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Complete Guide to Building a Real Estate Team

April 20 2022 building real estate team 1Has your business finally reached the point where you are ready to assemble a real estate team and reach new levels of success? Building a real estate team is an exciting milestone to reach, but it doesn't happen overnight.

There are many hurdles to overcome to put a successful team together. You'll need to decide the right real estate team structure after evaluating your needs, find the right person for every role, and then refine communication and business practices for long-term success.

The good news? Once you have a winning team in place, you'll be positioned to reach goals together and run your business more efficiently. Here's how to build a real estate team that works for your business model and goals.

Step #1. Preparation for Building a Real Estate Team

Building a successful real estate team begins with a lot of planning and preparation. You will need to not only evaluate your strengths and needs but also set goals.

Start by making sure it's actually the right time to start a real estate team.

  • Do you have sufficient volume? Most agents can handle up to 60 transactions on their own. Once you reach 40 transactions per year or one per week, it's probably time to consider the benefits of realty teams for handling extra leads.
  • Is your business stable and growing? It isn't just current volume that matters – will you be able to generate new leads and business to support bringing on team members?
  • Are you ready to transition from a solo agent to a team leader? A realty team means individual agents take a backseat and support the strength and growth of the team as a whole. You'll need organization and leadership skills to succeed in this role.

Once you're sure it's time to build a team, you will need to evaluate your needs and set goals. You may have specific revenue goals in mind, need help with lead generation, want to team with successful real estate agents to handle an overload of leads, or you may be looking for experience with niche markets to expand your scope.

Consider how real estate teams work to pool resources, collaborate, mentor, and share the load. Think about your personal strengths and weaknesses to make sure you choose the right structure, systems, and team members that will be the best match.

Step #2. Make Sure all Crucial Real Estate Systems Are in Place

Don't make the mistake of building a real estate team without the support and core systems in place first. While working within a brokerage, you may be equipped with tech and systems that do not necessarily adapt well to real estate teams.

As a team leader, you should consider supplemental tools and support systems that will work best for a team. You will need to be ready to manage leads from a variety of sources with systems that can handle increased volume while supporting communication and transaction management. You will also need a means of tracking goals, finances, productivity, and other metrics.

Top real estate teams invest in systems like:

  • Business plan
  • Team purpose and goals
  • Marketing and advertising
  • Lead generation and follow-up
  • Client database and referrals
  • Transaction management
  • Listing inventory and farming
  • Profitability, financial, productivity, and forecast reporting

With effective systems in place, it will be easier to onboard new team members and keep the business running smoothly.

Step #3. Determine the Right Real Estate Team Structure building real estate team 2

Whether you're learning how to start a real estate business from the ground up, building a real estate investment team, or starting a realty team, the right structure is one of the most critical factors to get right from the beginning.

There isn't a real estate team structure template that will work for every team as the structure can depend on the brokerage, team size, volume, and market. Let's look at how to structure a real estate team that works for your goals and business model.

  • Mentor and Mentee Real Estate Team Structure
    • This type of real estate team structure is generally made up of a real estate broker and an agent. It has a very low split, with the mentor or broker receiving just 10-20% of the team member's commission.
  • Two-Agent Partnerships
    • These real estate teams are usually formed when successful real estate agents decide to pool their resources and work together.
  • Team Leader Structure
    • This type of real estate team is comprised of a leading broker and a team of agents in the sales department. The team leader usually receives 40-50% of the team member's commission.
  • Lead Team Structure
    • This team may be composed of a real estate broker at the top and several agents with oversight from operations. The leader usually receives 60-80% of the team member's commission. With effective systems in place, it will be easier to onboard new team members and keep the business running smoothly.

Real Estate Team Roles

Part of building a successful real estate team is identifying the roles you need. Here are some of the most common roles and what each team member does. building real estate team 3

Other Team Roles

Your team may include many other roles, especially as it grows. Other common roles in a real estate team include:

  • Inside Sales Agent (ISA). This team member generates customer leads and listings by making phone calls.
  • Showing Assistant. They are responsible for showings, inspections, and appraisals.
  • Marketing Coordinator. This role involves managing and coordinating marketing efforts for the team. They can market new listings, strategize ad campaigns, track performance, run social media accounts, and manage content creation for blogs, newsletters, and other campaigns. They can even be part of the lead generation team by following up with fresh leads generated through online marketing campaigns.

Once you know the right realty team structure and roles for your business, you will need to consider the details.

You will want a written real estate team agreement in place with clear guidelines, policies, compensation, relationships, and duties. The brokerage should have a copy of the agreement.

Make sure you give special consideration to compensation and how team commission will be structured. The commission split between the brokerage and agents usually remains the same which means agents must pay additional compensation to the team leader. The typical team leader receives 20% to 50% of the total commission. The benefits of working on a real estate team can be well worth the cost for agents.

It's usually best to avoid complicated commission splits like paying buyer's agents a different commission when they find deals on their own. This can change their motivations and make them less interested in leads you give them and allow them to make more money on their own instead of benefiting the team.

Compensation may also depend on the goals of the real estate team. For instance, a team structured toward referrals may pay a higher commission on referrals that team members generate personally.

Step #4. Hire the Right Person for the Right Role building real estate team 4

A golden rule on how to start a real estate team is to do it thoughtfully and avoid hiring too quickly. Hire one team member at a time and make sure they are a good fit and well trained before moving on to the next team role. Learning how to recruit the best real estate agents and other team members takes time; don't feel rushed to make something work with someone who is not adding the right skills, experience, and results.

It's almost always best to begin with admin team members, including a transaction coordinator and/or assistant first. Remember that bringing someone into the team represents a huge commitment of time and resources. If they end up a poor fit, it's a major loss of time. With the right systems and admin support in place, onboarding is easier and takes less time. Your business will also be set up to handle the increase in volume.

The most basic real estate team consists of a team leader with a transaction coordinator, assistant or office manager, a listing agent, a buyer specialist, and an insight sales agent.

Especially at first, you may want to invest in scalable admin solutions. A virtual real estate assistant can handle tasks as needed with hours that increase as the business grows. The typical transaction coordinator fee is per file which adapts easily to your team volume.

With systems and admin in place, you may want to start with a buyer's agent. Additional buyer's specialists can be added later as volume increases. The inside sales agent usually comes after the buyer's agent. Over time, your team may benefit from other roles like a showing assistant or a marketing coordinator, used by most successful real estate agents who generate substantial leads online.

Step #5. Refine Your Real Estate Team and Business Practices

Expect your profits to drop initially when building a real estate team as you are investing in new systems and training. Going forward, focus on tracking metrics that can be used to improve business practices, refine the team, and grow your business.

Keep track of conversion ratios, financials, profitability, and team metrics to identify ways to improve your business and strengthen the real estate team. Track your financials to make sure the team is profitable, all team members are contributing, and goals are being reached. Don't be tempted to keep people on the team if they aren't a good fit.

Always have a good understanding of the numbers to make sure you aren't carrying the team. If you are responsible for most of the transactions, don't mistake it for profitability because the cost of the team is likely cutting into your bottom line, not adding to it.

Real estate teams are powerful and help agents increase revenue and learn valuable skills. Of course, building a real estate team requires a lot of work, preparation, and time.

Now that you know how to build a real estate team, are you ready to get started?

To view the original article, visit the Transactly blog.