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!
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.
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.
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.
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.
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.
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.
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:
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…
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!
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!
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.
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.
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.
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.
Know who you are. Are you an Artist or an Operator? Build your team accordingly!
No matter what type of team you have, make sure that every team member’s duties are clearly defined.
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!
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.
When you start with a free real estate coaching consultation, chances are we can help scale yours as well. Schedule yours today!