For years, real estate teams have benefited and suffered from large brokerage firms. With increased production came headaches in the form of responsibilities and resource depletion. The explosion of teams over the past decade lends credence to the fact that teams are not only a great model, but have a higher per capita production rate than individual agents.
Based on recent real trend Research: “It’s true that real estate teams outperform brokerage firms.” Comparing team production to individual agent production, team structures not only make teams more flexible, they are also more profitable. higher. According to the study, the team had an average gross margin of 61.8%, while the brokerage firms RealTrends benchmarked (of all different business models) had an average gross margin of 13.8%.
What caused this shift?
The origins of most real estate companies can be traced back to high-producing agents or agents who felt hampered by brokers, so they started their own companies. Not all high producers have business acumen or an interest in running a large scale business. They are really great salespeople who know how to generate business and serve clients, and that’s what drives them to success.
Most high producers know enough when they start their own company to surround themselves with people who understand the mechanics of running a business other than selling real estate. , a lot of non-real estate related jobs will arise and you will need a lot of initial capital to support your fledgling business.
As profit margins shrink, more top producers are looking for alternative ways to go head-to-head with their former companies just to achieve the coveted autonomy. Instead of quitting to start a real estate company, just create a real estate company within a real estate company.
A real estate company within a real estate company
Traditional brokerage firms have had different types of teams over the years. They were initially created by brokerage firms to target specific lines of business such as relocations, leasing, REOs and more recently internet leads.
Brokers can set very specific performance metrics and payout structures to achieve desired results. These teams are typically loyal and obedient. Because I found it difficult to generate that business and maintain it as an individual agent. And some of that is still true today.
But in the case of agent teams and their sole proprietorships, no one knows how to manage them better than agent teams, and there is no corporate entity as an entry point barrier.
Well-funded team solution
The real question for teams is, does the team need the support and visibility of a large brokerage? Or can you use a vendor to provide a service that you don’t know how to manage or don’t want to manage?
In a perfect world, they could stay with their current traditional model broker or leave and partner with a company to provide it. The very obstacles have been removed by the various well-funded solutions that have entered the market in the last few years.
entities like place, ~ side When Keller Williams backed, Rivianspecifically by addressing teams, is pushing the boundaries of the traditional model.
Nationwide network enters the team market
Brokers can no longer ignore elephants in the room. They must decide what support and resources to provide to support their growing team population.
Rumors on the street compass needle When RE/MAX We create specific programs to accommodate, attract, grow and retain large teams.
The RE/MAX pilot program for qualified teams features expanded education, technical upgrades, and enhanced economics to further support team growth and profitability.
“Teams have historically been non-scalable partnerships built on personality, DNA, or highly productive rainmakers. The challenges of masterminding and scaling first-generation teams have made it clear that our industry is failing business-minded entrepreneurs.” To Rivian. “We believe this failure represents the greatest opportunity in the industry to scale modern teams to achieve freedom and financial success never before possible.”
As teams continue to dominate the real estate landscape, broker owners seek solutions that not only reduce their liability but also provide the support team leaders desperately need to run their businesses. I need to find it.
Large brokers are already overwhelmed by the large amount of staff required to manage marketing, legal, HR, finance, IT, and more. While these operational staff do not directly generate revenue, they do provide compliant resources and consistent model and brand management. When each team creates its own set of rules under a national branded flag, it can easily become the Wild West.
Why brokers fear teams
responsibility. Teams can waste resources because intermediaries can step in and help them with their various needs or risk leaving them unsupervised and responsible. Running a business based on what the team thinks is right can create serious legal problems for the broker, especially in the area of employment law.
run out of resources. They can deplete a broker’s already limited resources when they have to step in to provide a lifeline. What responsibilities does the broker have to the team? Sometimes it’s too late to define because once the problem is revealed, everyone goes into defensive mode.
Unpredictable. One thing big brokers want is uniform practices. This makes things predictable. Loss of control creates a very unpleasant unknown. The team is not intentionally confusing. Team his leader not only needs leadership and sales his coaching, but also business management guidelines from experts in the field.
It’s a team leader issue. The CEO of a large East Coast franchise said: So real estate companies need a platform that fully supports them. That said, teams may present challenges.
“Culturally, some teams establish a company within the company, while others perceive it as disconnected from the collaborative nature of the group as a whole and from internal recruiting activities. In the case, there are legal and human resource implications with employees and IC team members at risk that the company does not control.
“Finally, the space in the office to grow the team inevitably creates pressure. I am always excited when agents want to take their business to the next level. It’s exactly the future of brokerage firms and if they want a sustainable company they should be excited. We often hear from other brokers and managers who
“I usually ask, ‘If one of your agents wants to double their business in the next two years, how would you react?’ The response is always positive. So I ask, “If building a team is what gets them there, why would you object?” What I generally see is that it’s not the concept of the team, but rather the problem of the team he leader. Does this person have the organizational and leadership skills to run a team chaotically and effectively?”
don’t be afraid of them, embrace them
“Real estate agents are often looking for the wrong thing from brokers. We believe that brokerage firms serve a very specific purpose: They have historically been the one-to-many solution to launching and building real estate operations. At some point, there are agents who want to be true business owners and need to build or plug into a business services platform to grow their real estate business,” said Chris, co-founder of PLACE. Suarez said.
One of the things the recent round of venture capital funding has shown us is that they endorse the creative thinking that some of the new fringe services are offering. The stock performance of large public brokers is a real-time reflection of the lack of trust investors currently have in traditional models. New ventures continue to challenge and disrupt the way we believed real estate brokers should behave.
“The team is the heartbeat of the real estate industry. When professional expertise and individual talent match, real estate professionals can bring out the strengths of each team member to better serve their clients. Consumers are demanding better technology, smarter marketing and higher levels of service, said Ben Kinney, co-founder of PLACE.
what does the team want?
One thing that’s clear is that teams don’t just want money thrown at them. Either they were already successful or they wouldn’t have had the resources to grow and build a team. You have to do it. But it all depends on the team leader and the openness, appetite and acumen to run the business.
“Team leaders are often unable to create agreements on important terms, such as the division of agent/leader commissions or the separation of terms in the event of a team dissolution or the departure of one of its members. , may use new agents as assistants, creating unintended employee-employer relationships and potentially causing wage and hour violations, reimbursement, tax issues, and other labor law violations.” The president of a major West Coast franchise company, who requested anonymity, said.
Everything depends on you
Who buys and sells real estate, and what’s best for them. Customers could care less about how things worked behind the scenes. We want agents who are attentive and well-informed while getting a fair price.
But for brokers, customers are also agents, and some of the best customers are team leaders. The behind-the-scenes mechanics are the broker’s responsibility to make sure the brand delivers as promised, and it gets more complicated as the team grows.
If the traditional broker model can figure out a way to price the services they currently offer in-house, maybe they can create a fee-based service model to support their teams. By providing a range of services, including support from the HR department, the team he leader can follow the recruitment process and absolve the broker of liability.
Your HR or legal needs may vary, and pricing so costs are spread across your team allows for more reliable budgeting and determines how much staff you have available. Even if it means creating a consortium of external service providers to leverage where necessary, ensure that the services provided are approved by the broker and compliant to maintain brand expectations and avoid tricky legal situations. We guarantee that
The real answer for these new team service providers lies in the future. Much of the team will remain with the intermediary, as they may use the support of external providers.
If a team uses the services or advice of an external provider, who is responsible in the event of an employment lawsuit from a team member? Even if the team is a standalone broker, the provider can still be held liable There is a nature. only time will tell.
Teresa R Howe is the founder of TRH Consulting.