- Teams' transaction rates are growing faster than those of individual top-producing agents, according to Real Trends.
- There are between 35,000 and 50,000 real estate teams in the U.S., said the company.
- According to Real Trends research, almost 40 percent of teams were formed one to three years ago and 26 percent of teams were formed one year ago.
- What makes a good team leader? Lead generation and lead management, according to the report.
Real estate teams are on the rise, according to a new in-depth report from Real Trends.
Citing real estate coach Tom Ferry from a 2016 survey, the report — “The Real Estate Teams Playbook: Aligning Structures and Strategies” — said there are between 35,000 and 50,000 real estate teams in the U.S.
And the numbers are growing, with 37 percent of teams formed one to three years ago and 26 percent of teams formed one year ago.
How does Real Trends track these numbers — and what do they say?
Real Trends tracks the top-performing real estate teams and individual sales agents each year for the national rankings, America’s Best and Real Trends The Thousand.
Of note: Only brokerages and agents (and teams) who submit their numbers are included in Real Trends rankings. This is why some top-producing agents and brokerages do not appear on the list — they do not submit their numbers to Real Trends, for a variety of reasons.
In 2012, 2,233 teams submitted for ranking, while in 2015, the number of submissions grew by 94 percent to 4,335 teams.
This number only accounts for the highest-producing teams in the country, yet it shows phenomenal growth for a three-year period, said the publishing company.
Meanwhile, teams’ transaction rates are growing at a faster rate than top-producing agents, it said.
According to Real Trends data, the top 250 real estate teams ranked in The Thousand completed 61,321 transactions in 2011; in 2015, the top 250 real estate teams completed 70,873 transactions.
This 16-percent increase in transaction volume compares with an almost 20-percent decrease by top-producing individual agents.
Individual agents ranked in the top 250 of The Thousand completed 45,074 transactions in 2011 and only 35,833 transactions in 2015.
What’s a team, anyway, and why do they work?
“The Real Estate Teams Playbook,” a study conducted by Real Trends in partnership with BoomTown, dotloop and ERA Real Estate, defines what a real estate team is, what tools a team needs (both human and technological) to work well and how brokerages can support their teams.
It also gives tips on how to start a team, how to recruit and how to sustain your team by ensuring you’ve met certain “must-haves” — such as prioritizing team culture, lead generation and management, support and accountability.
While including a number of definitions from respondents, the study summarized a real estate team as “a group with defined skills working towards a collective goal that supports the individual goals of its members, led by one or two people whose focus is to provide training, support, accountability, a source of business and a collaborative environment that fosters professional and personal growth for its members.”
Real Trends interviewed 25 leaders of teams and broker-owners of real estate firms across the country, and it surveyed more than 2,450 licensed team members, team leaders, broker-owners and real estate professionals.
Many team leaders say they are reaping the rewards of an improved lifestyle.
“Teams in real estate create the opportunity to deliver information, guidance and customer service to clients without having to be a superhero individual sales associate who works 75-plus hours each week,” said the report.
Lead generation and culture fueling team growth
Lead generation and culture are the two primary fuels driving the growth of real estate teams, said the report.
Online lead sources used most by teams in the study were:
- Online portals, (42 percent)
- Websites (38 percent)
- Social media (30 percent)
- Pay-per-click advertising (11 percent)
- Multi-media (3 percent)
Leads generated through online platforms or marketing efforts are important pieces of the puzzle for most real estate teams, but they are used in conjunction with traditional lead sources as well.
Team leaders and team members ranked their sphere — repeat and referral clients — as the top lead source, followed by listing portals and websites, said the Teams Playbook.
Gary Ashton of The Ashton Real Estate Group, Re/Max Advantage, in Nashville, Tennessee, was an example of a team leader who has used innovative lead generation techniques to help create his team, said the research.
Ashton partnered with Nashville.com in the early 2000s to gain real estate leads from the community-based website. Today, the 60-member Ashton Real Estate Group drives 1,800 to 2,000 leads a month from the websites Ashton established over 10 years ago.
Not just lead generation but also managing leads
The report warned: “Anyone in real estate can use listing portals and websites to generate leads; however, in these two areas, in particular, the amount of money invested in them makes a big difference in how powerful of a lead generation tool they become.”
And this puts teams at an advantage. Successfully managed teams are using technology-based lead sources to create the constant lead flow needed to maintain the team, it said.
”Having the capital to buy out entire ZIP codes for advertising space shuts out the competition on a listing portal. Continual investment in website search engine optimization (SEO) and search engine marketing (SEM) can move a real estate team to page one of search results and keep them there.”
Team leaders should be generating the bulk of leads
To those agents thinking about building their own team, they should be prepared to take responsibility for generating the bulk of leads, said The Real Estate Teams Playbook.
“About half of today’s current teams have a team leader or rainmaker whose role is solely focused on lead generation.
“This person pursues, measures and evaluates lead sources. Leads are critical to the long-term success of a team, and having one or two people solely focused on consistent lead generation ensures the sustainability of a team.”
Out of the 25-plus team leaders interviewed for this study, almost all of them reported generating 75 percent or more of the leads for the team.
Several of the respondents said the majority of the team’s leads come from the team leader’s personal sphere of clients. Mike Deck, the team leader of Team Deck and broker-owner of ERA Real Estate Links in Carmel, Indiana, generates about 90 percent of the leads for the team from his database, it said.
“Teams can be a ‘loose collection of agents’ and a lot of the mega-teams don’t provide the leads. Our team is set up to act more as one unit, that’s the big difference,” said Re/Max Results team leader, Kris Lindahl, of The Kris Lindahl Team, flagged in the study.
His real estate websites generate 80 leads a day, and his team of 16 agents (including himself) has generated more than 400 sales this year so far, a sales volume of $100 million.
And although lead generation is necessary, it is only “half of the job,” added the study.
“Real estate teams must be equally capable of lead management. Due to the nature of team configuration, lead management requires teams to use online collaborative platforms to ensure that one team member can pick up where the other one left off.”
Today’s real estate teams are pushing the possibilities of lead generation and lead management through the overflow of new technology-based tools, said the study.
Their ability to test, adopt and adapt these systems puts them ahead of most individual sales associates who do not have the time or desire to implement these new strategies.
“The modern successful real estate team is one that evolves with consumer expectations by leveraging technology to craft an amazing experience for the consumer,” said Grier Allen, CEO & President of BoomTown. “These teams have the systems and processes to enable scalable and profitable growth. They leverage technology partners to strip away inefficiencies in their daily work and give them the power and functionality to run their business the way they need to.”
“If team leaders can’t provide that value proposition they will lose their agents — it’s such an important piece,” added Allen.
“You constantly, as team leader, have to be evaluating leads from a quantitative and qualitative standpoint,” said Allen.
Support from teams
Support is the primary attribute of successful teams — support through knowledge, allowing experienced and newer team members to idea-share, problem-solve and strategize, said the study.
Support also comes in the form of accountability, where it pushes team members to reach greater goals — professional and personal.
Reaching team goals on the Duncan Duo team of Re/Max Dynamic in Tampa, Florida, means that the team leaders reward their entire 40-person team with an all-inclusive trip to destination cities across the United States.
“The whole team, sales associates and support staff, is motivated to reach their full potential,” said the report.
Starting a team
Meanwhile, out of the 25-plus teams interviewed for this study, most of them started building their team with an administrative person assisting one or two sales associates and growing from there.
CEO and president of Hunt Real Estate ERA, Peter Hunt, believes that it is critical to hire an administrative assistant first, said the Real Trends report. An administrative hire is needed for functionality but also serves as a good first test of the team’s culture.
Kris Lindahl added: “If you decided to start a team, the No. 1 thing is never start a team unless you have the personal brand to support it — going out and buying leads. If you don’t have a personal brand to support it, it’s never going to happen.”
What’s in it for the brokerages?
One key point made in the report: Broker-owners, brand leaders, and coaches must play an active role in how teams operate and function in the real estate industry.
The biggest advantage of a broker-owner allowing teams into his or her brokerage is the market share that the successful teams bring, said the study.
Thirty percent of brokerages had teams that produced over 45 percent of their company’s total sales volume in 2015 .
Working with teams in your brokerage can be a challenge, said BoomTown’s Allen, but there are some franchise organizations that set themselves up to support teams, and you see them growing very quickly.
“In some cases teams are a burden on the brokerage — the amount of resources they take up, office space, for instance — but the business model of the brokerage benefits from having a team of that size. Brokerages that take teams seriously moving forward are the ones that will do well,” said Allen.
When teams can be dangerous
The groups that refer to themselves as teams but do not take the time to construct a culture, develop a framework for lead generation or install the right personnel are the biggest problem for brokerages. For this reason, many brokerages would rather not allow teams, but do so only to remain competitive, said the study.
There is a tremendous opportunity for broker-owners to get out ahead of this issue by proactively establishing a framework for teams in their company, said Real Trends.
Hunt Real Estate ERA implements a strategic system to qualify and train team leaders in the brokerage, said the study.
Expectations of duties, performance and management are established before a team forms. Without direction and collaboration from a brokerage or brand, teams are left to learn by trial and error at the expense of the company and consumer.
Successful teams don’t want to leave their brokerages
Of all of the team leaders interviewed for this study, none of them wanted to leave their brokerage in hopes of starting a firm, the Real Trends research found.
The logistics of running a brokerage — legal, escrow, title and compliance — is something that team leaders said they would rather not do.
“Keep in mind that the majority of team leaders are in their current position because their strength is lead generation,” noted the study.
“Not everyone who is a talented rainmaker is necessarily a good fit for a team leader or broker-owner. Only a small percentage of team leaders have the right skill set and personality to make the leap from leading a successful team to leading a successful brokerage.”
By guiding the leadership and structure of a team, brokerages regain some balance in the team/broker/owner relationship.
Kris Lindahl has no interest in leaving his Minnesota brokerage, Re/Max Results. “One of the advantages that we have in our brokerage is access to 34 offices without additional expense,” he said.
Lindahl and business partner Sarah Pickens had a meeting with their brokerage this week.
“One of the things we want is assistance with recruiting and training. We also wanted to know what the numbers of the brokerage were in real time. Our team is large, but the brokerage is bigger, so we can forecast when the market shifts,” said Lindahl.
“They are behind us 100 percent. They want us to get to the next level,” he said.
And that isn’t always the case with brokerages, he said.
What do consumers think?
Are consumers choosing teams more frequently, or do they prefer teams? That question is still up in the air, according to the teams report.
“There is no clear indication that real estate teams impact the way consumers buy or sell a home,” it concluded.
Team members said that consumers made their choice largely on who they had relationships with, with only 13 percent going with teams for teams’ sake.
The message from the report, meanwhile, was: don’t fight the growth of teams. They are good for the industry.
“What is known is that value of real estate professionals is changing due to consumer access to information and tools. Teams are a part of the real estate industry’s process of redefining the value of real estate professionals.”