All About Real Estate Teams
The real estate market is always changing, and there is one trend that continues to be getting stronger every year. Real estate teams are the future of the industry. And the future is now! Total team domination is one of the hottest trends in real estate right now. In the United States, there are approximately 35,000-50,000 teams. And I predict that in 3 years there will be over 100,000 teams. Are you ready? Is your business ready? What needs to change to make sure you are ahead of the curve?
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As you already know, the power of a team can always outperform an individual. There is so much you need to do to be a successful real estate professional! From the lead generation, marketing, appointments, negotiating, transactions, and paperwork, trying to do it all on your own is nearly impossible.
Not every real estate team was created equal though. And unfortunately, we are seeing some good and bad practices when putting together a team. Whether you’re considering joining a real estate team or if you’re already part of a team, we’ll provide an in-depth look at how real estate teams work, such as different structures, pros and cons, and how commission is split. Here’s your all-in-one guide to teams in real estate!
How Do Real Estate Teams Work?
As with any team, working on a real estate team is a collaborative effort. But how do real estate teams work? In most real estate team structures, there’s a team leader. The team leader typically takes charge, generating most leads, guiding team members, recruiting team members, and managing the team.
While the team leader takes the reins, the rest of the team will act as support. Clients will be able to contact any team member for questions or concerns they may have, which can help give them peace of mind knowing they have immediate access. Team members are also responsible for hosting open houses and working with buyers, while the team leader is responsible for listing, finding referrals, and achieving goals.
Together, the leader and the team offer support to one another to reach milestones and achieve success. However, this leaves one important question: how do real estate teams split commission?
When it comes to splitting commission as a real estate team, there are different routes a team can take. The most common way real estate teams split commission is the fixed commission split model. Through this structure, the lead agent will split the commission on a consistent basis for each transaction, such as 60% and 40%.
However, the way teams split commission varies based on team structure and goals. For example, some teams with multiple agents may split commissions based on who did the bulk of the work. No matter the structure, it’s important to have the commission split in writing and that it’s easy to understand so there’s no confusion between team members.
Real Estate Team Structure
Teams are an amazing way to leverage time and resources. In my nearly 30 years of experience coaching rockstar agents like you, I’ve noticed there are four different types of team structures in real estate. Not every real estate team structure is successful, which is why it’s important to learn about the different team formations and which ones produce results. Learn more about each structure below to determine which category your team might fall under and which structure to move toward.
1. The Illegitimate Team
The illegitimate team isn’t really a team in the traditional sense. This is just a group of people who all do the same thing and started selling together. Think of this as more like a bunch of salespeople without anyone to run the operational side of the business.
2. The Family Team
You’ve probably seen a family team and they are very popular. Although everyone is related, roles aren’t clearly defined as to who is doing what. Also, family teams usually have to put the business on hold when they all go on vacation.
3. The Hero and The Minions
I’m sure you’ve met the “hero” agent leading the team of minions. The "hero agent" is great at what they do, but they are huge control freaks! These are the types of teams where burnout is common and people are always coming and going. The hero can be tough to work with and they are usually the kind of person that doesn’t play well with others.
4. The Team Builder
There are some rockstar agents out there who know their stuff and hire a team to help support them in the other areas of their business. They realize that with a team they can grow the potential of the business exponentially. This is because the team builders know the team is the vehicle to maximize everyone’s strengths to even better serve the customer and take the business to the next level.
No matter what kind of team you have, we recommend the Team Builder approach, you’ll find that the type of entrepreneur who leads the team can vary greatly. The team must be structured to account for the team leader being an artist or operator.
Pros and Cons of Real Estate Teams
Teams in real estate offer plenty of great benefits that can help you be successful in the industry. However, there are drawbacks that are worth considering as well to ensure working on a real estate team is right for you. Explore the pros and cons of real estate teams below:
Pros of Real Estate Teams
- Support: Working on a team offers plenty of support when you need it. When part of a real estate team, you’ll work with a group of people striving for the same goal, allowing you to learn from one another and succeed.
- Lead generation: Finding leads is one of the primary duties of being a successful real estate agent. In a team setting, there will be more people working on generating leads, which can eventually lead to more clients, which is a win-win for everyone involved.
- Improved work-life balance: Taking on all of the responsibilities that come with being a real estate agent alone can be a challenge. When working on a real estate team, more tasks can be delegated amongst the group, allowing you to create a healthier work-life balance that allows you to grow personally and professionally.
- Shared resources: Part of being on a team means working together. One of the top benefits of teams in real estate is that you’re able to share resources with one another, such as leads, software, tools, and marketing materials.
- Education: In an industry that’s rapidly evolving, it’s crucial to stay up to date on news and trends. When you join a real estate team, you’ll be able to learn from your peers about the newest changes that affect the industry, market trends and changes, and new marketing tips to expand your business.
Cons of Real Estate Teams
- Less control: While working on a team means you get to work together, it takes away from some of the control and freedom you’d enjoy as an independent real estate agent. This means running new ideas by your team members to determine whether everyone is on board or if it needs to be scrapped or tabled for another day.
- Commission split: One of the top drawbacks of working on a team in real estate is that you will have to split the commission, which is less money in your pocket. Additionally, the larger the team, the larger the split, which means your team will need to generate more leads and close more deals than an independent agent in charge of their own success. When joining a real estate team, ensure the commission split is clearly detailed to ensure everyone is on board.
- Negative team dynamics: In some cases, the dynamics of your real estate team might not be healthy. Unfortunately, not every personality type meshes well with one another, meaning you can find yourself in disagreement with another team member, which can stall progress. In turn, this can cause stress and undesired results. This is why it’s always important to evaluate the culture of a team before joining to ensure you’ll be a good match.
- Lack of personal branding: When you join a real estate team, you’re working on building the brand identity of the company, not yourself. Depending on where you see yourself in the future, this can make it difficult for you to turn your name into a brand.
Learn From Some Of The Best Real Estate Team Leaders
When you have a team structured in the right way, with the right people it is incredibly powerful!
I’ve been privileged to talk to two amazing team leaders recently…
Tim Smith
Check out this interview with Tim Smith as he talks about the rewards and challenges faced by leading a rockstar team of agents. I loved what Tim had to say about hiring an assistant!
Heather Sittig Jackson
I also interviewed the CEO of Relola, Heather Sittig Jackson. Heather and I talked about the different aspects of a team and why it is critical that you hire the right people. I really loved what Heather had to say about hiring based on your team’s values!
Babushka Doll
Whether you are looking to start your team with just an assistant or take on five or six people to build your team, you need to remember one thing…
Have you ever seen one of those Russian nesting dolls? It is a big doll that splits in half and there is another doll inside that is a little bit smaller. This keeps going several more times with the dolls getting smaller in size.
I bring this doll up because this is what most people think hiring a team is. The ego and desire to feel important causes many agents to hire someone smaller than them. If you want to achieve massive success in your business, you’ve got to add rockstars to your team that are committed to doing big things.
This means not hiring based on ego, but instead finding the people who think and perform big and are dedicated to growing the business.
2 Types of Team Entrepreneurs
1. The Artist
This is the vast majority of the people in the real estate business. They are high energy qualitative, and emotional and their decisions are made based on their gut and emotions.
2. The Operator
These are the people who work off of checklists, processes, systems, and numbers. What we’ve found is that the artists make all the money in this business when they have an operator. The key to building a great team is to get educated and gather the right information to make the best decisions possible.
4 Solutions to Common Team Problems
1. Read
There is so much good information out there on building teams that you are doing yourself a disservice to not be prepared.
Here are a few: Our CEO Manual, The E-Myth, Good to Great and In Search of Excellence.
2. Know Thyself
Know who you are. Are you an Artist or an Operator? Build your team accordingly!
3. Define Roles
No matter what type of team you have, make sure that every team member’s duties are clearly defined.
4. Build the HUB!
The hub is the back end of a smart and successful real estate business.
A team has the training, culture, operations manager, listing coordinator, transactions coordinator, direct response marketing, marketing for branding, nurturing (ISA/OSA), sales, and client satisfaction.
With this structure, you can then add as many sales agents as you have space for. Not sure if you are ready to start your own team? Simply sign up for a complimentary coaching consultation to find out all the ways we can help you and your business improve!
Final Thoughts on Real Estate Teams
Are you wondering how to join a real estate team? At Tom Ferry, our real estate coaching programs can help you in every aspect of your real estate career, from building a strong business foundation to connecting with industry leaders and building or joining a team. There are numerous factors to consider when joining a team in real estate, and our coaches can provide the mentorship and real estate tools to help you make the best decision for yourself and your career.
Whether you’re a veteran agent or just starting out, our real estate coaches can help. You’ll gain exclusive access to resources for success, such as tips on how to create a business plan and eight rigorous levels of curriculum. Add a Tom Ferry real estate coach to your team today to see how you can succeed.
We’ve helped scale the businesses of tens of thousands of real estate agents.
When you start with a free real estate coaching consultation, chances are we can help scale yours as well. Schedule yours today!
