Real Estate Team Basics: How They Work & How To Build One

When most people think of real estate agents, they think of a professional who works solo. And sometimes, that’s actually the case. Anyone can obtain a real estate license and start taking clients, and they often become quite successful. Drive through any neighborhood, and you’ll probably see a “for sale” sign with a realtor’s name and photograph prominently displayed.

That said, many real estate agents instead choose to work as part of a team. Teams can support each-other and share their workloads, and each team member has unique skills to bring to the table. Joining a team can be a great way to grow your business, but there are also some drawbacks to be aware of. Here’s everything you need to know about real estate teams, how they work, and how to build one.

How Are Real Estate Teams Structured?

A real estate team is a group of two or more real estate agents who pool their resources. Team members split their commissions and can even help out with each other’s clients. For example, suppose you’re overbooked on Monday, and your teammate Jenny is overbooked on Wednesday. Jenny could handle some of your showings on Monday, and you could return the favor on Wednesday. Because you’re splitting commissions, everybody has good reason to support the whole team.

Different real estate teams have different structures, and there’s no single “right” way of doing things. With larger teams, different agents sometimes work on specific tasks. For example, one could be in charge of dealing with lenders, another could be responsible for open houses, another might handle phone calls, etc. This allows team members to work in roles that play to their strengths, making the entire team more effective.

Real Estate Team Lead

In most, but not all cases, a real estate team will have a team leader. This is normally the agent who takes care of the listings, while other team members will meet with potential buyers. In some teams, all team members create listings, but the team lead still brings in most of the business.

Real Estate Team Compensation

Different teams will have different compensation structures. Some teams work more like a traditional company, and pay their members a fixed salary. This can be risky for the team lead, though – if sales are poor, the leader might not have any commission left over for themselves.

The most common compensation structure is a split commission, where each team member gets a fixed percentage of commissions. For example, a three-person team might split their commissions 40-30-30, with 40% going to the team lead and 30% to the others. In some cases, team compensation will be based on performance – if team members meet certain benchmarks, they get a higher percentage.

Fiduciary Relationships

Many team leaders operate only as a seller’s agent. This makes the team’s fiduciary responsibilities pretty clear. They’re responsible for working in the seller’s best interest, and they have no obligations toward the buyers. If an agent from outside the team is representing the buyer, there’s no conflict of interest.

In some cases, an agent from within the team might be representing the buyer. This creates a situation known as dual-agency. In dual-agency, the team leader represents the seller, while the team member represents the buyer. This can be managed without creating a conflict of interest, but if you’re a buyer, it’s wise to ask your agent about any potential conflicts, and how they avoid them.


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real estate team

Real Estate Team Models

There are many ways to structure a real estate team. The optimal structure will depend on the agents’ levels of experience, how many agents there are, and each agent’s strengths and weaknesses. That said, most teams use one of the following three models:

  • Mentor/Mentee Real Estate Team

  • Team Leader Model

  • Lead Team Model

Mentor/Mentee Real Estate Team

The mentor/mentee team structure is exactly what it sounds like. The team leader is an experienced agent, while the other agents are new and inexperienced. For the newer agents, the benefits are obvious. Instead of having to go it alone, you get the benefit of a mentor with years or decades of experience in the field. For the team lead, the hope is that their mentoring will pay off in the long run. As the newer agents learn and grow, they’ll contribute more and more to the team’s bottom line.

Team Leader Model

The team leader model works best when one agent has a very strong personal brand. If an agent’s name and face is well-known in the community, there might not be enough hours in the day to keep up with the demand. An agent with this kind of presence can build a team around them to help lighten the load. There are typically strict branding guidelines for other team members in this arrangement. For example, an experienced agent named John Smith might call his team “John Smith Realtors” and require other team members to put that on their letterheads.

Lead Team Model

The lead team model is the opposite of the team leader model. Instead of one team member making all the decisions and dictating the branding, several real estate agents come together and work as equals. This most often happens when agents have different skill sets that work well together. For example, one agent might be a whiz at conducting open houses, but struggle with phone communication. They could partner with another agent with strong phone skills, and so on. At the end of the day, everyone gets to focus on what they’re most comfortable with, and the team is stronger for it.

Pros & Cons Of Real Estate Teams

There are costs and benefits to working with a real estate team – for the agents themselves and buyers and sellers. Let’s talk about some of the pros and cons.

Pros Of Joining A Real Estate Team

  • A larger resource pool – When you work as a solo real estate agent, you have to do everything yourself, from marketing to open houses to closings. A group of agents gives you access to more leads and the resources to invest in high-quality marketing material.

  • A supportive environment – Working as an individual environment can be lonely. If you fall into a funk, there’s nobody around to give you advice, help you out, or hold you accountable. This can turn into a vicious cycle that damages your career. With a team, you’ll have people around you to provide that support. You’ll also be able to improve your own skills by helping others.

  • Leads, leads, and more leads – Leads are the life’s blood of the real estate business. Without leads, you don’t have any clients. The more agents are looking for leads, the more you’ll have to work with. Oftentimes, different agents have better insight into different areas, so your leads will also have more geographic diversity.

  • Professional development – If you just got your real estate license, there’s probably a lot you don’t know. How do you find leads and convert them into clients? How do you create listings to attract potential buyers? By joining a team with an experienced lead, you’ll get all the advice and guidance you need to grow your career. Even if you want to work as an individual agent, it’s not a bad idea to work for a team for a few years to learn and grow.

  • Benefits for clients – As a client, a real estate team gives you access to a deeper pool of knowledge and experience than any individual agent. And if your agent is unavailable for some reason, another team member will be able to help you out. This all comes with the same commission cost as hiring a single agent.

Cons Of Joining A Real Estate Team

  • You split your commission – The larger your team, the smaller share of the commission you’ll receive. And if you’re working with a mentor, your mentor could take the lion’s share of the commission. Make sure you understand the commission split before you join a team.

  • A toxic work environment – Ideally, you’ll be working with a group of people who mesh well together and create a supportive environment. But sometimes, people just don’t get along, which creates a toxic environment.

  • Less control over your business – Even if your team uses the lead team model, you won’t have full control over your business. Decisions can only be made by consensus, which means you can’t move forward with every idea you like.

  • No personal branding – If you’re trying to build your personal brand, working for a team is nowhere nearly as effective as working under your own name. All the marketing will put the team name front and center.

  • Drawbacks for clients – Depending on how the team operates, you might be working with a different agent at each point in the sales process. This might not bother you, but many people prefer to work with the same person throughout the entire process.

Who Should Join A Real Estate Team?

Joining a real estate team is generally a good idea for newly-licensed agents who need to grow and develop. However, it’s also a good idea if you’re a true master of one aspect of the real estate process. You can partner with other people who specialize in other aspects, and create a top-tier team. If you’ve recently relocated and don’t have a strong local network, it’s also well worth considering. If you’ve already got a strong network and are doing plenty of business, joining a team makes less sense.

When To Start A Real Estate Team

Starting a real estate team is a different ballgame altogether. Take a look at your schedule; if there’s a ton of free time for finding customers, you’re probably not ready to start a team. The average real estate agent has enough time to handle around 50 to 60 transactions per year. When your brand is strong enough that you’re turning away customers, your only way to grow your income is to start a team.

Of course, leading a team has its own complications. The accounting is more complex, and you have to set aside some of your own time for coaching, mentoring, and recruiting new team members. If none of that appeals to you, you might prefer to work solo for the rest of your career.

real estate teams

How To Build A Real Estate Team In 7 Steps

So, you want to start a real estate team. How do you do it? Here’s a simple, 7-step guide.

  1. Establish Underlying Systems

  2. Calculate Expenses

  3. Get To Know Your Candidates

  4. Hire The Right Roles

  5. Align Your Motivations

  6. Never Forget Your Clients

  7. Don’t Be Afraid To Let Go

1. Establish Underlying Systems

Before you start, you need to have a plan. How is your team going to operate? What is each team member’s role going to be? How are they going to communicate? How are they going to follow up? If an agent is on vacation, who will be taking over for them in the mean time? How will this be communicated to clients?

At the same time, it’s important to think about branding and marketing. Is your name going to be front and center? Or are you going to take more of a team approach? Who is going to actually handle the marketing? By working through these kinds of questions beforehand, you’ll have a much easier time going forward.

2. Calculate Expenses

When you start working with a team, you’re going to have to pay your associates. Since you’re creating the team, you need to decide how that’s going to work. In most cases, you’ll simply have to come up with a reasonable way to split your commissions. That said, there may be reasons to do otherwise. For example, suppose you’re taking on a mentee. At first, they’re probably not going to generate much business. If you’re splitting your commission, it could cost a significant portion of your income. In this situation, it makes sense to pay a flat salary.

Some teams will pay associates differently for different roles. This can serve as an incentive for new team members to stick around; they can eventually get a promotion by moving to a “higher” role.

3. Get To Know Your Candidates

Before you bring a new team member on board, you want to know their strengths and weaknesses, and you want to know if their goals align with your team’s. Take the time to interview several candidates and think about your options carefully.

4. Hire The Right Roles

When you’re hiring, think about some of the roles you want to fill. Here are some of the most common real estate team roles:

  • Showing assistant – A showing assistant handles open houses, as well as some showings for individual buyers. This is typically the first role you want to fill.

  • Transaction manager – A transaction manager is responsible for coordinating all your transactions. They ensure that tasks are handed off smoothly from one agent to another, and they handle a lot of the paperwork.

  • Listing agent – A listing agent, sometimes called a buyer agent, can help attract buyers for your other clients. This can help you sell homes faster, and expand your client base.

  • Administrative assistant – An administrative assistant handles bookkeeping, some aspects of marketing, and scheduling appointments.

5. Align Your Motivations

If a team is going to be effective, they need to be working on the same mission. When evaluating your candidates, ask them why they went into the real estate business. Listen for a candidate whose motivations are aligned with yours and your team’s.

6. Never Forget Your Clients

More than almost any other business, real estate relies on word of mouth. If you want your team to succeed, it’s critical to maintain positive, personal relationships with all of your clients. In all your work, make sure your team stays focused on providing each client with an excellent experience. It also helps to follow up and thank former clients; social media is a great way to do this.

7. Don’t Be Afraid To Let Go

No matter how promising a candidate was from the outset, the proof is in the pudding. If a team member has a negative impact on the rest of the team, you might have to let them go. If it’s just a matter of inexperience, the real solution is to brush up on your coaching skills. But if it turns out that somebody has a negative attitude, that can bring down morale, and hurt everybody’s performance. Of course, this is less likely if you thoroughly vet your candidates before bringing them on board.

Summary

Whether you’re starting one or joining one, a real estate team can provide professional development, more clients, and more resources. They’re not the ideal choice for everybody, and you need to weigh your options. But for many agents, being part of a team is the next step on the path to success.


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