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Beginner’s Guide to Real Estate Teams: How it Works and Do You Need One?

What is a Real Estate Team?

New agents are always asking me about whether or not they should join a real estate team. Teams and how they work are often a mystery to people.

The benefit of being on a team is that it offers support and leads. It is generally a framework for your business so you don’t have to spend time on building the structure, you just get in and learn how to work with clients, handle contracts and negotiations or and list and sell houses.

A Real Estate Team is Pre-Built

The leads and systems are there for you to follow. They were created by an agent who figured out how to do it already.

Stand on the shoulders of giants.

You will go in from day one and be fed leads or prospects and like a worker bee, follow up and complete your specialized task.

You might start out at the bottom with rental leads or lower priced buyers until you prove that you can close and get the deal done at which point the team leader will up the quality and quantity of your leads. They work hard and send a lot of money to generate those leads and want to be sure that they are getting a high ROI by handing them off to an agent who can seal the deal.

Even though each team is set up its own way, there are some basic commonalities regarding teams,  so let’s break it down.

How a Real Estate Team Works

The team leader negotiates a high commission split with the broker based on volume. Because they are a high producing agent, or because they banded together and formed a team, their production level is high enough that they are able to go to the broker to negotiate a higher split* than they would have if they were on their own.

When they get this high split of 85%, they share some of that with the agents on their team. They might offer 50% to the agent, leaving them a 35% overage. In essence, they are acting as a middle man between you and the broker, siphoning off a portion of the commission in exchange for providing service to you, the individual agent.

In most states, the employing broker is still your broker. The team leader usually does not have any legal authority as your employer, and even though you might report directly to the leader, your contract is not with them- it is with the Broker of record.

The Truth About Real Estate Teams.

There are pros and cons to joining a team. Let’s go over them so you can decide if being on a team is the right move for you.

Leads

Pros:  The main attraction of a team is often the promise of leads. The team works hard and spends money on a marketing or advertising campaign to generate leads and prospects. They are focused on generating new business- more business than they can handle, which is where you come in. 

The team hires you as a member  to work and close these leads. Because you are just starting out and might not have the time, experience or budget to generate these leads yourself, joining a real estate team gets you the leads right away with no upfront cost or time consuming learning curve.

Cons: You will not develop the skills you will need in order to generate your own leads and build your own business. If you decide that you want to stay on a real estate team forever and work somebody else’s leads, this is not a problem, but if you want to move out on your own at some point, you will need to develop this skill and figure out how to get your own clients. 

Branding 

Pros: Branding and image is important to many agents. The internet has made access to branding and logos much easier, but it is still time consuming and can be costly to get it all done right. Real estate teams provide branding and logos, as well as most of the forms and marketing documents that you will need for your business. You do not need to start from scratch and create an image. It is all packaged up neatly for you and at your fingertips.

Cons: What if love the team but not their branding, or it doesn’t express who you are and attract the type of clients you are looking to work with?

Even if the  team’s current branding fits now, they can always decide to rebrand at a later date. This happened to one of my students and she found herself leaving the team after three years and having to start all over again.

If you have a flair for creativity and self expression, someone else’s branding, no matter how great it is, might not be the right fit for you. 

Your SOI, aka Your Pot of Gold

Pros: Some teams will let you have access to the CRM and add your SOI. If you bring in the deal yourself through networking or your SOI, you will earn a higher commission split than be a team generated lead. 

Cons: I wish I had better news for you on this one, but the all of the stories I’ve heard about SOI fall into the cons category. 

Some teams pay you the same amount on a deal whether they provide the lead or you bring your own. I even had a past student call me to say that the team she joined started her on the rental team. When her own sister wanted to list her house, the agent had to hand it over to the listing team and have her sister work with a complete stranger. She didn’t even get paid on the deal!

Be aware that if you upload your SOI to the team CRM, they have access to your list. They can market to them at any time whether you are on the team or not, which means they can work the lead or hand it out to another team member, leaving you out in the cold.  

If you leave the team, a copy of your SOI stays with the team, and now the real estate team becomes your competition.

Money

Pros: You will probably start closing deals and earning commission checks faster on a real estate team than you would on your own. Your split will be lower than if you were independent, but would you rather have 50% of something or 100% of nothing?

Cons: Your split will be lower. You will make less money per deal than you would if you were solo. You are paying for what the real estate team provide: leads, support and training. There is no such thing as a free lunch.

Name Recognition

Pros: Working with an established real estate team gives you instant street cred. You can hide all of your inexperience behind an established name and bypass the name building that solo agents have to do.

Cons: In order to keep up the team sales volume and preserve the high commission split with the broker, real estate teams usually close all deals under the team leader. You don’t get a chance to build a name for yourself, and if you are looking to become independent and branch out on your own, this can be a large hurdle to overcome. Also, if you plan on getting your broker’s license (which you should), and there is a production requirement, this could cause a problem when trying to verify your experience. 

Training

Pros: Most real estate teams offer training. They will teach you all you need to know about your duties as a team member. They have a vested interest in making sure you know how to do your job.

Cons: Look into the training programs before you sign up, and be sure to ask lots of questions. Ask if they charge for  training and what topics will be offered. Oftentimes, the team will only offer training that pertain to your assigned tasks rather than topics that might help you grow and become independent There is an inherent conflict of interest that the real estate team will want you to limit your growth so you will stay where you are and keep on producing and generating team revenue.

Admin Support

Pros: Many real estate teams are run like assembly lines, with a different person for each part of the transaction. This admin support will free you up to do your job of working with clients and closing deals. 

Cons: When the transaction is split up between many different people, the client often feels lost in the shuffle and does not get the opportunity to develop such a close bond with the agent. Relationships are the building blocks for repeat and referral business.

Also, in highly specialized positions, agents lose out on learning all the steps of the transaction, which robs them of knowledge. Knowledge is the keystone of confidence and growth.

Is a Real Estate Team Right for You?

In exchange for all the  leads and training, you will get a lower split being on a real estate team than you would if you were independent or solo agents dealing directly with the broker. The real estate team leader is a middle man- and the middle man always gets paid. They are providing a service to you- it is simply a matter of seeing if it is worth it to you.

If you are looking to make a name for yourself and branch out on your own, be sure to have an exit strategy. Maybe you can negotiate with the team leader to list you as a co- buyer’s or co-listing agent on the transaction.

This is a personal decision, so gather information, ask lots of questions, talk to other agents and ask why they chose to be on a team or be independent. 

Then get it all in writing and make a decision.

I just spoke to an agent who has been on the fence for over a month because she can’t decide between two brokerages, and she lost a buyer lead who couldn’t wait for her.

Make a choice.

Do the best you can and then jump in all the way. You don’t know what you don’t know, and if it ends up not feeling right, you can leave and go find a better fit.

Are You a Team Player, or Do You Fly Solo?

Now I’d love to hear form you in the comments. Are you on a team or flying solo, and what is the main reason for your choice?

*For illustration purposes in this post, we will use 85% as the commission split for the team leader, and 50% for the agent. In real life, it is by negotiation.

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