For the past few years, building a real estate team has been an all-consuming goal for many real estate professionals.
Sure, it seems glamorous to have 10 to 12 people “working for you” and doing fun photo shoots of your group stepping off a private jet. However, once you look beneath the surface, leading a team might not be the best option for your business. As the market shifts toward normality, it may be time to reevaluate the goal of the almighty team.
What are you trying to accomplish? Please don’t just say, “I want to make more money.” If that’s the case, building a team is not for you. There are countless other ways to increase your income without being financially responsible for one or more other people. There are also many good reasons to form a team, my favorites being either a work-life balance or creating a salable asset.
Before you run out and file an LLC, create a logo and schedule that airport photo shoot, you need to decide the true purpose and direction of this venture. You may want to ask yourself several questions first:
- Can I reach my goal by just having an assistant or transaction coordinator?
- Am I making enough money to support myself before sharing my production?
- Is this just about awards and accolades?
- What if things don’t work out?
Let’s explore each of these questions in a little more detail to see if a team is the correct path for you.
Can I just get an assistant?
Simply scaling your real estate business is a reasonable goal.
However, there are many times that I hear agents in their first year in the business talk about building a team because a “coach” told them that is how they will be truly successful. I learned a long time ago that there are only so many hours in a day and only one of me.
The first logical step in scaling is to delegate tasks that don’t require your specific skill. That could be an assistant to help with client communication or marketing. It could also mean a listing or transaction coordinator.
If you want to be really out-of-the-box, you can pay a showing agent to handle buyers until an offer needs to be written. You’d be surprised at how much more you can accomplish by removing the “minutia” from your to-do list.
Do I make enough without a real estate team?
I vividly recall a conversation with one of my agents who came to me about forming a team. She was essentially ending her second full-time year in the business and had closed about $3 million in volume (a respectable amount in her market). Her coach told her it was time to scale up. I simply asked her, “are you happy with the money you made last year?” The answer was a resounding, “No.”
Then, I asked if she was prepared to give her leads to a buyer’s agent and confident that she could generate enough business to provide for two livable incomes. *Insert crickets sound here.*
Needless to say, that agent did not move forward with forming a team and is now closing $8 to $10 million a year. She still wants a team but realizes she needs a strong foundation before she can take on that responsibility.
Think about it from a financial perspective. You may see a team doing $20 million and think that is pretty amazing. Look at all that money! However, what if there are five people on that team? That means they average $4 million per person. It’s not bad but can you or are you doing better on your own already?
Is this just about the accolades?
Be honest! If forming a team is all about the ego stroke, then it’s a terrible idea.
I see countless “teams” that are little more than a group of agents that simply aggregate their production. There is no support, no sharing of business, no joint marketing. They just have the word “Team” on their cards.
If that is your goal, more power to you. Just call it what it is – a vanity project. Don’t take this as criticism. Perception is powerful and a big team can win business. You just need to be honest about your motives with the one person that matters – yourself.
What if things don’t work out?
This is probably the event that most real estate teams fail to foresee. Everyone assumes they are all friends and will never have a falling out or personal ambitions that take them in a new direction. Before moving ahead, you need the equivalent of a pre-nuptial agreement. Should you part ways, what happens to things like leads, the database, pending business, marketing materials, websites, the team name, proprietary systems, etc.? If you can’t bring yourself to think about these issues, being a team leader may not be in your wheelhouse.
Forming a real estate team is just like starting a business. You need a plan. You need to spend hours crunching numbers, performing a SWOT analysis, creating a budget, deciding on the division of labor, and so on. It’s so much more than calling up a friend and creating a shared business card.
These questions barely scratch the surface of what needs to be considered. Don’t get caught up in the hype or simply create a team because someone told you to. Take a breath and give it the thought and consideration this decision deserves.
Stephen Meadows is Chief Operating Officer of Coldwell Banker Premier, a regional brokerage with 16 offices and 250 sales associates serving Virginia, West Virginia, Maryland, Delaware, Pennsylvania and Washington, D.C.
