The Rise of Real Estate Teams

Real estate teams first began forming in greater numbers during the 1990s as a way to compete more effectively with individual agents and increase business. Certain benefits of working on a team are self-evident — an agent whose workload is piling up can team with another Realtor to provide major relief. With two or more agents around to handle clients and find leads, the transaction volume of each individual Realtor can go up. Agents also may be able to spend more time with each client, building a bond that could develop into a solid long-term business relationship.

A more subtle benefit to forming a team is that it adds diversity and differentiation to the ways clients can be managed, enlarging the range of the types of people a team can properly connect with. “We have different sets of strategies and types of ideas for different properties and marketing,” Mike Hulett, an agent with Jameson Sotheby’s International Realty, said of his partnership with Jennifer Lieu (The Mike and Jen Team). “We can match our different personalities to different clients. If a particular transaction is tough because there’s a personality conflict, we can make the switch within our team to manage the situation a little more smoothly.”

Hulett believes that starting out in the business with a partner can be particularly advantageous, due to the knowledge an agent can gain by working on twice as many deals as he or she could do alone. Having a partner also helps stabilize income for beginning agents in an industry that is largely commission-based. And, Hulett advises, “When single agents leave town, they don’t have anyone to cover their business.”

Agents will often say that the disadvantages to forming a team are relatively few. An agent who has been working alone will have to be able to cede control of some aspects of the business to others. Being able to work with and trust others is a necessity. Agents also may have to resolve conflicts between team members. And while a well-functioning team will bring in more income than a solo agent, paying payroll taxes and working out benefits for team members adds another layer of accounting to the office workload.

However, when it comes to teams, some significant problems can arise for the brokerages. A recent report by The Swanepoel | T3 Group on behalf of the National Association of Realtors was highly critical of the team model. According to the report, the ability to acquire their own technology essentially allows teams to function autonomously and potentially overshadow the brokerage brand. By acquiring their own technology and building their own brands, they achieve a level of independence that leads to the development of what essentially becomes a company within a company with a lead agent in charge.

Teams, whose transactions all may go under one MLS number, also tend to generate more revenue than single agents, but they spend more on personnel rather than kicking additional dollars back to the brokerage. An increased chance of legal liability also becomes a threat as the team institutes practices and standards without the authorization of the brokerage.

Planning a Partnership

Developing a team should not be an overnight decision. Before deciding to form a partnership, a Realtor should take a look in the mirror and decide whether he or she will make a good business partner for someone else. Be realistic about priorities, such as whether the reason for the partnership is to provide better service to clients, to bring in more business or to create more time for life outside of real estate. Determining the driving priority behind the desire to create a partnership can help an agent work out what kind of partners they want. Perhaps they only need someone to handle unlicensed aspects of the business, or they may want to expand and offer more kinds of services to a more diverse range of clientele. Use those priorities to develop goals, which will help in determining the direction of a talent search for team members.

Cindy Banks of the Cindy Banks Team under Re/ MAX heads a group of six brokers, including herself and her husband Tony Banks, who also serves as the managing broker. Based in West Chicago, they also have an accounting manager, a marketing manager and a social media director. She advises that total type-A personalities who want to drive all aspects of a business may not be right for a team dynamic. Banks believes a crucial reason behind joining a team is the increased exposure it can give agents.

“Agents want to join teams because there are huge marketing dollars going out to capture leads,” Banks said. “If you’re a good agent but you don’t have the capital to go after lead programs, you want to align with leaders who have already put those lead capture programs into place.”

Adding the right members to a team can be a tremendous boon to business. However, hiring the wrong individuals can end up costing time and money. It may not be evident at first that a new partner is wrong, and when it does become obvious and it’s time for the agents to cut ties, he or she may lose the contacts built up during the time that the partnership was in effect.

Hiring people on a trial basis can help alleviate that potential problem. Agreeing on a trial period to see how the new team member works out can give an agent a chance to see whether the relationship will be beneficial. At the end of the period, the agent can bring the new hire on full time or cut ties. Dragging out the process can only be more costly in terms of both money and lost business. The right hire will likely be a similar personality, someone with whom the agent feels he or she can easily interact and trust. Forming a partnership with a capable family member is a common way to get a team going.