To join a team or go solo? That is the question many real estate agents find themselves asking at a certain point in their career. There are pros and cons to both models, and much of the decision will come down to your own personality and working style.
But how does a real estate team work? You probably want to get a better feel for what really happens on a team before committing to one. How is the team structured, and how are commissions split? Are there expectations that you don’t face if you stay independent? In this article, we’re breaking down everything you need to know about how teams really work – the highs, the lows, and everything you might encounter in between.
A real estate team is a group of agents who band together to handle the tasks of buying and selling homes. Fueled by contracts, listings, and a whole lot of coffee, these agents find that they earn a better living by working as part of a team rather than going it alone. The growth of team structures in real estate has skyrocketed—because let’s face it, who wouldn’t want a squad to share the ups, downs, and occasional “let’s call it a learning experience” moments that come with the territory?
In fact, an independent national study by Workman Success Systems shows that 85% of real estate agents believe being part of a team gives them a competitive advantage. 77% of the study respondents also stated that they either had a “positive” or “very positive” experience when participating in a real estate team. What is it that’s drawing so many pros to teams?
Benefits of Working in a Real Estate Team
The popularity of teams essentially comes down to the ability to succeed (and make money). At the end of the day, many agents believe that the support, tools, and expertise of other top agents can only benefit them. Here are some of the advantages of working in a real estate team.
Support and Mentorship
Being part of a real estate team means you’re not navigating this rollercoaster alone. New agents can benefit from the wisdom of seasoned professionals, who are often more than willing to share their expertise. Think of it as having a mentor who’s also your work buddy—everyone needs a cheerleader! If you are talking to the right team, you’ll see that there is plenty of knowledge to go around, and the experienced agents are generous with it.
If you are not getting this vibe from a team you’re considering (for example, some senior agents don’t want to share research or make introductions), it may not be the right team for you right now, but it doesn’t mean you should count teams out altogether.
Shared Resources and Tools
Why invest in all the latest tech and marketing tools when you can pool your resources with your team? From sophisticated CRM systems to social media strategies, collaborating means having better tools for everyone. Plus, it’s way more fun to collaborate than to go solo.
Consider all the tools you might use on a daily basis—or would use if you had them. Everything from e-signature software to transaction management is typically made much more efficient and secure with a certain tech stack. But who can afford all those tools on their own? The NAR annual technology report revealed that 27% of independent agents spent more than $500 per month on their technology tools. Meanwhile, the report also revealed that 61% of respondents were either “very satisfied” or “satisfied” with the tools that their firm provided. To summarize, independent agents spend a significant amount of money on tools, while those in teams are generally satisfied with the tools their company provides.
Enhanced Lead Generation
Two heads are better than one. It’s a cliché, but in real estate, it tends to be true, especially when it comes to lead generation. Working in a team means you can tap into a larger network and more leads. a
Improved Work-Life Balance
Can’t make it to an open house because of your kid’s soccer game? Having a health emergency during a closing? Having a team you can count on means that these scenarios, while not ideal, are not a major concern.
Plus, as we all know, real estate can be a bit of a time-suck. But with a team, you can share the workload and actually have a life outside of showing houses! It’s a win-win: more time for family, friends, and those Netflix marathons you’ve been neglecting – and more likelihood of closing deals and gaining success.
Challenges and Considerations
This wouldn’t be an honest article if we didn’t talk about some of the potential pitfalls of working with a team. Though there are tangible benefits that come with working on a team, no scenario is perfect. Here are a few things to think about before joining a real estate team.
Commission Splits
For most agents, one of the biggest concerns is: “How much of my commission will I actually see?” Working in a team often means splitting commissions, which can feel a bit like sharing your dessert—nobody wants to give up that last bite! We’ll delve into this commission question further below.
Reduced Autonomy
Being part of a team means you’ll sometimes have to follow the group’s lead. If you’re the lone wolf type, this might feel a tad constricting. Some people do better with structure, stricter schedules, and collaboration, but not everyone. It’s important to understand what you value in a work arrangement. If more flexibility and independence is paramount, a team might not be the best fit.
Potential for Team Conflict
As an adult, you’ve likely realized by now that not everyone gets along (especially not all of the time). Conflicts can arise, especially when egos are involved. Navigating team dynamics is part of the game, but it’s all about finding ways to work together (and maybe cracking a few jokes along the way).
Impact on Personal Branding
When you’re part of a team, it can sometimes feel like you’re lost in the mix. Building your personal brand might take a backseat to the team’s reputation. This can be tricky to balance if you’ve invested time in a niche and are recognized for a specialty.
But don’t worry; you can still shine—just be sure to find ways to showcase your individual flair. Every team needs people who play specific roles (keep reading for more), so it’s a good idea to understand early on what your particular area of expertise will be so that you can make the biggest contributions.
Roles and Responsibilities within a Real Estate Team
We have just mentioned that every team is comprised of unique roles. Most teams follow a template that includes at least the following contributors.
Team Leader/Rainmaker
This is the captain of the ship, the one steering the crew toward success. Team leaders often generate leads and set the overall direction for the team. Think of them as the wise Yoda of the group. These people also tend to be high revenue generators. The top 5% of real estate agents tend to earn between $3-5 million, and these are the individuals who are likely to have teams supporting their efforts.
Buyer’s Agents
These agents are the ones who help buyers find their dream homes (or at least a place without a haunted history). They specialize in understanding client needs and navigating the buying process.
Listing Agents
If buyer’s agents are the matchmakers, listing agents are the home sellers’ best friends. They work on getting homes ready for the market and securing the best offers. They’re kind of like the home’s own PR team.
Administrative Support
Let’s not forget the unsung heroes—the pros behind the scenes. These individuals keep everything organized and running smoothly, handling the paperwork and ensuring that no one forgets to close a pivotal deal. They may not always receive the recognition, but their work is crucial to deals being completed.
Marketing Specialists
Having a marketing guru on your team is more beneficial than ever, especially in all things digital. These specialists handle everything from social media strategy to stunning property photos. They’re the ones who make listings shine bright and help generate new leads to funnel to agents.
Commission Structures in Real Estate Teams
Even if everything in this article about teams resonates with you, there’s likely a part of you that’s saying, “Ok, but how much money could I give up?”.
Commission structures in real estate teams can vary widely, and understanding potential models is crucial for agents considering joining a team or establishing their own. Here’s a quick breakdown on how commissions usually work in real estate team environments.
Traditional Broker/Agent Split
In the traditional setup, agents typically split their commissions with their broker. The standard commission in real estate is often around 6% of the sale price, which is then divided between the buyer’s agent and the seller’s agent.
Example:
– Home Sale Price: $300,000
– Total Commission (6%):$18,000
– Buyer’s Agent’s Share (3%):$9,000
– Seller’s Agent’s Share (3%):$9,000
Now, let’s say the broker takes a 30% cut of the agent’s commission. Here’s how that would look for a seller’s agent:
– Agent’s Commission: $9,000 (after the split with the buyer’s agent)
– Broker’s Cut (30%): $2,700
– Agent’s Earnings After Broker Cut: $6,300
So, for a $300,000 sale, the agent would walk away with $6,300 after all commissions and splits are taken into account.
Team-Based Commission Models
In a team-based model, commissions are often divided among team members, including the team leader, buyer’s agents, listing agents, and sometimes administrative support. This model encourages collaboration and shared success.
Example:
– Home Sale Price: $500,000
– Total Commission (6%): $30,000
– Team Split: Let’s assume the commission is split among three people: the team leader (50%), the listing agent (30%), and the buyer’s agent (20%).
Here’s how that breaks down:
– Team Leader (50% of $30,000): $15,000
– Listing Agent (30% of $30,000): $9,000
– Buyer’s Agent (20% of $30,000): $6,000
In this case, the team leader gets the largest slice of the pie, reflecting their role in generating leads, managing the team, and engineering larger deals.
Salary-Based Models
Some teams offer a salary-based structure, providing agents with a consistent income regardless of the number of transactions closed. This model can be particularly appealing to new agents who may not yet have a steady stream of leads.
Example:
– Base Salary: $50,000 per year
– Bonus for Each Closed Deal: $2,000 per transaction
If an agent closes 10 transactions in a year, their earnings would look like this:
– Base Salary: $50,000
– Transaction Bonuses (10 deals × $2,000): $20,000
– Total Annual Earnings: $70,000
This model provides financial security while still rewarding performance with bonuses.
Hybrid Models
Some teams combine elements of both commission splits and base salaries. In this model, agents might receive a lower base salary with a more substantial commission split. This makes it appealing to more experienced agents who want a bit of financial security while feeling confident about their ability to create new deals.
Example:
– Base Salary: $30,000 per year
– Commission Split: 50% of the commission after the broker’s cut
Let’s say the agent sells a home for $400,000 with a total commission of $24,000 (6%):
– Broker’s Cut (30%): $7,200
– Agent’s Share (70% of $24,000): $16,800
– Agent’s Earnings After Broker Cut: $16,800
Now, adding the base salary:
– Total Earnings for the Year with One Sale: $30,000 + $16,800 = $46,800
This model allows agents to have a safety net while still benefiting from commission earnings.
Each model has its pros and cons, and the right choice depends on individual circumstances, career goals, and personal preferences. Whether you prefer the security of a salary, the collaborative nature of team splits, or the traditional broker-agent model, knowing how these structures work can help you navigate the competitive world of real estate more effectively.
How to Build an Effective Real Estate Team
No two teams are the same, but highly successful ones tend to follow a pattern. There’s more to building a strong team than we could cover here, but this is a brief breakdown of the steps effective teams tend to follow.
- Identifying Objectives and Goals
Before assembling your team, determine what you want to achieve. Are you aiming for more sales, better client relationships, or just fewer late-night spreadsheets? Clarity is key.
- Determining Team Structure
Decide how your team will be organized. Will you have specific roles, or will everyone wear multiple hats? Consider what works best for your objectives and team dynamics.
- Recruiting and Hiring Strategies
Finding the right people is crucial. Look for individuals who complement your skills and share your vision. And remember, a good sense of humor doesn’t hurt!
- Training and Development Programs
Invest in your team’s growth. Training programs not only boost skills but also improve morale. Plus, they’re great for team bonding—just skip the cheesy trust falls.
- Implementing Systems and Tools
Ensure your team has access to the necessary tools and systems to streamline processes. Whether it’s CRM software or marketing platforms, the right tech can save time and headaches. For example, Humaniz’s automated recruiting software enables growing teams to cast a wider net for top talent. By automatically searching across over 100 platforms and organizing a candidate pipeline, Humaniz gives recruiters back hours every week while finding candidates who are, on average, three times more qualified.
Key Considerations for New Agents Joining a Team
When it comes to joining or starting a real estate team, it’s not an easy decision. Luckily, it’s not a decision you need to make in a vacuum. You can find a wealth of information that will help you determine the best course of action by asking around and observing.
Questions to Ask Before Joining
Before you sign on the dotted line, ask questions! What’s the team culture like? How are leads distributed? It’s crucial to know what you’re getting into. Here are some of the top questions we suggest you get an answer to before committing to a team:
- What is the team structure?
- What is the commission structure?
- What training or development opportunities are offered?
- What marketing resources are available, and is there a budget allocated for agent requests?
- What are the biggest team goals?
- How does administrative support work? Are there dedicated resources? How does paperwork get handled?
- What is the team leader’s experience and background (and why do they want to build a team)?
- What are the opportunities for growth?
- How flexible is the work environment? What are the expectations around availability?
- Does the team currently have a reputation – good or bad – in the market?
- What happens if I decide to leave the team? Is there a process for exiting? What about penalties?
Evaluating Team Culture and Support
Team culture can make or break your experience. Ensure it’s a supportive environment where you feel comfortable asking questions and seeking help. Start by:
- Asking current members about how they feel, how would they describe the culture?
- Finding feedback or reputational clues on social media or by asking around.
- Observing the team interactions by shadowing or attending a team meeting, or event.
- Reviewing the documented vision or mission statement (if there is one).
- Discuss the team leader’s approach to team management with the team.
- Asking about training or other development opportunities. Also, how is feedback managed?
- Understanding the work-life balance of current team members.
- Reviewing overall success metrics and goal performance (you may need to ask the team leader to share some things with you).
- Trusting your gut.
Understanding Compensation and Growth Opportunities
Don’t dive in blind—understand how compensation works and what growth opportunities exist within the team. After all, you want to make sure you’re moving forward in your career. For most agents, it’s not enough to simply be a part of a team and enjoy the benefits. They also want to make more money and expand their career aspirations. By asking the questions we discussed above, you should be able to get a genuine sense of what your career could ultimately look like if you join a team.
Ready to take the plunge? Whether you’re forming your own team or considering joining one, there’s a whole world of opportunity waiting for you. Don’t be afraid to dive in with like-minded pros working toward success – after all, as they say, in some cases, teamwork really does make the dream work!
