The real estate market is always changing, and there is one trend that continues to be getting stronger every year. Teams are the future of real estate. 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?
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 all teams are 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 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 that all do the same thing and started selling together. Think of this as more like a bunch of sales people 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 across 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.