Having the right team can be a major boon to your business — provided you take steps to avoid these 10 mistakes that can undermine your team’s success. 

This June, Inman’s editorial theme is Teams — we’re going to go deep on what it takes to grow your team amid this intense seller’s market. And if you’re not already a subscriber to our Teams Beat email newsletter, sent every Thursday, sign up now.

Regardless of whether you’re a fledgling team leader or an experienced veteran, always be on the lookout for costly mistakes that can negatively impact your profitability or the effectiveness of your team.

If you’re thinking about launching a team, use the list below to avoid as many missteps as possible before your actual launch. If you already operate a team, determine if any of the common mistakes below apply to your situation, and take steps to correct them immediately. 

1. Not understanding the difference between a team and an agent partnership

The first question to address when you start a team is whether you will be building a team or an agent partnership. Both models provide proven paths to success, but it’s important to understand the distinction.

  • In a team, all transactions flow through the team — no outside transactions are allowed. 
  • Agent partnerships permit transactions outside the team. Team members can also have separate client lists, a separate website and separate email addresses. 

If you opt for the team model, make sure all emails flow through your website URL (SallyAgent@TheABCTeam). This approach makes it difficult for a departing team member to take any of the team’s clients with them when they leave. 

2. Setting up a 50-50 partnership 

A common reason teams and brokerages fail is due to disagreements within 50-50 partnerships. Failure of the partners to agree on a course of action can paralyze the team. 

To avoid this situation, shift to a 51-49 partnership so one partner is the ultimate decision-maker. If you don’t trust your partner to make the decisions when there is a disagreement (or they don’t trust you), then don’t form a partnership!

Second, all teams and agent partnerships need to determine what happens if one of the partners becomes ill, is permanently incapacitated, dies or decides to exit the team

Address each scenario in writing including buy-out options, and have all partners sign the agreement prior to executing the final partnership agreement. If you have an existing team or partnership and haven’t handled this, do it now.

3. Failure to address the management and accounting roles within the team

As soon as you hire an assistant, transaction management coordinator, a buyer’s agent or other team member, you are responsible for supervising that team member. This includes handling the accounting, legal, payroll, taxes, plus setting up an operations and procedures manual for each position on your team. 

The following graphic illustrates the additional responsibilities associated with managing a team. 

Fortunately, you can outsource your accounting, payroll, taxes, and legal to firms that provide these services. 

You can also locate assistance for web design, marketing materials, video editing, sound engineering, etc., at UpWork.com. You pay UpWork, and the platform takes care of the taxes and other issues regarding the individual you choose to hire. 

4. Hiring a buyer’s agent first 

Gary Keller’s book, The Millionaire Real Estate Agent, makes a point every team leader needs to heed: “Your first two hires should be administrative.” 

When agents start a team, many search for a buyer’s agent first so they can focus on taking more listings. This is a recipe for disaster. Adding another agent to the mix without having sufficient administrative support means more chaos — not less. 

Furthermore, failure to have adequate administrative support results in increased confusion, damages client satisfaction and also exponentially increases your stress. 

If you’re not ready to make a full-time administrative hire, working with a transaction coordinator or virtual assistant (preferably someone who is an independent contractor you compensate per transaction or by the hour), is an excellent place to begin.

When you are ready to make you first full-time hire, here are some critical skills the person will need: 

  • Enjoys organizing files, managing databases and reviewing contracts. 
  • Has strong administrative skills. 
  • Good at implementing and managing processes and systems. 
  • Dependable and prefers a fixed schedule. 

Caveat: Do not hire a buyer’s agent until you have all your systems and procedures in place and are in a position to handle the increased administrative load from doing more transactions. 

5. Failure to create a job description and procedures manual for each position on the team

A strong administrative hire is good at doing the management tasks the rainmaker is usually poorly suited to handle. For example, you can have them create job descriptions and a procedures manual for each position you wish to hire.

Positions to consider including are the rainmaker, licensed or unlicensed assistant, transaction coordinator, office manager, buyer’s agent/showing assistant, listing agent/coordinator, and marketing/social media coordinator. 

6. Failure to use a behavioral assessment when hiring

Using the Target Training International DISC assessment, the rainmaker and any listing agents should have high scores on the “D” (dominance) and “I” (influencing) factors; this is someone with a high drive, get-it-done attitude who is also a “people person.”

Support and technical staff should have high scores on the “S” (steadiness) and “C” (compliance) factors. Individuals with high “S” scores use a systems-based approach and are good at taking projects through to completion. Those with high “C” scores are usually analytical and detailed-oriented and can be perfectionists. 

7. Making the wrong hire

Anyone can bring their A game at least once, so make sure to conduct at least three interviews

  • Conduct the first interview by phone to determine how well the candidate interacts over the phone. 
  • The team leader then does a more comprehensive one-on-one interview with the candidate in person or on Zoom. 
  • If the candidates do well on the first two interviews, they then meet with other team members to see if the individual is a fit for the team. 

Although it pays to be “slow to hire,” if someone turns out to be a prima donna or disrupts the functioning of the team, be “fast to fire” to protect the integrity and effectiveness of your team. 

8. Failure to ask the right questions during the interview

Before your first interview, visit the candidate’s LinkedIn and other social media sites to learn more about their current position, their interests, while also checking for any online reviews.

You’re searching for candidates whose work ethic, vision and purpose are in alignment with those of your team. Also, be sure to contact each person who has given the candidate a recommendation. 

During your interview, ask situational questions that address the candidates’ ability to overcome objections or how they would handle a situation you or your team faced recently. This allows you to evaluate how they will be when they work with the team and your clients. 

Also inquire about their long-term goals. Is this person someone who will function well as part of a team or whose goals are to become your future competition?  

9. The costliest compensation error you can make

All agent splits and employee bonuses should be calculated on net commissions after deducting expenses off the top. For example, if an agent is on a 50-50 split with your team, their net would be approximately 42.5 percent after deducting overhead and other expenses. 

Agents who fail to deduct their expenses off the top greatly reduce their profitability. They are also at greater risk of having their team fail due to the inadequate capitalization. 

10. Treating independent contractors as if they are employees

If you require your team members or administrative staff to be in the office at specific times, to use your tools and systems, to hold open houses or to prospect when you instruct them to do so, you must hire them as employees. This means paying them a salary and benefits as required by state and federal law, withholding taxes, making sure they have breaks, etc. 

If you have independent contractors on your team, the correct way to treat them is as if you have sent them a referral. They are free to use the methods and tools they select to close the deal. Failure to do so can expose you to fines from the Department of Labor, IRS penalties for not withholding taxes and FICA, and even litigation. 

One final question to consider 

Given the facts above, here’s a third alternative to seriously consider: the referral model. 

Several years ago, Ira Serkes had to decide if he wanted to have the most successful agent team in Berkeley, or if he wanted to be the happiest agent in Berkeley. He decided on becoming the happiest agent.

Today, Serkes only works with clients who meet specific criteria, including transacting within a few miles of his home, being in a specific price range, being well-qualified financially and most importantly, being fun to work with.

If a potential client does not meet all these requirements, he refers them to a qualified agent who can address their exact needs. His first year using this model Serkes generated over $60,000 in net referral income without the hassle and cost of running a team. 

Having the right team can be a major boon to your business — provided you take steps to avoid the 10 mistakes outlined above that can undermine the success of your team. 

Bernice Ross, President and CEO of BrokerageUP and RealEstateCoach.com, is a national speaker, author and trainer with over 1,000 published articles. Learn about her broker/manager training programs designed for women, by women, at BrokerageUp.com and her new agent sales training at RealEstateCoach.com/newagent.

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