This July, Inman’s editorial theme is Teams — what it takes to build and join one, how to optimize your team for summer 2020, and even when to consider leaving one. And if you’re not already a subscriber to our Teams Beat email newsletter, sent every Thursday, sign up now.
What do you do when 17 sellers, in the same week, all postpone putting their homes on the market? Jenn Cole, co-owner of Be Home Realty in Garner, North Carolina, faced that exact scenario as COVID-19 hit her market earlier this year.
What did she do? She talked it out with her two partners. The three Js — Cole, Jill Booth and Jane Ball — opened their boutique firm as partners five years ago, building a distinctive culture (note the professionally maintained beehive in their office) and strong sales results. They operate with 11 agents, and the brokerage handles around 200 transactions annually.
Partnerships exist for more than managing in times of crisis. An ownership group can ease the load from a single person to multiple parties. An expansive group with a managing partner, dual owners with equal equity, or uneven influence between disproportionate ownership shares are all ways to succeed in running a successful brokerage.
Cole says her ownership group “functions like a three-legged stool” with each partner providing strength and balance from her areas of skill and interest. No part of the brokerage depends solely on one of them. The odd number, with equal votes, means they work toward stronger decisions through consensus. She reports that another harmonizer is that three owners share similar family stages and demands in their personal lives.
Not all partnerships are meant to last. After initial success in a two-person partnership, Sherine Moghazi, an agent with Revolve Realty Group at Keller Williams Preferred in Raleigh decided to return to operating as a solo agent. Although initially aligned, she and her business partner found their goals diverging after a few years.
She was glad that they had a formal agreement, drafted by an attorney, that provided a road map for breaking up successfully and amicably. Moghazi shares that leading a team is complex. She finds value in having one person define the direction of the team. It’s helpful to have a designated leader with a long-term perspective to make major decisions for the group.
Sometimes partnerships grow into a large success. Dan McCarthy worked in various real estate sales ever since graduating from college. As a successful sales person, he knew all about the day-to-day activities that generate contracts and closings.
A third party introduced him to Geoff Burt, who was ready to exit corporate life and enter real estate. Burt brought experience and capital to expand opportunities, and create organization and systems. After operating independently for some time, the two affiliated with a franchise to accelerate scale.
Today their company, BHGRE Lifestyles, services the greater Jacksonville, Florida, market with four offices and 80 agents. The firm is approaching $300 million in annual sales volume with a plan to grow further.
Burt and McCarthy don’t consider themselves to be visionaries. Their steady approach to work and partnership allows them to be “reactionaries” who grow incrementally and leverage opportunities that their market delivers.
McCarthy’s advice on entering a partnership is to take time to assess the personality and fit of your partner. He points out that successful salespeople often have big egos and that quality can be harmful to a working partnership.
So what makes for a successful partnership? Whether you’re thinking of starting a team, consolidating brokerages or partnering up, here are a few areas to consider as you chart your own business relationships:
Understand your personality profile
Know who you are, and take the time to document it. DISC, Myers-Briggs, Strengths Finder and other tools can provide objectivity for the conversation. Start by better understanding yourself and share the assessment with your potential co-owners.
Have long conversations about why you want to own a firm, what you want to accomplish and how you like to work. Clarify what you want from your business partners. As part of this process, consult third parties. Involve family, friends and professionals you trust to gain perspective on the quality of the match. Remember, it is OK to walk away when it’s not a fit.
Draft written documents outlining the partnership
Consult an attorney, draft legal documents for a legal entity, and be clear about financial commitments. Many partnerships have been damaged at launch simply because individuals have failed to reveal their personal financial status. Explore your partners’ credit scores, financial reserves and business history.
If you agree to work together, it is critically important to define the exit steps. Define how one or more partners can or will leave the entity with clear definitions on payments, appraisal steps for determining the brokerage value, and terms for payout or debt clearance.
In addition to the legal documents, strengthen the relationship by keeping things fluid. How a partnership works today is not what may be needed in the future, especially with success.
Geoff Burt shared, “Scale changes what’s needed from the owners.” Part of planning should be assessing roles, making specific assignments and clarifying duties of each owner.
Also, take time to define success. What do you want to accomplish as owners in the quarter, the year and at the finish line? Having goals and outcomes in writing creates an objective measurement.
Prioritize clear communication
What was clear from all three ownership experiences was the importance of ongoing communication. Selling brokers are particularly susceptible to communication breakdowns as they each manage substantial groups of clients and team members.
Cole reports that her ownership team begins texting by 7 a.m. each morning: “We know when Jane awakes, because she usually starts the daily thread.” Moghazi mentioned that communication must be constant; Burt and McCarthy say they have offices next to each other to facilitate conversations.
Consider different levels of communication to keep your partnership successful. Incorporate quick, throughout-the-day interchanges to stay on message with the whole organization, work through checklists, and measure the temperature of your agents and clients.
Partners benefit from sitting down weekly by appointment to cover quarterly objectives, short-term duties and employee needs, assignments and adjustments. Think strategy during quarterly face-to-face conversations that merit a morning block or a long lunch meeting. Include a careful and detailed review of the company financial statements in these quarterly conversations, and consider including your firm’s accountant.
Once or twice each year, partners grow the business by taking time to review, refine and revise their annual goals and strategy. Take advantage of your business status and make it an off-site meeting, perhaps even with family, to write off some of the expenses. Another benefit is deepening the personal relationships that healthy ownership groups build over time.
Partnerships can leverage your strengths, grow your income and deliver the best parts of real estate business to you. Be wise and chart your steps carefully to succeed.