you are maxed out on what you have the time and resources to do. Developing a team allows you to delegate tasks to assistants and coworkers, thus allowing you take on those extra leads, build stronger client relationships, and increase your earning potential.

BETTER WORK-LIFE BALANCE

Along the same lines, a hyper-successful solo real estate entrepreneur who is rolling in leads and clients may not have much time for anything else. What’s the point of working so hard if you can’t find time to enjoy the rewards of that work with your family and friends? Starting a real estate team lets agents handle an increased number of clients and transactions while still maintaining a healthy work-life balance.

FOCUSING ON WHAT’S IMPORTANT TO YOUR CAREER

Every real estate agent comes to the business with specific goals—goals that can evolve over time. As these agents enjoy more success, those goals can get away from them. Gradually, they lose the work-life balance they were seeking, work less with their target clientele (e.g., young families or more local buyers and sellers), get bogged down with busywork, and so on. Forming a team allows agents to return to or strengthen focus on what’s important to them within their careers.

LATITUDE

An advantage of leading a team is that you (theoretically) enjoy wide latitude to run your business in the way you want. Yet, when the transactions pile up, agents might find themselves throwing that latitude out the window just to stay successful. A team allows you to stick to your principles (and partner with people who will embrace your business plan), while giving you the leverage to maintain and increase your success.

SCALABILITY

As already stated, success breeds success, but one person can only do so much with the hours in a week. Inevitably, you will hit a point where you simply can’t grow anymore. By forming a team, your business can continue to scale. The great thing about this concept is that the sky really is the limit—if the resources and clientele are there, you can continue to add people and expand your business as you see fit.

EXPENSE REDUCTION PER TRANSACTION

Hiring help to reduce transaction costs may seem odd, because the expense of paying your team—particularly a transaction coordinator—will always be there. But think about how much time it takes you to complete a transaction, from drawing up the contract to staying in contact with all of the necessary third parties, to concluding the process. These tasks likely consume hours of your time and take energy away from more impactful responsibilities, such as communicating with clients. A transaction coordinator and other team members can do these tasks more efficiently, thus saving money, setting the stage for more business growth, and allowing you to focus on what you do best.

INCREASED PRODUCTIVITY

The ultimate goal for a real estate team is to increase output and revenue. When many team members work in concert to get houses sold, the amount of transactions will proportionally increase. Imagine a sandwich shop and the way a production line of workers can get your sandwich made in a minute, whereas a single person may need five minutes to deliver your food. Both sandwiches might be delicious, but that production line shop can serve more customers who will leave happy. A real estate team works the same way—each person works individually yet together to achieve goals, increase productivity, and impress clients. The benefits of forming your own real estate team are real. Although relinquishing some responsibilities might be a struggle at first, the long-term advantages will soon make you feel less worried about trusting someone else to handle the minor details of each transaction.

The advantages agents seek from the team model are plentiful. A survey from Inman Group that allowed respondents to pick more than one answer found that 61 percent of respondents cited “work-life balance” as a reason to form a team, 56 percent (respondents could pick more than one answer) cited “the chance to expand their business opportunities,” and 50 percent cited “providing more effective representation for clients.” These benefits are alluring, but building a successful team requires more than hiring a few people and turning them loose to work. The process requires careful planning of goals, the structure of your team, and the roles and responsibilities taken by your team members.

This guide details the team-building process for agents who are interested in starting their own teams, as well as agents looking to revamp or expand their existing teams. It focuses on the importance of good planning, provides sample frameworks that teams of various sizes might take, details several defined roles your team may include, and explains how a team-centric brokerage can help you achieve success.

• You currently complete about 40 transactions per year. There’s no magic number of transactions you must have to be ready for a team; much depends on the agent, the market, and the economy. However, 40 is a good general benchmark—that’s nearly one per week, which is on the cusp of the volume that a single agent can handle solo.
• You have enough volume to bring on more people. The number of transactions isn’t the only consideration for starting a team; the volume of leads coming your way should be factored into your decision, as well as the amount of commission you are earning. After all, part of your commissions will pay for your future staff, and though that will eventually lead to more commissions, in the short term, you also need to be making enough to pay yourself.
• You need help with operations. If you are constantly on the phone, talking with leads and customers and falling behind on the technical details of listing homes and completing transactions, the timing might be right for a team.

• You need help with marketing and gathering new leads. Alternately, if you are constantly bogged down with busywork and can’t find time to market yourself or initiate contact with new leads, a team might be your best option for refocusing your mission.
• You are ready to let go. As already stated, self-made successes can find it difficult to give up some of the control they have worked so hard to establish. With the help of a team, the trade-off is is fewer 60-hour weeks and more commissions, but you need to be ready to let go a little bit. Jumping back into some of the tasks you’ve tabbed for skilled people to perform will defeat the purpose of starting and leading a team.

Once you know the timing is right, you can move on to more serious planning.

GROWTH OF THE BUSINESS

New teams may not be looking to expand beyond a few people, but growth will be required to get these businesses to reach their desired output. If you want to grow a bigger team, long-term planning for bringing on new team members and determining the rate of expansion is essential. Existing teams need the same kind of forecasting: What adjustments are needed now to lead the team to the place you want to be in the next year, or the year after, or five years down the line? Solo real estate entrepreneurs often live in the moment, advancing from one transaction to the next and collecting their commissions. Once you become a team leader, you must lead the team—and that’s impossible if you don’t know where you are going.

REGULATIONS

The regulations and laws regarding real estate transactions, licensing, and agents are formidable—and unfortunately, rules vary by state. Even standard guidelines are complex and must be considered for the infrastructure you are implementing or expanding. For example, which licenses must your team members hold so they can effectively perform their duties? Regulations shouldn’t be a deterrent against starting a team, but they must be considered as you develop and maintain a team.

PICKING AN INFRASTRUCTURE

The team infrastructure you choose often depends on what goals you have for your business, your coworkers, and the revenue you hope to achieve. A startup team may include a few team members, enough to set your venture in motion and leave the door open for growth and scalability. Established teams looking to revamp or expand their operations may need more support staff. Your infrastructure—especially if you are tweaking an existing team—may also depend on the skill sets of your existing team members. What’s important is that you map out your team, hire or train to fill gaps, and think about how your team might grow beyond the infrastructure you choose.

STRIVING FOR SUCCESS: AVOID CHURN

Team frameworks that highlight you and your team members’ strengths, define roles, and keep everyone happy are primed to be successful. Team members feel fulfilled knowing their efforts are appreciated and that they contribute to reaching overall goals. A lack of a framework often results in employee churn—unhappy team members who leave for other jobs. Replacing team members is expensive: their departure leaves a work gap, hiring someone new takes time and money, and any training and mentoring you have invested in the former coworker flies out the door with them. Although some churn is inevitable (after all, few people stay at a one job forever), your infrastructure, or lack thereof, shouldn’t be the reason why team members want to leave.

UNDERSTAND WHAT YOU’VE CREATED

A challenge for existing teams is to identify the gaps in their frameworks and and adjust processes or hire to fill those gaps. Just bringing on a few extra members doesn’t automatically lead to smooth sailing; you can still find yourself in constant crisis mode, putting out fire after fire, which can deflate even the most enthusiastic teams. Honestly assess what can be done better and what needs to be added. Team-centric brokerages are a great resource for helping with this assessment; these partners can recommend frameworks and strategies to form a team that clicks.

Just bringing on a few extra members doesn’t automatically lead to smooth sailing; you can still find yourself in constant crisis mode, putting out fire after fire, which can deflate even the most enthusiastic teams.”

TAKE ADVANTAGE OF TECHNOLOGY

The life of a successful lone wolf real estate agent is a juggling act—you are constantly trying to keep all those butcher knives (we’ll assume you are that daring!) in the air. Teams relieve this constant state of frenetic activity, but many moving parts remain that a team leader may overlook. Technology can not only settle down your life, but also increase productivity and save money. For example, the software offered by top-flight brokerages might include marketing tools, transaction management resources, paperwork review tools, and more—all part of the package when working with the broker. An Inman survey on teams found that over 80 percent of respondents believe technology assists teams in the way they work. Combined with an outstanding team, technology can improve every aspect of your business and give your team members the resources to deliver excellent work.

TEAM AGREEMENTS

The real estate team concept stresses collaboration and collegiality, but you must remember that it is still a business—and any thriving business operates within a framework of guidelines, policies, and procedures. Therefore, establishing clear agreements on the way your team operates, the roles and responsibilities team members will follow, and the amount every member is compensated is essential for efficiency and compliance. These team agreements should include:

• Team titles, definitions, and responsibilities
• Licensing policies
• Disclosure requirements
• Compensation structures and commission splits
• Recruiting policies
• Separation procedures
• Confidentiality policies
• Referral fees

Moving these steps out in front will help to avoid any confusion or hard feelings that could get in the way of your team’s successful operation. A team-centric brokerage will help provide guidance on these agreements and consult with you along the way so that you are leaving no stone unturned.

PROFITABILITY

This may be the easiest measure of the success of your team—after all expenses are met, after all your support staff is paid, and after each transaction is completed, it is the amount of revenue that ends up in your pocket. Profitability is why it’s so important to determine if you are ready for a team. It’s also a measure of how you want your business to grow: If you know how much net revenue you want to bring in, you can structure and expand your team accordingly.

A transaction fee-based model offered by the best team-centric brokerages provides stability and flexibility when charting revenue. This approach forgoes the varying, commission-based fees for a flat charge per transaction. Teams keep more of their commissions, thus leading to greater profitability with each deal. Moreover, team leaders can negotiate better compensation splits with their team members because they aren’t haggling splits with their brokerages. With this complexity out of the way, bonus structures for agents can be more easily established.

MEETING OBJECTIVES

Your business plan should include objectives and benchmarks by which personal and team success can be measured. When you decided to start the team, likely you were at a set number of transactions per year and were ready to expand in order to take on more. Did you reach that new number? Did you achieve your revenue projections? Are more leads being accepted or at least, adequately pursued and followed up with? Periodically assess if benchmarks are being met, and if they aren’t, adjust your team roles and processes to get back on track.

GROWING THE BUSINESS

Once a team becomes successful, leaders see the potential of growing it even more—potentially handling more transactions, adding more team members, and netting more profits. Don’t grow your team too quickly, or you’ll have more team members than revenue to pay them. But when the time is right and you are comfortable with having a bigger team (some team leaders want to stay small, which can still be rewarding and profitable), expanding your business is a reasonable and exciting goal. Perhaps you want to go national with your team or be one of the major real estate players in your local market. With a solid team structure in place—and again, a quality brokerage behind the scenes is a big help—the scalability is already there. You just need to determine when you want to take that next step.

Profitability is why it’s so important to determine if you are ready for a team. It’s also a measure of how you want your business to grow: If you know how much net revenue you want to bring in, you can structure and expand your team accordingly.