Real estate teams are more popular than ever and offer a welcome haven for agents navigating the current market. But who should form a team and where do you begin?
Years ago, it was standard practice for real estate agents working for brokerages to make a 50-50 commission split. The brokers controlled the stakes and their agents relied heavily on them for leads.
In the Seventies, RE/MAX pioneered the concept of charging agents a desk fee rather than a commission split, giving rise to the formation of teams. In return for keeping a 100% commission, agents turned to teams for specialized skills like transaction coordination and training.
Twenty years later, agents began taking more ownership of the consumer relationship and found they could deliver a better service experience as part of a team than they could on their own.
In 2013, Keller Williams introduced Expansion Teams and developed a commission split that left the agent holding a 70/30 split with a cap on the broker share. Keller Williams also introduced profit sharing, which gave the agent or team lead additional, ongoing income via paid hiring referrals.
Glenn Sanford, a former top team lead at Keller Williams, founded cloud-based real estate brokerage eXp Realty in 2009, and expanded eXp’s teams model with a capped 80/20 split.
Then the Great Recession hit in late 2007, and online leads from Zillow, Facebook, email campaigns and individual websites infused new life into the real estate team model.
Last year when the Covid-19 pandemic gave way to a rush in demand for housing, many individual agents sought shelter in teams to help manage the influx of new business by distributing the workload and balancing risk.
Consider RealTrend’s Thousand list, in which the top 1,000 teams saw their average transaction sides increase by nearly 50% from 2019 to 2020 with the average team closing 253 sides in 2020 versus 2019’s 107 sides. To compare, the 1,000 top-performing individual agents grew their closed transactions sides an average of 18.2% over the same time period.
Also, RealTrends recently revealed its America’s Best Sales Professionals grew by nearly 4,000 agents and teams between 2019 and 2020 with all producing at least 50 closed sides or $20 million in volume — “far and away the largest single-year jump in the 15 years [RealTrends] has been tracking top agents and teams.”
So why are so many agents joining and forming teams?
Teams offer myriad benefits from increased lead gen and improving the skills of new agents to giving clients the knowledge and responsiveness of the collective whole. Novices gain real-world learning experience from working with other team members and benefit from shared resources, such as transaction coordinators, lead nurturers, in-house graphic design services and branding. With few downsides, it’s easy to see why teams continue to take off in a big way.
Interestingly, 96% of the top teams in the RealTrends study were associated with a well-known regional or national-branded brokerage firm. But that’s where the similarities stop.
As many team leaders as there are, there seems to be just as many real estate teams models, each bringing their own special branded nuance to the basic structure.
Here are seven of the many notable team models in real estate today and the characteristics of each:
According to Dotloop integration partner Chime, the CEO model represents the most popular type of team today with four to nine members reporting to a single, central leader.
At its best, the CEO model is agile and centralized in its decision-making. Here, the team lead acts as a CEO who typically oversees all operations but has operation managers tending to specific areas of focus, such as lead gen, conversion, training and technology, says Jeff Cohn, CEO of kwELITE Keller Williams and the coaching company Elite Real Estate Systems.
In this model, the CEO must empower their team to operate self-sufficiently and independent of their direct, daily involvement. “A business should be something that can grow exponentially without the lead being necessary to the direct sales,” says Cohn.
Successful team CEOs leverage key reports to make decisions that grow the brand and strengthen operations from above-board customer service to agent success training that fosters scalability. These team leaders focus on overseeing training and support and tech systems that bring the whole team to the table.
CEO-led Operation-Driven Areas of Focus:
In the Rainmaker Model, a team lead may double as the top producer, supported by an admin and/or a transaction coordinator. There may be one or two buyers agents, an additional listing agent and a showing specialist, says Justin Letheby, trainer, speaker and coach with The John Maxwell Team.
Typically, a Rainmaker Team is led by a top producer who specializes in listings and passes the buyer business to other agents, who work on a split with the rainmaker. All business with the brokerage flows through the rainmaker, who manages and pays the team agents, even though their licenses hang under the brokerage.
As one variation of this model, a group of rainmakers may partner and share overhead expenses while keeping splits and fees separate. Chime calls this the Partnership Model, when two agents who have worked together in the past combine forces to unite their unique skill sets.
This partnership of equals can provide added convenience for team members who use this “tag team” system as a means of covering vacations and complementing skill sets.
In this case, each agent relies solely on their own sales without earning a percentage of others’ sales.
Expansion teams allow agents to grow their business geographically without having to start a new brokerage. As noted, Keller Williams kick-started the expansion team movement, aptly named to describe the process of expansion agents selecting an expansion partner to lead a new team in one of Keller Williams’ Market Centers.
Under the expansion model, agents have sales teams in at least one additional Market Center, with the expansion team handling local sales with a listing assistant and a buyers agent focusing on lead gen and sales. The “expansion hub” oversees and supports the team.
Chris Suarez of Xperience Real Estate, Portland, OR, and Ben Kinney of Washington state, for instance, combined their Keller Williams powerhouses to form PLACE Inc. in early 2020, topping the list of RealTrends’ Mega Teams by Volume in 2021 with $2.1B turned in sales.
In a statement to Inman, Kinney describes the partnership as “a full service real estate and technology platform that partners with the top 1% of agents and teams.”
The idea, the statement noted, is to help agents become more profitable, boost their value proposition to customers and “grow their unique local brand, all without having to leave the brokerage where they are currently affiliated.”
Identifying operational gaps in teams, PLACE will handle an array of admin and business tasks for real estate professionals, including accounting, payroll, human resources, marketing, brand development, talent acquisition and legal affairs. PLACE team members will also receive access to mortgage, title and escrow services built out by Kinney Companies.
In exchange, PLACE takes a percentage of the team’s profit and plays an active role in its management strategies.
Husband and wife teams dominated in the Nineties mainly for the convenience they afforded busy real estate-licensed couples. The Family Model is perfect for those dynamic duos who complement each other’s personalities and skill sets and are able to leverage a broader, combined spheres of influence for referrals.
Every Valentine’s Day, Lars and Liz Petzke celebrate their wedding anniversary as the husband and wife duo behind The Petze Team, RE/MAX by the Lake, a Michigan-based team of six agents, including Lars’ brother Nils, as well as the broker/owners of a two-location office that includes 21 agents.
The couple has learned to turn the challenges of working with your spouse into an advantage. “Running a team from the ground up is constantly filled with challenges, but it’s also so rewarding to be in control of your destiny,” says Lars.
The close kinship of a married couple also offers its unique benefits, particularly with regard to client communication.
“We usually know who should take control in the relationship and conversation, and we can say it with a look,” says Liz.
Team leads who are great communicators, have a love of training and being part of a multilevel (MLM) brokerage type are often drawn to the Mentor/Mentee Model.
Team lead Elissa K. Williams of RE/MAX Success, for instance, makes it her mission “to serve and empower high-minded professionals in their pursuit of success.” In other words, this Templeton, CA-based team leader believes in “teaching agents to fish” and places high value on the team’s ability to collectively share information.
As a non-competing real estate broker, Williams spends a good deal of time personally training her agents on the RE/MAX Momentum curriculum and technology training, including dotloop.
“When I’m meeting agents, I’m talking to them about training and their development,” she says. “I like in-person training. I totally believe in continually learning and growing. That’s a big thing I promote in my office. This is who I am. I am a teacher and trainer.”
Sean Moudry, author of Real Estate Investing, a former Top 10 Keller Williams market center CEO and founder of the consulting company 16 Strategies, describes this team model in The Close as a low-cost, low-risk teams model, in which the lead mentors and trains novice agents for a set period of time, typically 12 to 24 months. The agents receive foundational training and a large split (70-90%) for the few 3-6 annual transactions they might close. Once ready to progress, the agent then moves onto teams where they receive leads in exchange for a smaller split (splits decrease as leads increase).
The best mentors help agents set up goals with realistic and stretch targets. Mentors might add value by training agents on best practices in tech, like how to use integrated CRMs to funnel leads and transaction management systems to close sales and expedite deals with resources provided by the local MLS, association or brokerage.
Agents who opt for training-based teams learn how to prospect, build a sphere, hold an open house and plan, but they shouldn’t expect to receive any marketing or leads in exchange for their high splits.
Mentors make most of their money on multilevel (MRM) marketing or downlines — like Keller Williams, Exit and eXp. Once the agent grooms their own agents downline, the original team leader profits exponentially from all entities connected to the core team lead relationship. Over the long term, the Mentor/Mentee model can offer significant passive income for team leads.
Many great names in real estate have been built on teams they grew and self-branded. They may enjoy a loyal following with the team name a familiar sight or topic of referrals among friends and neighbors.
“Since you are building a brand around a specific community, high standards and unmatched customer service is a must for this structure to achieve massive success,” says Moudry.
Laurie Finkelstein Reader in South Florida and The Deldi Ortegon Group of McAllen Texas, who now partners with PLACE Inc., are two names that have built an impressive following in their respective communities.
Team leads provide the resources team members need to succeed, while agents, admins and transaction coordinators work cohesively to promote the team brand. Team Leader member splits are typically 50/50 or 60/40, depending on who brought the business.
The team might provide the overhead, brokerage split, insurance and marketing. To keep operational costs lower, these teams often focus on more prospecting and team activities and less on marketing and advertising.
With the Team Leader Model, there are two clear divisions of the business: sales and operations.
In a typical setup, the business manager presides over a marketing manager, a listing manager and a transaction coordinator. Team leads set lead gen goals and team member standards. They also tend to be someone who enjoys working with others yet sets high standards and operates with vision and a proven technique that can be leveraged to train additional team members.
While downline business fuels the Mentor/Mentee model, client referrals, loyal relationships and unparalleled service drives the Team Leader model.
As opposed to the CEO model or lead-driven structures, this team type spends a greater share of budget on the client experience. As such, the team lead commonly provides transaction coordinators and business expenses, such as the MLS, lock boxes, and errors and omissions insurance.
By building brand awareness, the Team Leader model attracts leads naturally through word of mouth, local marketing, open houses and past clientele. Team members are held accountable to meet weekly or monthly quotas for a variety of metrics, ranging from number of calls made and leads leveraged to contracts closed.
Team members in the Team Leader Model should be able to produce four to six transactions in their first year and eight to 12 the following. Half of the business should stream from their sphere or referrals, while the remaining half can source from team leads.
“Hire slow and fire fast,” Moudry advises when recruiting team members.
Contrary to the above Mentor and Team Leader models, this team type relies heavily on advertising to generate leads for its team members with a monthly budget ranging anywhere from $500 to $20,000 a month. As such, team leads thinking about structuring their team around a high volume of advertising-sourced leads will need to bring substantial startup capital to the table.
Here, the team is divided into inside sales — those who intake leads, follow-up and prequalify, and outside sales — those who show properties, negotiate and transact.
New agents are often drawn to this team structure’s low splits or flat fee, which can lead to high turnover among those who didn’t properly develop the foundational training skills early in their career. Keep in mind that this system’s success largely hinges on its operational systems and processes to manage the bulk of leads flowing through the team every month.
In this case, the emphasis is on volume and seamless operational systems. The team lead often picks up the tab for the office bill, MLS and NAR dues and other expenses that may be out of reach for newer agents. Due to the volume of leads handed to outside sales and their low expenses, agents on a Lead Team may earn a commission rate of 25-30% or a flat fee for showings and negotiations.
While the Lead Team model comes with higher advertising costs and requires higher volume, the payoff can be big and lead to expansion into other states.
Like the Team Leader model, the Lead Team contains a sales and an operations side; but here, the operations manager typically oversees sales, allowing the lead listing agent more autonomy.
Lead management is critical in this model, requiring inside sales associates who can qualify and assign leads in a timely manner. Teams who integrate a lead acquisition platform like Boomtown or kvCORE with a transaction management platform like dotloop for Teams can better track their ROI on leads through closing.
With this type of team, agents must meet higher performance standards than other team models due to the high cost of lead acquisition. Team members may have strict daily or weekly quotas, which may require them to be employees rather than independent contractors. To be sure, check with legal counsel and state regulations before forming a team.
Real estate teams that use transaction tools like dotloop for Teams help foster team collaboration by enabling agents and transaction coordinators to act on behalf of agents and ensure compliance while empowering team leaders to recruit and retain top talent.
Dotloop for Teams, the industry’s transaction management system designed specifically for teams, provides the following benefits for team leads and members:
Before embarking on any team formation, ask these critical questions:
CRM and dotloop integration partner Follow Up Boss recommends prospective team leads ask:
If you’re closing between 40 and 60 transactions a year as an individual agent—or roughly one per week—then you may need some help to offload any additional leads.
Great team leaders love to teach and help build the skills of team members.
Inman coach Bernice Ross notes many agent teams are undercapitalized and make the common mistake of overpaying agents at their full rate rather than their split after expenses. Prospective team leads, she says, should expect expenses to run about 15% of your budget.
Another common mishap among team leads is to overpay their team members as a means of retaining talent. However, high advertising costs and narrow profit margins can squeeze out team leads. As a basic rule, those thinking about forming a team should always ensure the commission splits they set are high enough to cover any marketing and support provided to the team, which will vary according to team structure.