Where are the true real estate teams?

Incentives aren't structured so that individuals benefit from the success of the team

I watched a football game on Sunday that started out as one of the worst I’ve seen, became one of the weirdest I’ve seen, and ended as one of the best I’ve seen.

If you listen to even a little bit of the talk surrounding an actual football game, what you come across is hagiography after hagiography about "The Team."

After the Baltimore Ravens won the Super Bowl, their star running back, Ray Rice, said, "We have a band of brothers. We love each other. When you love each other, you’ll do anything for your guys."

Ravens linebacker Brendon Ayanbadejo said, "Love put us over the top. You wouldn’t think it, because football is a game known for machismo and violence and toughness, but love is what drove our success. Just like the most epic action movies end up being love stories — ‘The Matrix,’ ‘Star Wars,’ ‘Gladiator.’ This Ravens team is a love story."

It’s the nature of football players to be so focused on the team.

But as I turned the TV off, watching the Ravens celebrate their victory, my thoughts naturally turned to, well, teams. Real estate teams.

Real estate teams

One of the revolutions in the real estate industry over the past several years is the emergence of real estate teams. Take a look at the list of Top 250 Real Estate Agents by transaction sides compiled by RealTrends, for example.

The No. 1 agent, John Murray of Key Realty in Rockford, Ill., did 1,199 transaction sides in 2012. The No. 250 agent, Bryan Jones of Coldwell Banker Premier Realty in Las Vegas, did 123 transaction sides.

I’m willing to bet a fine microbrew that every single one of those agents — who were ranked in the individuals category, not the teams category — has a team.

I don’t believe that it is even physically possible for a single agent to do 1,200 transactions in a given year, which breaks down to more than three closed transactions a day for 365 days. Even Bryan Jones’ 123 transactions works out to 2.4 transactions a week, every week, with no vacation or break.

By now, it is well known that most of the top agents in the country have a network of both licensed professionals and unlicensed staff who work with them, and underneath them.

Buyer agents, transaction coordinators, listing specialists, administrative assistants, marketing specialists — these are just some of the members of a real estate team, along with a top agent or two who are the big rainmakers.

Teams often function as an autonomous brokerage unit under the actual brokerage itself.

They pay for their own expenses and their own marketing. They often have their own brands, which are more powerful and more important than the parent brokerage’s brand. In some cases, they even have their own office space.

Many teams have technology that they have gone out and purchased themselves, instead of simply using what the brokerage makes available to its agents.

In many cases, it’s difficult to tell small independent brokerages apart from real estate teams. The lead agent in a team will often fill the role of the broker or manager, providing guidance and advice and training to the other agents on the team. The paid staff of a team, like the marketing coordinator, functions exactly like the paid staff of a brokerage.

Many, if not most, of the major real estate companies have come to recognize the importance of recognizing and at least tolerating these real estate teams, if not outright encouraging and enabling them.

Keller Williams is the leader in embracing the team as a fundamental building block of their company, but the others are not far behind.

Structure of real estate teams

While there are numerous variations, some more effective than others, the typical real estate team structure mimics the brokerage.

At the top, there is typically a lead agent (or a couple of lead agents) whose individual success generates the leads and the business that allows the rest of the team to function.

Underneath this leader, there are usually buyer agents who work the buyer leads of the main agent on a very favorable split — typically 50/50 — with the main agent.

For larger teams, one might find agents who also work listings that the leader doesn’t want to or can’t handle himself. There will also be a set of staff people who are paid a salary to support all of the agents on the team: transaction manager, contracts coordinators, and the like.

What I’ve always found fascinating about teams is how the normal balance of power that exists with a brokerage is reversed.

Most brokerages recruit agents. Teams are selective about the agents they will allow in.

Most brokerages cater to an agent and talk about how they’ll help improve the agent’s career. Many teams ask the buyer agent how she will cater to the lead agent and demand that the buyer agent help improve the team’s revenues.

The brokerage is agent-centric. The team is team-centric or, at minimum, lead agent-centric. The reason is quite simple.

In a healthy, functioning team, the lead agent generates almost all of the leads. The buyer agents have little responsibility for lead generation and marketing. They are handed the clients to work, and if it actually gets to a transaction, the team of coordinators takes over and ensures that the deal gets done as smoothly as possible.

Not all teams work smoothly or function well, but all of the good ones I’ve studied do.

Real estate teams aren’t teams

Thing is, for most real estate teams, the word "team" is an inappropriate term.

Read what the Ravens are saying about each other. The whole culture of football requires that the individual be subordinate to the whole. That’s what a team really is. And a real estate "team" isn’t that.

It’s more akin to a normal company — a normal brokerage — where individuals get together and cooperate for individual gain.

The lead agent brings buyer agents on because they will generate income that would otherwise not happen. Buyer agents join because they can make more money as part of a successful team than as solo players. Staff join because they get paid a salary.

There’s absolutely nothing wrong with this, of course. This is exactly why most companies exist.

Despite all of the attempts of senior management to try to make a team out of a company, or sometimes, even a family out of a bunch of self-interested strangers, these attempts usually fail (and to be fair, most football teams also fail to be a true team).

What if?

But I do wonder what it would look like if a real estate "team" actually worked as a team. Its members would sound like Ray Rice and Brendon Ayanbadejo, constantly reminding everyone how much they love each other, how they would be willing to go into battle together, would die for each other, and all that.

I imagine a true real estate team would be structured a little bit differently.

First of all, I imagine that the division of money would be different.

While each NFL player has his own contract and gets paid whatever he has negotiated for himself, many of them have incentive clauses and bonuses for things like winning the Super Bowl.

Perhaps it is a revenue-sharing arrangement that goes beyond the marginal. Instead of a 50-50 split with the lead agent, perhaps only 20 percent of an individual agent’s income comes from her own transactions, and 80 percent comes from dividing the team’s overall profits. Whatever it is, the structure would make it so that the individual benefits personally for the success of the team itself.

Second, I imagine specialization would be intentional, and something people would have to work towards. Inexperienced agents wouldn’t be shuffled into handling only buyers, but have to earn their way into it by showing that they have mastered all aspects of working with buyers.

Just like a linebacker practices his craft and only his craft, rather than trying his hand at being a wide receiver or a place kicker, members of a true real estate team would focus on their chosen specialty, to the exclusion of other paths.

Yes, it would probably mean some period of general practice, rotating through all areas from marketing to transaction management to lead conversion until the team identified that person’s true strengths, but maybe the hierarchy of listing agent, buyer agent and marketing staff would be replaced by true experts in each area.

Third, in a true team, team discipline and team culture would come from the team itself, instead of being imposed by the coach or the manager.

John Harbaugh is a great coach. But time and again, we hear about how veterans like Ray Lewis, Ed Reed and others police the locker room, hold other players accountable, teach the newbies the "Ravens Way," and the like.

I imagine a real estate team where even the marketing coordinator would hold the star listing agent accountable to the rest of the team, because she knows that her personal income and personal success depends on the listing agent doing his job.

I imagine a team where a real "locker room" culture develops, with everyone holding each other accountable, and veterans teach the newbie "Our Way."

Yeah, that does seem like a fanciful dream sitting here right now.

But imagine it.

Just imagine if brokers and top agents worried less about Pinterest and more about building that team culture.

If agents worried less about who owns which client, and more about who on the team is best suited to serving that client.

If the veterans didn’t avoid coming into the office because it ends up being a waste of their time, and instead spent hours teaching talented newbies, because they believed that their success depended on the rookies becoming experts.

If that seems far-fetched, why not ask ourselves, what if?

Robert Hahn is the managing partner of 7DS Associates, a marketing, technology and strategy consultancy focusing on the real estate industry. Follow him on Facebook and Twitter (@robhahn).


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