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Teams are all the rage these days. There are mega teams, partnership teams, expansion teams, the list goes on. Many new or struggling agents are wondering if they should join a real estate team. We’re going to do a deep dive into how different groups work so you can see if it’s a good fit for you and your business.
WHAT WE’LL COVER
If you drive around your local market, you’ll probably see signs like the “John Smith Team at Remax” or the “Sell Smarter Group at eXp Realty.” These are examples of real estate teams under a specific brokerage. Real estate teams are a group of agents working together with a team leader under the umbrella of a real estate brokerage.
The team leader will typically provide training, leads, marketing, and a variety of other services for the agents on the team. In return, the agents share a percentage of their commission with the leader, in addition to what they share with their brokerage.
There are typically two types of real estate teams, a community team, and a traditional team. More and more you’ll hear terms like “Mega Team” or “Expansion Team.” We’ll break them all down here:
TRADITIONAL TEAM – This is the most common real estate team structure, but every team runs a bit differently. If you are on a traditional team, you’ll typically receive buyer leads, administrative support, transaction coordinators, training, and accountability. Many traditional teams have a team leader and/or a seasoned agent who handle all the listings and the rest of the agents on the team only work with home buyers.
COMMUNITY TEAM – While this is less common, the community team or partnership team usually includes more experienced agents. All the Realtors work together under the team brand and they chip in a small percentage of their commission to cover the cost of marketing, signs, and lead generation. This is a good fit for agents who already have a steady stream of business, but enjoy the camaraderie, support, and work-life balance that a team environment offers.
MEGA TEAM – This is a traditional team on steroids. The mega team typically has at least 20 agents on the team and sells 500+ homes annually.
EXPANSION TEAM – This also follows the same structure as the traditional team, but the team leader has expanded the group into multiple cities or states. They all operate under the same team name/brand.
It’s also important to note that every real estate team is set up differently. Some traditional teams have a 60% split and others have a 40%. Others take a lower split but don’t provide leads. Some run like a well-oiled machine, others not so much. Before you join one be sure to read our “Questions to Ask When Joining a Team” below.
Many teams have a strong lead generation system and/or a steady stream or referrals and repeat clients. If you are a newer agent with no marketing budget and don’t have a large network of family and friends in the area, being able to work the leads from the team will definitely give you a leg up and help you start selling homes faster.
By working with your team leader and the other members of your group, you’ll be able to learn from them on a regular basis. Hearing about other agents’ experiences and strategies for success can help you become a better agent and get your business off the ground much more quickly.
Many teams offer a closing coordinator to help you prepare all of your paperwork for closing. They also give you access to a Customer Relationship Management (CRM) tool to help manage your leads. You may also be able to reach out to your fellow team members for backup help if you aren’t able to make it to a client appointment.
If the team has been in business for many years, usually they have a recognizable brand and great reputation in the community. You’ll also be able to leverage the team success statistics (i.e. “sold over 100 homes last year”) if you don’t have many of your own to share. If you are a new agent and join a real estate team, this can help build your credibility — and your confidence — when talking with potential clients.
As a member of the team, you’ll be sharing a portion of the commission with the brokerage AND the team leader. While you typically won’t have to spend any money marketing yourself, you will have to help more clients buy/sell homes each year to offset the expense of being part of a team. The average agent on a team keeps between 30%-45% of the commission generated.
We highly recommend that you crunch the numbers (solo agent vs team) to make sure the team is a good fit for you and your wallet.
Most teams have you complete all of the sales under the group name (or the team leader’s name) versus your own. Initially, most newer agents don’t mind not receiving credit for the sale. But if you are the type of person who wants to publicly celebrate your successes so you can start making a name for yourself in your community, that may be quite a bit more challenging when you’re on a team.
Being on a team may be difficult if you’re a part-timer. Most team leaders want you to be in the office for the morning meeting. They may also allocate certain times each day for follow-up calls and they want you to be there “smiling and dialing” for several hours each day/week. Also, if they are giving you buyer leads, they usually need you to contact the lead within 10 minutes of receipt. If you are working another job and can’t contact the incoming leads, that may be a problem.
Have you lived in the area for years? Do you have lots of family, friends, and acquaintances? If you are a buyer’s agent on a real estate team and one of your friends wants you to sell their home, you may not be able to. The team leader would take the listing and possibly give you a small referral fee.
Do you have a background in marketing? Or do you just enjoy getting on social media, creating videos, or finding creative ways to promote your business? If so, being part of a team probably isn’t the best idea. Your team will usually handle all of the marketing on their social media pages and website and you may be limited to what and how you share online.
Do you wake up in the morning ready to tackle the day? Whether it’s following up with leads, promoting yourself online, or trying to learn as much as possible? If you hold yourself accountable and are always striving to do and learn more, you’re most likely a self-starter. If you’d prefer to have someone else map out your day for you and hold you accountable to your goals, you would probably work best on a team.
Okay, let’s talk numbers! This is an important factor when deciding if a team is right for you. Most agents on a team keep about 40% of their commission while the average solo agent keeps about 65% to 75% (after expenses and broker splits).
We are going to break down what you could earn as a solo agent vs team member and also look at the potential expenses associated with each one.
Caley and Sally work at ABC Brokerage. Sally is a solo agent and Caley is on a team. The brokerage keeps 25% of the commission earned. Caley’s team also takes another 35%. Both sold 10 homes this year generating a total of $100,000 in gross commission (i.e. before splits).
While Sally made significantly more, she did have to put in the work and the marketing dollars to generate more business. Caley just focused on the leads that were provided to her and didn’t have to worry about anything else.
If you decide that you want to join a real estate team, now you have to find the right team. Ideally, they should have a fair commission split for the value they provide. Here are some important questions to ask when meeting with team leaders:
We hope this has helped you make that big decision — to join a real estate team or run your business as a solo agent. In our (humble) opinion, whether you join a real estate team or not really boils down to your personality and whether or not you have a marketing budget.
If your primary focus is to get dressed up, show homes, and not focus on the marketing / lead generation side of the business, a team should be the perfect fit for you. If you are a self-starter who would prefer to start building your own brand and business, but don’t have the marketing budget and would like to learn from the pros, then joining a team for your first year or two would be ideal. For those of you that have a great network of friends/acquaintances as well as the time and/or marketing dollars to promote yourself, it’s time to go solo!
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