If you’ve attended a National Association of Realtors (NAR) or Inman conference recently, you might assume that every agent in the country is trying to figure out how to build a team. However, the truth is a bit more sobering. According to the 2022 National Association of Realtors’ Member Profile, the percentage of agents on teams actually decreased by over 4% last year.
So why did this happen? Well, you could blame it on the market, but we have a sneaking suspicion that most agents gave up because they didn’t take the time to learn how to build a team the right way.
To help you get started on the right path, we want to share our 40-plus years of real estate experience with you. In this article, we’ll walk you through everything you need to know to build a thriving real estate team in 2023. We’ll cover getting started, the most efficient team structures, building your tech stack, which team members to hire and when, and we’ll wrap up with seven common mistakes new team leaders make.
Getting Approval & Guidance From Your Managing Broker
Before you embark on your journey to dominate your real estate market with a team, you need to have a plan in place. Here are the step-by-step instructions for getting your team up and running:
1. Get Approval & Guidance From Your Managing Broker
Even though real estate teams are legal in all 50 states, it’s important to talk to your broker to make sure you know and follow the rules. You’ll also need to establish a split and cap agreement to determine how much money you can expect from each transaction and cover your expenses. As your team grows and becomes more successful, you can renegotiate with your broker.
Why Managing Brokers Support Teams
Don’t worry about your managing broker approving your team. In fact, every brokerage I’ve worked for has encouraged agents to start teams. Why? It’s simple. Teams require less hands-on management and usually recruit and train junior agents on their own. This means less work for your boss, not more.
However, if you approach your broker with a detailed plan from this article, they’ll be more likely to take you seriously and offer assistance in getting your team off the ground.
2. Choose the Right Team Structure
Once you have the green light from your managing broker, it’s time to decide on the structure of your team. Here’s a quick overview of our three favorite team structures for 2023:
Mentor-Mentee Model: Teach Them to Fish & Build Residual Income
This model is best suited for team leaders who excel at recruiting and training new agents at brokerages with downline revenue sharing like eXp, Keller Williams, and Exit. In this model, team leaders recruit, train, and mentor new agents, teaching them strategies and systems to generate their own leads. Agent retention is not the goal here; instead, you mentor them until they are ready to build your downline on their own.
Team Leader Model: Leverage Your Personal Brand
If you’ve built a strong personal brand and want to use it as the centerpiece of your team, the team leader model is perfect for you. It operates more like a boutique brokerage, with your personal brand as the unique selling proposition. As the team leader, you’ll be the lead listing agent and recruit other listing agents, showing agents, and support staff to support your operation.
Lead Team Model: Run Your Team Like a Startup
If you have the resources and a strong business background, the lead team model might be for you. Here, you’ll operate more like the founder of a startup, with a business manager overseeing a marketing manager and a team of inside sales agents. Your role is to fill your customer relationship manager (CRM) with fresh leads, which are then passed on to listing agents and showing agents for closing.
3. Develop a Business Plan & Budget
Managing a real estate team’s business is different from managing a solo real estate business. Create a plan for what you need, how you’ll fund it, and how you’ll allocate the revenue you generate. If you need help creating a real estate business plan, check out our strategy guides.
4. Decide on a Compensation Model
Instead of splitting a commission solely with a managing broker, real estate team members split it with their team. Junior agents typically receive a split between 40% and 50%, while team leaders receive between 60% and 75%. The split with the broker is usually similar to that of a solo agent. Use our guidelines for the split ranges as a starting point, being generous at the beginning to attract high-quality agents and adjusting as your team scales.
5. Build Your Technology & Communications Stack
Regardless of the team model you choose, your toolbox is crucial to your success. Remember, your team members won’t exceed your combined talents; they will only meet the level of your systems. The right software can make recruiting new agents easier and reduce stress and confusion. Check out some of our favorite tools designed specifically for teams.
6. Hire an Administrative Assistant
Setting your team up for success starts with hiring an administrative assistant. Many new team leaders make the mistake of recruiting junior agents first, only to find them quitting after a few months due to mundane tasks dominating their time. An administrative assistant takes on these tasks, freeing up licensed team members to focus on real estate-specific tasks that drive relationships and closed deals.
7. Build Out the Rest of Your Team
When your team starts closing more deals than your agents can handle, it’s time to scale. The order in which you hire the next team members will depend on the team model you chose. Here’s the general order we recommend for most teams:
- Buyer’s Agent: Works exclusively with house hunters to handle the labor-intensive buying process.
- Transaction Coordinator: Handles the paperwork and frees up buyer’s agents to show more houses.
- Listing Specialist: Specializes in listing property and manages listing presentations.
- Marketing Specialist: Develops and executes marketing strategies for your team.
- Inside Sales Agent (ISA): Generates new leads and qualifies incoming leads through outbound communication.
Common Mistakes New Team Leaders Make
Now that you have a better idea of how to set your team up for success, let’s take a look at some common mistakes new team leaders make. Avoiding these pitfalls can help ensure your team thrives.
- Don’t Project Your Bad Mood onto Your Team:
Providing opportunities and a paycheck to others does not give you the right to project negativity onto them. Being unrelenting, micromanaging, or uncompromising can quickly tarnish your reputation. Remember, finding great talent is challenging, and having a reputation for being difficult to work with won’t make it any easier.
- Seek Self-Improvement:
If you recognize that you’re falling short as a leader, seek support from a therapist, coach, or trusted peers. Developing self-awareness and improving your leadership skills will help you achieve your full potential.
Building a real estate team is an excellent way for successful agents to scale their business and for new agents to learn from seasoned professionals. Are you part of a real estate team? Share your advice for agents wondering how to start up their own team in the comments below. And if you want more information on real estate team building, visit Garrity Traina.